SPX: Follow Up of the Short Term EWP

By: TheWaveTrading | Tue, Oct 16, 2012
Print Email

I have postponed personal matters to next Thursday, so I am able to publish a brief short-term update.

With a misleading pattern, yesterday SPX has most likely established the bottom of the assumed wave (A) of the second Zig Zag of the Double Zig Zag from the September 14 high.

SPX 30-Minute Chart
Larger Image

If this is the case, price still needs to regain above 1444, then the expected multi-day rebound wave (B) should reach the target box = 1448 - 1454 from where the "last" wave (C) down should have the mission to complete the corrective pattern from the September 14 high.

Once we can detect a reversal pattern price is expected to resume the intermediate up trend, with the mission to challenge the 2000 - 2007 highs. (As you now my long-term scenario calls for the bearish wave (X)).

I have already mentioned that I have 2 potential targets for the pending wave (C):

Since the EWP from the September 14 cannot be considered completed and we did not have positive divergences when price breached the September 26 reaction low I give for granted that the next down leg will break through the 1422 pivot support.

Despite the fact that on Friday we have monthly OPEX, which always provides uncertainty regarding the immediate time frame price maneuvering, this countertrend bounce should be short lived and in the best-case (easier one) scenario, price should not establish an eod print above the 20 d MA that yesterday stranded at 1448.

SPX Daily Chart
Larger Image

Don't forget that we also have a "clear" Double Top in the DJIA which I expect to be fulfilled

DJIA Daily Chart
Larger Image

You know that I am fixated with VIX, since I believe that it will give us reliable clues regarding the strength of the pending wave (C) down. Today I show once again the Ending Diagonal project of VXX, which MUST not breach the converging lower trend line.

And if it is a bullish wedge you will certainly notice it.

VXX Daily Chart
Larger Image

Lastly, below we have the chart of the McClellan Oscillator (my favorite short-term breadth indicator), which should not breach the zero line during the course of the current countertrend bounce.

NYSE McClellan Oscillator 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.

Disclaimer: The content of this article is for educational purposes only, the information supplied is not a recommendation to buy or sell any security or financial instrument.

Thewavetrading.com nor the owner can not be held responsible for any loses occurred from the information provided within the website.

The Information supplied cannot be copied or reproduced without the permission from the owner.

Copyright 2011-2014 TheWaveTrading

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com

SEARCH





TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/