SPX: Follow Up of the Short Term EWP

By: TheWaveTrading | Wed, Mar 13, 2013
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The short-term breadth warning I mentioned yesterday has been confirmed with a bearish cross of the McClellan's stochastic.

How long it will last?

It depends if the Oscillator does not substantially lose the zero line. (More than one day below it)

NYSE McClellan Oscillator Chart

My guess is that the pullback will probably be just a few days affair, as the buy the dip will most likely continue ahead of next Wednesday FOMC meeting.

No change regarding the EW count from the November lows. My short-term scenario calls for a wave (B) pullback with a target in the range 1531-1524, which will be followed by the last wave up (With the task of breaking above the 2007 all time high at 1576).

The expected pullback could be shallow (Maybe it can establish a bottom even above 1531) as the previous two wave (B) pullbacks, which have taken, place during the November up leg.

Pivot support = 1547.36 (Below here ==> Kick off of expected shallow pullback)

Once the EWP is complete (The up leg from the November lows is done), I expect a large correction (But not a major reversal).

SPX Daily Chart
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In addition of the McClellan sell signal, even though yesterday's internal structure of the mini pullback is the typical 3-wave buy the dip stuff, maybe there is a chance of price forming a small H&S that has a target at 1539.90.

In the SPX 15 min chart we can clearly see three key levels to watch:

If instead yesterday's 3-wave pullback is bought once again then the overlapping segment form the March 6 lod would extend higher (EW it would be incomprehensible).

SPX 15-Minute   Chart
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Two Risk On/ Risk Off indicators are giving mixed signals:

VIX Daily Chart
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TLT Daily Chart
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