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SPX: Follow Up of the Short Term EWP

By: TheWaveTrading | Wednesday, January 23, 2013

Today I don't have much to say.

I give up in attempting to count the overlapping "crapping" move from the December 31 low.

It feels like I am fighting a losing battle, however I have not lost confidence of my preferred count which calls for a Double Zig Zag from the November lows, hence price is unfolding from the December 31 low the wave (A) of the second Zig Zag.

This means that when THEY decide to pull off the rag price should unfold a pullback wave (B), which I don't expect to break through the trend line support off the November low. This corrective wave (B) should be followed by the last wave (Y) that will complete the pattern of the up leg off the November lows, and will allow a SIZEABLE correction or maybe even a major reversal. But this is something we will have to evaluate once the pattern is over.

The main reason of expecting one more up leg in addition to the EW count is the absence of negative divergence in the daily RSI.

In order to consider feasible the beginning of the assumed and overdue multi-day pullback we need a reversal pattern.

So at the moment I can only say that bears have to reclaim the last higher low at 1481.26, in order to increase the odds of a short-term pause. At yesterday`s eod we do have a short-term bearish extreme with TICK at 903, but I don't know if this high reading is a strong argument, maybe just a heads up.

But this move is definitely overstretched hence it should be vulnerable.

SPX 60-Minute Chart
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Since the daily chart does not offer any visible nearby potential resistance, I think that price might have as a magnet the trend line resistance that connects the May 2011-September 2102 peaks in the zone of 1500 +/-.

SPX Daily Chart
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In the technical front, the song remains the same:

NYSE McClellan Oscillator Chart

SPX Momentum Chart
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I keep watching TLT and VIX for indication of warnings. At the moment another "yellow flag" since yesterday neither one established a lower low.

TLT maintains a clear pattern that calls for a larger counter trend rebound that should unfold a Zag Zag up, hence if price breaks above 120.70 it should coincides with the overdue SPX pullback.

TLT Daily Chart
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Regarding VIX, I would like to see if Friday's lod was an exhaustion move or we shall see even lower prices, although I think that the declining trend line should hold, in other words I would like to see a bullish candlestick.

VIX Daily Chart
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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.

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