Weekly Technical Analysis

By: TheWaveTrading | Sun, Jan 13, 2013
Print Email

SPX ended the week with a Hanging Man. This candlestick is warning that price may begin next week a pullback. The pullback will be confirmed once price breaches 1451.64.

Once the pullback is confirmed I don't know if it is going to be a shallow one with a target at 1444-1438 or a larger one with a target in the range 1426 - 1398.

SPX Weekly Chart
Larger Image

Reminder of my two preferred long-term counts discussed last Sunday:

"1. From the monthly chart above we can see that from the October 2011 low price could be unfolding a wedge. In this case then price with an Ending Diagonal would be on the verge of finishing the wave (A) of the second Zig Zag by unfolding from the November low the wave (V) of the Ending Diagonal."

SPX Weekly Ending Diagonal Chart
Larger Image

"2. From the June lows price is unfolding with an Ending Diagonal the last wave (Y). If this is the correct count price is now involved is tracing the wave (III) of the assumed Ending Diagonal. This pattern will complete the wave (X) countertrend rally from the 2009 lows."

SPX Weekly Ending Diagonal Two Chart
Larger Image

The issue is that even though in an Ending Diagonal usually the waves (I), (III) and (V) subdivide in a Zig Zag, hence price should be now involved in the final stages of the wave (A) of the Zig Zag, the wave (A) can also extend higher with a Double ZZ.

So far I was following the Double ZZ option (Blue count) but I should not rule out that instead price is on the verge of finishing the wave (A) with a Zig Zag (Black count) if a small wedge pan out from the January 4 peak.

SPX 60-Minute ABC Chart
Larger Image

The main difference between the 2 corrective counts is that in the former the overdue pullback will be shallow, probably it will not breach the 20 dma = 1441 (worst case scenario the trend line in force since the November low will come into play) while in the latter price will begin a relative large pullback with a potential target in the range of the 50d = 1417 - 1398

In the SPX daily chart below I show the two short-term scenarios:

SPX Daily Chart
Larger Image

As I have discussed last week momentum and breadth indicators are suggesting that a pullback is due:

SPX Momentum Chart
Larger Image

NYSE McClellan Oscillator Chart

NYSE Summation Index Weekly Chart




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