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SPX: Follow Up of the Short Term EWP
THE MCCLELLAN OSCILLATOR HAS ISSUED A SELL SIGNAL
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)
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).
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:
- Pivot support = 1547.36
- H&S Project with target = 1540
- February 19 peak = 1531
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).
Two Risk On/ Risk Off indicators are giving mixed signals:
- VIX: A bullish One White Soldier was transformed by eod into a bearish Shooting Star resulting in only a gap fill (Monday's gap down). Therefore it is uncertain that Monday's lod will hold. IF it does (Because the SPX H&S pans out) then, IF it breaks above the trend line resistance in force since the February 25 top, it should move towards the resistance cluster = 14.
- TLT: Is suggesting that a multi-day rebound is in progress. If this is the case yesterday's gap must not be closed (114.86) in addition we need to see higher highs/lows. Next resistance is at Monday's gap down = 115.91 then above it we have the 0.382 retracement of the down leg off the February 26 high.