SPX: Follow Up of the Short Term EWP

By: TheWaveTrading | Tue, Jan 15, 2013
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No Change:

Based on what I have discussed in my last weekend technical update, in my opinion the risk is quite high for at least a multi-day pullback.

Even though the internal structure of the up leg off the November lows is clearly corrective I rule out that it belongs to a bearish countertrend move, instead as I have been suggesting recently it should be long to and an Ending Diagonal, either a wave (III) or a wave (V), therefore I expect only a Fibonacci retracement of the November's up leg.

Therefore I maintain the idea that the pending pullback will eventually be bought as it should be the wave (B) within a larger Zig Zag that will establish either the wave (III) or (V) of two Ending Diagonal options (Please read my last weekend update for a more comprehensible explanation of the two Ending Diagonal patterns)

In the SPX daily chart below I highlight 4 potential areas where price should end the pending correction:

SPX Daily Chart
Larger Image

Today we have two more reasons that are warning for a pending top:

CBOE Options Equity Put/Call Ratio Chart

NYSE McClellan Oscillator Chart

Regarding the short-term price action I also maintain the idea that price from the December 31 low is unfolding an Ending Diagonal, maybe it does not require another marginal higher high as it could truncate.

SPX 30-Minute Chart
Larger Image

The loss of 1465.69 should begin the overdue pullback.

 


 

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.

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.

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