• 287 days Will The ECB Continue To Hike Rates?
  • 287 days Forbes: Aramco Remains Largest Company In The Middle East
  • 289 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 689 days Could Crypto Overtake Traditional Investment?
  • 694 days Americans Still Quitting Jobs At Record Pace
  • 696 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 699 days Is The Dollar Too Strong?
  • 699 days Big Tech Disappoints Investors on Earnings Calls
  • 700 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 701 days China Is Quietly Trying To Distance Itself From Russia
  • 702 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 706 days Crypto Investors Won Big In 2021
  • 706 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 707 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 709 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 710 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 713 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 714 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 714 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 716 days Are NFTs About To Take Over Gaming?
How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

  1. Home
  2. Markets
  3. Other

SPX: Follow Up of the Short Term EWP

THE PULLBACK IS UNDERWAY

Preamble of my preferred scenario ====> the current pullback does not belong to a "major" reversal pattern; instead I expect just a retracement of the up leg from the April 18 low.

EW Reasons:

  • The up leg from the April 18 low has not unfolded an impulsive up leg therefore it cannot conclude an EWP.

  • The advance from the November lows should unfold an 11 -wave up leg; therefore there is still one missing up leg.

The current down leg can either unfold a downward pattern (Zig Zag / Double Zig Zag / Triple Zig Zag) like the four previous ones or a sideways pattern that could form a triangle, in which case it will require a longer time to be shaped.

Going forward since major market players are clearly sensitive to a continued asset purchase by the FED, strong economic numbers will have a negative impact while weak ones will maintain alive the hope of QE into infinity.

Key economic releases:

  • May 31 Chicago PMI

  • June 3 ISM Index

  • June 5 FED's Beige Book

  • June 7 NFP

While the next FOMC Policy Update on June 19 (It includes Ben Bernanke press conference) will be a major risk event (Exit strategy? Tapering?).

Therefore it seems reasonable that the correction should last at least until the next NFP release (12 days) ===> Probable downward correction.

If instead, major investors decide to wait until next FOMC meeting ===> Probable Triangle.

SPX Daily Chart From November 16
Larger Image

Next in the weekly chart, as I mentioned yesterday, so far we have a bearish weekly Shooting Star (it could morph into a bearish 3 weeks Evening Doji Star). Bears should prefer a weekly close below the upper BB which today stands at 1662.

Again, as I have recently suggested, I don't expect a weekly close below the rising 10 wma which is now standing at the horizontal support (previous break out now support) at 1597.35.

SPX Weekly Chart
Larger Image

It does not matter any more but yesterday, instead of the suggested ED price concluded the corrective pattern from the April 18 low with a thrust following a "freaky" Triangle.

This is the chart I posted yesterday on Twitter/Stocktwits:

SPX 15-Minute Chart
Larger Image

Next in the 30 min chart I have labelled my preferred count of the up leg from the April 18 low ===> TZZ.

We still need price to breach the last higher low at 1648.60 but it almost guaranteed that this up leg is over.

I have outlined 3 potential target areas based upon the Fibonacci retracements:

SPX 30-Minute Chart
Larger Image

It is just a thought but given that the April 18 up leg (Assumed wave A) has risen 151.19 points probably odds should favour at least the 0.5 retracement = 1611 as a potential target in the case of a Zig Zag /Double Zig Zag while the 0.382 Ratracement = 1629 could fit better with a Triangle.

At the moment I am clueless regarding the labelling of the current down leg hence I prefer to wait a while longer before publishing a working count. But given the weakness of European markets I would not rule out that today or tomorrow price could test the 20 dma = 1627.74 If this is the case I would expect a large rebound attempt.

SPX Daily Chart
Larger Image

The McClellan Oscillator is already oversold but despite being below the Bollinger Band I doubt that this time it can trigger a buy equity signal, instead I expect something similar to the end of February pattern with a bounce (It should remain below the zero line) and another "flash" below the Bollinger Band.

NYSE McClellan Oscillator Chart

VIX did not form the suggested Inverted Head and Shoulder so there is not a clear reversal pattern. Here we have to monitor the potential buy equity BB signal.

VIX Daily Chart
Larger Image

 

Back to homepage

Leave a comment

Leave a comment