SPX: Follow Up of the Short Term EWP

By: TheWaveTrading | Tue, Nov 27, 2012
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Today I am posting just a brief update since I want to wait for "the dust to settle".

In the weekend technical update I mentioned that on Friday the US equity market ended the week with extreme "bearish" readings of short-term breadth indicators + Thursday's White Marubozu + having reached the 0.5 retracement of the corrective pullback off the September high were increasing the odds of a potential pullback.

Yesterday's initial weakness was aborted by dip buyers but the recovery action was overlapping and by eod SPX ended with a confusing candlestick, since it can be considered a "bearish" Harami or a bullish Hammer. In addition we cannot rule out that today's euphoria due to the Eurogroup deal to save once again Greece may spill over into at least the opening of the US markets.

The good news is that we have new price information:

Therefore I now have two options:

SPX Daily Chart
Larger Image

Regarding the immediate time frame pattern, hopefully today it will be solved and by eod we should know if the first up leg of the assumed Zig Zag up is over.

I still believe that a pullback is more likely than an extension higher.

But if bears don't show up then there is only "thin" air until the 50 dma = 1426.

The "ideal" path would be a retest of the 200 dma = 1383 from where a wave (C) up could reach the 1449 area.




Author: TheWaveTrading


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