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.

 


 

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.

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).

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