UPRO: Bullish Setup
Entry Date: 05/29/2014; Long 100.37; Stop: 98.35; Target: 107.90 +/-
Reason: Price should have completed a Triangle
In my last update of SPX on May 4 I discussed three potential short term Elliott Wave patterns. Today the Triangle option is the frontrunner.
It is probable that at Friday's lod price has concluded the bullish pattern. If this is the case the structure of the advance from the April 11 low is suggesting that price has concluded a Triangle wave (B) hence the pending thrust higher is a wave (Y) that will complete the Double Zig Zag and in addition it should conclude an Ending Diagonal which began to be formed at the October 2013 low.
If the Triangle pans out the theoretical target of the pending wave (Y) is located at 107.90 +/-.
The positive clue is that last Friday's lod was established at the 200 hr ma.
The caveat, as we can see in the SPX 15 min chart below, is that from the lod the rebound does not look impulsive unless price is forming a Leading Diagonal (Keep in mind that a wave C has to unfold an impulsive sequence)<./p>
For this reason I have decided to lower my stop below the lower contracting trend line, in case the wave (e) is not in place yet.
If the kickoff of the assumed wave (Y) is solved with an impulsive sequence the daily Hammer candlestick with the bottom of the tail at the 20 dma is strongly suggesting that a breakout would be imminent.
In addition since a Triangle occurs prior to the final actionary wave of a larger degree pattern it would strongly strengthen the scenario of the Ending Diagonal since the pending thrust higher would conclude the last wave (V).