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SPX: Follow Up of the Short Term EWP

I have postponed personal matters to next Thursday, so I am able to publish a brief short-term update.

With a misleading pattern, yesterday SPX has most likely established the bottom of the assumed wave (A) of the second Zig Zag of the Double Zig Zag from the September 14 high.

SPX 30-Minute Chart
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If this is the case, price still needs to regain above 1444, then the expected multi-day rebound wave (B) should reach the target box = 1448 - 1454 from where the "last" wave (C) down should have the mission to complete the corrective pattern from the September 14 high.

Once we can detect a reversal pattern price is expected to resume the intermediate up trend, with the mission to challenge the 2000 - 2007 highs. (As you now my long-term scenario calls for the bearish wave (X)).

I have already mentioned that I have 2 potential targets for the pending wave (C):

  • 1396
  • Trend line from the October 2011 lows.

Since the EWP from the September 14 cannot be considered completed and we did not have positive divergences when price breached the September 26 reaction low I give for granted that the next down leg will break through the 1422 pivot support.

Despite the fact that on Friday we have monthly OPEX, which always provides uncertainty regarding the immediate time frame price maneuvering, this countertrend bounce should be short lived and in the best-case (easier one) scenario, price should not establish an eod print above the 20 d MA that yesterday stranded at 1448.

SPX Daily Chart
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Don't forget that we also have a "clear" Double Top in the DJIA which I expect to be fulfilled

DJIA Daily Chart
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You know that I am fixated with VIX, since I believe that it will give us reliable clues regarding the strength of the pending wave (C) down. Today I show once again the Ending Diagonal project of VXX, which MUST not breach the converging lower trend line.

And if it is a bullish wedge you will certainly notice it.

VXX Daily Chart
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Lastly, below we have the chart of the McClellan Oscillator (my favorite short-term breadth indicator), which should not breach the zero line during the course of the current countertrend bounce.

NYSE McClellan Oscillator Chart
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