I still think that at the November 16 low the determining factors that usually "accompany" a major bottom were not fulfilled, I am referring to positive divergences of momentum & breadth indicators and a spike of "fear", therefore I maintain the scenario that calls for a pending "last" wave down.
Tomorrow probably it will be an uneventful day (1/2 trading day) hence the critical battle will take place next week.
The target box is shrinking, now the range is between the 20 dma = 1394.37 and the October 26 low = 1403.28 which also coincides with the trend line resistance off the October 2011 lows.
As for support a decline back below the 200 dma = 1382.92 will be the first step that should announce the end of the "oversold" rebound, while an eod print below 1377 should seal the deal.
Regarding the EWP off the November 16 low, in my opinion, price is unfolding a TZZ; maybe a thrust out of a potential triangle could establish the top of the wave (Z).
If the Triangle idea plays out then the 1 x 1 extension target is at 1402.80.
If price is approaching the top of the assumed wave (B), the negative divergence that is already appearing in the NYSE Adv-Dec Volume should be maintained.
I will be watching two VIX etf:
1. XIV:
The price action is questioning my short-term bearish scenario.
It has established a marginal higher high. The thrust could be justified by a completed Leading Diagonal wave (A). Two consecutive candlesticks above the Bollinger Band are suggesting that the move is a "bit" extended. But if my scenario is the correct one XIV has to reverse quickly to the down side, maybe unfolding a Flat.
2. VXX:
The forceful sell off from the November 15 peak could be the final thrust out of a large Triangle.
And I will also keep a close attention to the Bund, since if the equity indices are approaching a top the Bund should be approaching a bottom. The 141.95 area would be a nice spot for a reversal.
Enjoy the weekend.
