SPX: Weekly Technical/Elliottwave Analysis

By: TheWaveTrading | Sun, Mar 16, 2014
Print Email

The week ended with a "large" Harami candlestick, which has caused short-term technical damage and casts doubts over a false breakout of the January's high.

In my humble opinion SPX remains vulnerable to more downside with a potential target (Weekly time frame) in the range:

But due to the fact that both up legs from the October and February lows are corrective this decline should be treated as a retracement prior to the final upswing that could conclude the entire advance from the 2009 low. (Ending Diagonal idea that I have been discussing in the weekly updates. If this is the correct pattern the current pullback should bottom in the lower range of the assumed target zone: 1816 - 1799).

SPX Weekly Chart
Larger Image

Friday's Inverted Hammer, with the "proviso" that it is unknown the market reaction to Sunday's referendum in Crimea is suggesting that the first down leg of a potential Zig Zag down could be over. If this is the case, provided price recovers above the 20 dma = 1854, I would expect a multi-day rebound with a lower high in the range 1865 (10dma) - 1868 (Usually the equity market should rebound ahead of the FED meeting next Wednesday).

If instead next Monday we have a gap down, probably the next support located at 1834 will not hold and price will most likely enter the Support Zone 1 target box.

SPX Daily Chart
Larger Image

Reasons for a short-term bounce:

SPX 60-Minute Momentum Chart
Larger Image

NYSE Advance-Decline Line Daily Chart

NYSE Advance-Decline Volume Chart

NYSE McClellan oscillator Daily Chart

CNOE Options Equity Put/Call Ratio Daily

Elliott Wave wise, price with a wedge could be completing with a Double Zig Zag the assumed wave (A) of a larger Zig Zag down. If this is the case, provided bulls reclaim the resistance zone 1851-1854, the assumed wave (B) rebound should top in the range 1865 - 1867.

SPX 30-Minute Wedge Chart
Larger Image

If instead next Monday we have a gap down then maybe we could make the case that price on Friday completed a Triangle wave (X) within a Triple Zig Zag off the March 7 high. The following thrust should unfold a Zig Zag down completing the corrective pattern and likely establishing the end of the correction. The theoretical equality extension target would be located at 1812.

SPX 15-Minute Triangle Chart
Larger Image

If the wedge pans out the following rebound should establish a lower high for the following technical reasons:

NYSE McClellan Oscillator Daily Chart 2

NYSE dvance-Deline Volume Index versus SPX Chart

Lastly regarding VIX lets see if the next buy signal is "triggered" with a weekly spike above the 200 wma (It has occurred five times since 2012). Hence going forward VIX should not lose the support located at 15.77.

VIX Weekly Chart
Larger Image

The spike above the 200 wma is doable if the double bottom target is achieved:

VIX Daily Chart
Larger Image

Seasonality is bullish this coming week while the end of March is usually weak.

 


 

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/