SPX: Follow Up of the Short Term EWP

By: TheWaveTrading | Wed, Oct 17, 2012
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The rebound is much stronger then I was expecting with price easily recovering above both the 10 & 20 d MA and achieving an eod print above the 0.618 retracement of the down leg off the October 5 lower high.

We have a daily Marubozu, which could be an exhaustion candlestick if today we have a small range body or a reversal bar.

SPX Daily Chart
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Obviously the question that you should ask me is:

Is the correction over?

I am not stubborn, I never obstinate with a given EW count, but so far I am firmly convinced that EW wise the pattern from the September 14 high needs a pending wave (C) down in order to be considered completed.

SPX 60-Minute Chart
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Therefore if I have not wrongly labeled the current rebound (off last Friday's lod), once is over it should be fully retraced:

SPX 15-Minute Chart
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But in order to be on the right side of the price's path it is mandatory that price MUST reverse today since both momentum and breadth indicators are threatening to kill the short-term bearish set up:

SPX MACD Chart
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NYSE McClellan oscillator Chart

It is not only what could be described as a biased opinion since it would be very odd that SPX has resumed the intermediate up trend without the banks.

Below in the daily chart of KBE it seems reasonable to consider that price is going in the opposite direction.

KBE Daily Chart
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Conclusion:

Lastly lets watch VIX.

Yesterday's hammer may be suggesting that SPX "oversold" rebound is getting close to an end.

VIX Daily Chart
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Tomorrow I will not publish the short-term follow up.

 


 

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.

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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).

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