Weekly Technical Analysis

By: TheWaveTrading | Sun, Sep 30, 2012
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SPX has ended the month of September with "quasi" a shooting star, which is strengthening the scenario that I am working with of a retracement of the up leg from the June lows.

As I have been discussing:

In the monthly time frame we have 4 key numbers that are expected to come into play depending upon the intensity of the current correction:

April 2012 peak = 1422.38
3m MA = 1410
6m MA = 1384
May 2011 peak = 1370.58

SPX Monthly Chart
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Before proceeding more deeply in the weekly analysis of SPX I want to digress with AAPL monthly chart. Here we can see a textbook shooting star, which is strongly warning that price has completed the up leg off the May lows.

AAPL Monthly Chart
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Maybe price is unfolding a large Ending Diagonal that could be completed during the first quarter of 2013. If this terminal pattern is playing out then price now has to overlap below 644.

AAPL Weekly Chart
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Lets go back to SPX charts

I am strongly convinced that the September's impulsive up leg has completed a Triple Zig Zag from the June 4 low. Therefore now price is involved in unfolding a corrective EWP that could carry price at least towards the 0.382 retracement = 1396.56.

Above the 0.382 retracement we have the rising 50 d MA = 1412 that could act as support, but we will have see if technical indicators are aligned with a bullish resumption, once/if we get there.

In order to accomplish "such a bearish outcome" SPX has to breach the previous break out level at 1420 and the rising trend line in force since the June lows.

SPX Daily Chart
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In the daily chart below we have useful detailed info for the short-term time frame:

SPX Daily Chart
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Short-term price action:

It is obvious that price is unfolding a corrective pattern, but as I mentioned last Friday "we have to proceed with caution since corrective patterns can easily morph, so we have the immediate time frame picture not clear."

So far from the September 14 high to last Wednesday's lod we have a completed Double Zig Zag.

This bottom cam be labeled as:

SPX 30-Minute Chart
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If price does not breach the trend line resistance then the last 2 options will be the front-runners, while if price achieves to break above the trend line (Above 1455+/-) then the first option will become the correct EWP and the wave (B) should top below 1467.

For the immediate time frame, as long as price maintains the sequence of higher lows, I take the risk of forecasting that this bounce has more upside potential with a target at 1455 since price could be unfolding a Double Zig Zag. (1455 is the equality extension target).

But the key issue here is that even if price achieves, during the beginning of next week, more follow trough to the upside, the internal structure is suggesting an obvious countertrend move, therefore the EWP from the September 14 high is not over.

In the technical front:

SPX MACD
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SPX Weekly MACD Chart
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A larger correction will most likely take hold if:

But on presidential election years, seasonality is bullish from mid October.

NYSE Summation Index

Advance/Decline Volume

Next week we have an intense economic agenda:

 


 

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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