SPX: Follow Up of the Short Term EWP

By: TheWaveTrading | Thu, Sep 20, 2012
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Today I don't have much to say.

During this week I have been discussing my preferred short-term scenario so I will keep it short.

The "foundation" of my short-term bearish bias is justified by three technical reasons:

  1. A complete 5 wave up leg sequence (from September 5)
  2. Weakening of the McClellan Oscillator.
  3. Initial reversal of daily momentum indicators from extreme overbought readings.

The short-term internal structure, despite not being impulsive, hence apparently it could just belong to a shallow pullback pattern, is not being aggressively bought. This is a sign of weariness. It seems that SPX is involved in a short-term holding pattern maybe by the action of the OPEX players.

So this is a waiting game, since the pattern unfolded by price still favors the bulls until we have a lower low < 1456 and we see increasing selling pressure.

Yesterday's price rebounded as expected but with an overlapping internal structure therefore we only got a doubtful Expanded Ending Diagonal. But if the down leg becomes impulsive then the odds that the short-term trend is resuming its path to the down side will substantially increase:

SPX 5-Minute Chart
Larger Image

If I am right and the June up leg is over then why we should not expect a "logical" 0.382 retracement?

In the daily chart below I highlighted the critical price levels.

SPX Daily Chart
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Author: TheWaveTrading


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