"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 25 mins Four Tips From The World’s Top Investors
  • 1 day The Dark Side Of Trump's Tax Bonanza: $1 Trillion In Debt
  • 2 days How Goldman Made $200M In A Day
  • 2 days Why Trading On Trump's North Korea Misstep Won’t Work
  • 2 days Samsung Loses $539 Million In Battle Against Apple
  • 2 days Is There Upside Potential For Gold Juniors?
  • 2 days World's Top Diamond Jeweler Joins De Beers' Tracking Initiative
  • 2 days Cryptocurrencies Bounce Back But Struggle With Key Resistance Levels
  • 3 days Millennials Are Waiting For A $30T Inheritance That Might Not Come
  • 3 days Is This the Tipping Point for American Credit Card Debt?
  • 3 days Tech Icon Predicts A Big Future For Ethereum
  • 3 days Apple Doubles Down On Data Privacy
  • 3 days Where To Look As The Treasury Bond Bull Run Loses Steam
  • 3 days The Tech Giants Poised For A Breakout
  • 3 days The U.S. Dollar Is Set To Continue Its Rally
  • 3 days Bitcoin Plummets On Price Manipulation Investigation
  • 4 days The Multi-Billion-Dollar Business Of Influence Peddling
  • 4 days Goldman Backed ‘Stablecoin’ Hopes To Curb Crypto Volatility
  • 4 days Consumers Lost $1.6M To Crypto Fraud In Australia
  • 4 days Facebook May Soon Become A Paid Service
How Goldman Made $200M In A Day

How Goldman Made $200M In A Day

The thought of a stock…

The Tech Giants Poised For A Breakout

The Tech Giants Poised For A Breakout

Bullish sentiment seems to have…

TheWaveTrading

TheWaveTrading

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…

More Info

Weekly Technical Reviewof SPX

  • I maintain the long-term scenario (Updated on July 9).

  • I maintain the short-term scenario that calls for a counter trend wave (B) rebound off the June 4 low.

SPX Long-Term Count
Larger Image

  • I raise the initial target range for the pending wave (C) down from (1248 - 1207) to (1293 - 1248) since due to the extended move above the April 2 top, now a deep Zig Zag down is less likely, instead, the most likely options are a Flat / Expanded Flat or a Triangle.

  • Flat Option:

SPX Flat Option
Larger Image

  • Expanded Flat Option:

SPX Expanded Flat Option
Larger Image

  • Triangle Option:

SPX Triangle Option
Larger Image

Regarding the definition of the EWP of the assumed wave (B), in my opinion, the best way to label this price structure is a complex Triple Zig Zag = (ABC=W; X; ABC=Y; X, ABC=Z)

SPX - The Complex Triple ZZ
Larger Image

In my opinion, in spite of having a new sell signal issued by the daily Stochastic and MACD, I doubt that price has reversed to the down side due to the following facts:

  • The last up leg off the August 2 higher low has a corrective look.

  • The Internal structure of the down leg off the August 21 high has a corrective look.

  • It is "inconceivable" for the market to top before Mr. Bernanke speaks at Jackson Hole on August 31.

In addition we have the following critical events:

  • Mr. Draghi speech on September 1.

  • US markets are closed for Labor Day on September 3

  • ECB Meeting on September 6.

  • NFP on September 7.

  • FOMC on September 12-13.

Therefore I believe that the Triple ZZ could have one more wave (C) up in the cards.

For the immediate time frame I "venture" to expect one more down leg before price resumes the uptrend with the last wave (C) up.

The target of the second down leg could be located in the range:

1382 (TL off the June 4 low) - 1371 (50 dma)

The lower range could be accomplished if price unfolds the H&S and the target is fulfilled.

If this scenario plays out then the equality extension target for the final wave (C) can be located in the range 1442 - 1454. In addition remember that at +/- 1445 we have the Trend Line that connects the May 2012 & April 2012 tops (weekly chart above)

If I am wrong and price has already completed the Triple ZZ, then since the initial down leg has a corrective look the Triangle Option should be the front-runner.

In the technical front there are no reasons to consider this recovery as sustainable:

  • Daily Momentum: Stochastic and MACD have issued new sell signals. These readings are suggesting that my primary short-term scenario could be invalidated despite the corrective look of the current pullback.

SPX Momentum Daily
Larger Image

  • Breadth indicators are showing negative divergences:

  • 10 dma NYSE adv-dec volume peaked at the end of June while SPX kept pushing higher.

NYSE Advance/Decline Volume

  • Summation Index: The thrust higher ended in the middle of July, managing only a marginal higher high last week. In addition we have the RSI with negative divergence.

NYSE Summation Index

Conclusion:

Despite price has extended the current rebound above 1422; the internal structure of the move is clearly suggesting that price is involved in a countertrend move.

Additionally Momentum and Breadth indicators are confirming that price should be now involved in a topping process opening the door to a likely correction in September with at least a wave (C) down.

If my longer term scenario plays out then the near term correction will be shallow as it will not substantially breach the June lows.

Once the correction is completed I expect, during the last quarter of 2012, the resumption of the intermediate up trend, with one more up leg that will complete the wave (X) from the March 2009 lows.

 

Back to homepage

Leave a comment

Leave a comment