SPX: Follow Up of the Short Term EWP

By: TheWaveTrading | Wed, Feb 20, 2013
Print Email

Unfortunately SPX`s Ending Diagonal that I have been monitoring for more than two weeks has been busted.

However given the technical reasons discussed in my last Weekly Technical Update I maintain the assessment that price is involved in a topping process that will establish the end of the corrective up leg off the November lows.

At the beginning of February I changed my approach. Due to the lack of clarity given the overlapping internal structure of the up leg from the December 31 low I gave up attempting to decode the pattern with useless counts, instead I focused my attention to locate either an impulsive up leg or an Ending Diagonal, since an EWP always ends by forming either a 5-wave up leg or an ED.

I remain very doubtful that price is unfolding an impulsive move hence if SPX will eventually conclude the up leg from the November 16 low it should form an Ending Diagonal.

The SPX 60 min chart below, which I posted yesterday on StockTwits/Twitter after the close, depicts this EW outcome.

SPX 60-Minute Chart
Larger Image

Additionally, as it can be seen in the daily chart below, since the end of January (Until price does not break above the upper converging trend line) price is tracing a rising wedge with a bunch of overlapping waves.

SPX Daily Chart
Larger Image

Conclusion for the short-term time frame:

- White Marubozu = Usually it reflect a short term buying exhaustion.

- EOD print above the upper BB = It reflects an extreme move.

- TICK eod print of 1217 = As well it reflects a short-term buying extreme.

I keep watching TLT and VIX for clues of when Risk ON will be switched to OFF. (Divergences means yellow flags)

At the moment the conclusion is a draw:

VIX Daily Chart
Larger Image

Lastly I am monitoring the DAX, which I would be really surprised if the current bounce is more than a wave (B) that should establish a lower high.

DAX Daily Chart
Larger Image

Therefore at the moment I have two options either I leave for a holiday (I cannot do it) or I patently wait for the outcome that in my opinion remains the one with the higher probability.

 


 

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).

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 2011-2014 TheWaveTrading

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com

SEARCH





TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/