Weekly Technical Analysis

By: TheWaveTrading | Sun, Oct 28, 2012
Print Email

As a reminder:

Following the reassessment of the potential EWP from the October 2011 lows I am working with two potential options within the Double Zig Zag off the November 2008 low.

1. Price is unfolding the final wave (C) with an Ending Diagonal.

If this is the correct count then the assumed wave (II) of the ED in order to have the right look should bottom in the range of the 0.5 retracement = 1370 - 50 w ma = 1354.

Once the ED is done price will have completed the wave (X) off the November 2008 low.

SPX Weekly Chart
Larger Image

2. From the October 2011 low price, with another DZZ is unfolding the wave (A) of the second Zig Zag.

If this is the correct count then the wave (B) could carry out a shallower pullback with a potential bottom in the range of the trend line support off the October 2011 lows and the 200 d ma = 1377.

SPX Weekly Double ZigZag Chart
Larger Image

Even if one of the two options is the correct one, as a matter of fact, beforehand it is impossible to have a preference.

Therefore I remain open minded until I have further evidence in order to make a judgment.

In my opinion from the September 14 high price is unfolding a Double Zig Zag.

Since the down leg off the October 18 lower high is not impulsive then the DZZ cannot be considered over, therefore I expect at least one more down leg.

The assumed final down leg could bottom either at:

At the moment I have a preference for the second target zone, with a likely candidate in the range of the 200 d ma and the 0.5 retracement.

SPX Daily Chart
Larger Image

Now lets move on to the shorter time frame.

As I mentioned last Friday I have a short-term bullish bias. I am expecting an oversold bounce that I believe it will fail.

The main reasons behind my short-term bullish stance are:

SPX 30-Minute Chart
Larger Image

SPX Momentum Chart
Larger Image

In my last weekend update I mentioned that sentiment, measured by the AAII Bull Ratio was approaching extreme bearish readings.

Today I add that the weekly stochastic of the Summation Index has entered the oversold zone.

NYSE Summation Index Weekly Chart

Both readings should prevent a major drop of the equity indices.




Author: 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 2011-2016 TheWaveTrading

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