• 658 days Will The ECB Continue To Hike Rates?
  • 658 days Forbes: Aramco Remains Largest Company In The Middle East
  • 660 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,059 days Could Crypto Overtake Traditional Investment?
  • 1,064 days Americans Still Quitting Jobs At Record Pace
  • 1,066 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,069 days Is The Dollar Too Strong?
  • 1,069 days Big Tech Disappoints Investors on Earnings Calls
  • 1,070 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,072 days China Is Quietly Trying To Distance Itself From Russia
  • 1,072 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,076 days Crypto Investors Won Big In 2021
  • 1,077 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,077 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,080 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,080 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,083 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,084 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,084 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,086 days Are NFTs About To Take Over Gaming?
Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

Strong U.S. Dollar Weighs On Blue Chip Earnings

Strong U.S. Dollar Weighs On Blue Chip Earnings

Earnings season is well underway,…

  1. Home
  2. Markets
  3. Other

SPX: Follow Up of the Short Term EWP

Unfortunately SPX`s Ending Diagonal that I have been monitoring for more than two weeks has been busted.

However given the technical reasons discussed in my last Weekly Technical Update I maintain the assessment that price is involved in a topping process that will establish the end of the corrective up leg off the November lows.

At the beginning of February I changed my approach. Due to the lack of clarity given the overlapping internal structure of the up leg from the December 31 low I gave up attempting to decode the pattern with useless counts, instead I focused my attention to locate either an impulsive up leg or an Ending Diagonal, since an EWP always ends by forming either a 5-wave up leg or an ED.

I remain very doubtful that price is unfolding an impulsive move hence if SPX will eventually conclude the up leg from the November 16 low it should form an Ending Diagonal.

The SPX 60 min chart below, which I posted yesterday on StockTwits/Twitter after the close, depicts this EW outcome.

SPX 60-Minute Chart
Larger Image

Additionally, as it can be seen in the daily chart below, since the end of January (Until price does not break above the upper converging trend line) price is tracing a rising wedge with a bunch of overlapping waves.

SPX Daily Chart
Larger Image

Conclusion for the short-term time frame:

  • There is no ending pattern, therefore I assume that there will be at least one more higher high in the near future.

  • But due to the following reasons for today I expect a pullback:

- White Marubozu = Usually it reflect a short term buying exhaustion.

- EOD print above the upper BB = It reflects an extreme move.

- TICK eod print of 1217 = As well it reflects a short-term buying extreme.

I keep watching TLT and VIX for clues of when Risk ON will be switched to OFF. (Divergences means yellow flags)

At the moment the conclusion is a draw:

  • TLT has maintained the higher low while VIX by establishing a lower low has most likely aborted the Double Bottom pattern suggesting that it will need more time to form a reversal pattern.

  • VIX, as well as SPX it is wedging down with positive divergence of its RSI. Once/if the fear index closes the gap at 13.50 it will most likely confirm a trend reversal.

VIX Daily Chart
Larger Image

Lastly I am monitoring the DAX, which I would be really surprised if the current bounce is more than a wave (B) that should establish a lower high.

DAX Daily Chart
Larger Image

Therefore at the moment I have two options either I leave for a holiday (I cannot do it) or I patently wait for the outcome that in my opinion remains the one with the higher probability.

 

Back to homepage

Leave a comment

Leave a comment