It looks like someone linked you here to our printer friendly page. Please make sure you go Back to Safehaven.com for more great articles just like this one!

SPX: Follow Up of the Short Term EWP

By: TheWaveTrading | Wednesday, February 27, 2013

THE CORRECTION IN NOT OVER

Despite the disparity of the potential corrective EWP between the Dow and SPX I expect more down side action within the scenario of a retracement of the November-February up leg.

As discussed during this week the two US major equity indices are not tracing the same path:

SPX 30-Minute Chart
Larger Image

DW 5-Minute Chart
Larger Image

(Chart posted yesterday at eod on Stocktwits/Twitter)

Regardless of the correct explanation of the EWP I expect that the overlapping bounce which began at yesterday's lod to fail preferably in the range of the 0.5-0.618 retracement. I would be really surprised if bulls reclaim the 20 dma = 1511 (eod print).

Regarding my preferred long-term count, its viability depends upon if bears are able break through the September high at 1474.51.

If this is the case than the current pullback could belong to the wave (IV) ed with a potential target in the range 1459-1437.

So I am short and on a stand by mode.

SPX Daily Chart
Larger Image

As suggested yesterday due to short term oversold extremes the probability of a bounce was large.

Today I expect follow through to the upside (I am not saying bullish from opening to close, we shall see) due to:

CBOE Options Equity Put/Call Ratio Chart

TLT Daily Chart
Larger Image

TLT Daily Chart
Larger Image

Conclusion: Too many option equity bears + a likely pullback of TLT and VIX are suggesting that the odds favour a larger bounce of the equity market.

In the technical front I will monitor (as usual) the McClellan Oscillator, since it should maintain the sequence of lower Highs/Lows, hence it should not breach last Friday's lower high at -18.89 (Or if higher it should not recover above the 10dma).

NYSE McClelln Oscillator Chart

 

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