SPX: Follow Up of the Short Term EWP

By: TheWaveTrading | Tue, Feb 12, 2013
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It is not the Ending Diagonal that I was looking for, as I posted last Tuesday:

SPX 60-Minute Ending Diagonal Chart
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But maybe price is still forming a different bearish rising wedge:

SPX 60-Minute Ending Diagonal Chart 2
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In order to increase the odds that this Ending Diagonal will pan out price, despite yesterday's consolidative session, which usually means a continuation pattern has to surprise the majority with a corrective pullback.

This "unexpected" short-term pullback can pan out if a Double Top is confirmed today. This pattern has a theoretical target at 1509 (More or less where the 10 dma is located).

Below is the SPX 5 min chart I posted yesterday at the eod on Twitter/Stocktwits:

SPX 5-Minute Chart
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If the wedge discussed above is confirmed then I maintain the scenario that calls for a multi-week pullback wave (IV) of the large Ending Diagonal scenario discussed lately.

The potential target should be located in the range: 1458 (50dma) - 1434.

SPX Daily Chart
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In the Technical front there is no change: the warnings that this up leg is long in the tooth remain omnipresent across the board of both short-term and long-term breadth & momentum indicators

Below I show a few examples:

NYSE McClellan Oscillator Chart

SPX Momentum Chart
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NYSE Advance/Decline Volume Chart

NYSE Summation Index Weekly Chart

So if the wedge discussed above is correct, there should be marginal upside but the downside risk could be worth 60-80 points, hence R/R in my opinion is clearly leaning against the bulls.

I am watching KBE (In addition to an already long position in SPXU) as a possible candidate for a short setup (Long FAZ).

Here we have another potential wedge.

If/when price breaches 26 I might go long FAZ.

KBE Daily Chart
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Lastly, but I don't have time now to post any chart, both the EUR and the European indices have already began a correction, which should be far from over. In my opinion odds are larger for SPX playing catch up to the down side.




Author: TheWaveTrading


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