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
Larger Image

 


 

TheWaveTrading

Author: TheWaveTrading

TheWaveTrading

Contact: If you would like to contact the author, you can e-mail him at thewavetrading@gmail.com

The main objective of this project is to share my views on several markets and asset classes.

In the initial stage TWT website will be a free service.

My main focus will be the equity market with SPX being the leader but I will also follow US equity sectors, major European indices, fixed income, currencies and commodities markets.

My analysis is based upon traditional Technical Analysis, Elliot Wave guidelines and investor sentiment.

My goal is to establish the most likely path that the price of a particular asset will undertake and profit through ETF instruments both on the long and short side and mainly with leveraged ones (2 x & 3 x).

The advantage of ETF investments is that it allows getting involved in equity indices & sectors, currencies, fixed income, commodities etc.

Therefore the main purpose of TWT will be to establish investment strategies regardless if the market is in an up trend or in a down trend, leveraging the chosen scenario while managing the risk by establishing protective stop losses.

Hence I will always define the risk, I will try to let winners run the wave and I will cut the losses if my strategy is wrong.

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