SPX: Follow Up of the Short Term EWP
This is a brief update (Tomorrow morning I will not be able to post the daily SPX follow up).
Today has been a big day for the bulls.
SPX ended with an impressive bullish Hammer.
Price followed the path of the suggested double top target, establishing the lod very close to the 200 dma from where it reversed strongly to the upside with the help of good news regarding the fiscal cliff.
What matters is that this up leg is impulsive; therefore (barring a miracle for the bears) it has completed the small correction from last Friday's hod.
If the wave (V) is in place (caveat: since wave (III) < wave (I) the wave (V) cannot exceed 10.54 points) then I expect a pullback in the range of the 0.382-0.5 retracement, from where the wave (3) should kick off.
Regarding the overall pattern form the September 14 high please read yesterday's post.
For the time being I expect a Zig Zag up off the November 16 low with a potential target for the assumed wave (C) at 1451 if the 1 x 1 extension target is fulfilled.
On the way to the extension target bulls will have to overcome strong resistance at the 50 dma = 1425 and the November 6 peak at 1433.38.
I don't have updated info of breadth indicators hence this brief analysis needs confirmation from the McClellan Oscillator and Adv-Dec Volume.
Regarding the momentum indicators, RSI has recovered above the 50 line while stochastic is approaching the overbought territory.