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

  • 1 hour U.S. Money Market Funds Post Highest Outflows Since 2011
  • 2 hours Hedge Funds Turn Bearish On The Australian Dollar
  • 3 hours Tech Unicorns Are Taking Over European Stock Markets
  • 4 hours Trump Orders “Space Force” With Zero Support
  • 6 hours How Long Will The Gold Rout Last?
  • 8 hours The Wild Card In The New Eurozone Budget Agreement
  • 1 day Why Investors Must Look At Small-Cap Stocks
  • 1 day Banking Major Pays $42M For Misleading Customers
  • 1 day Rookie Daytrader Accidentally Makes $10 Million Profit
  • 1 day Flying Cars Are No Longer Science Fiction
  • 1 day The Internet Fights Back As EU's Controversial Copyright Bill Passes
  • 1 day Is Gold Preparing For A Reversal?
  • 1 day Tech Giants Under Fire For Facial Recognition
  • 2 days 4 Reasons Why Gold Investors Should Keep A Cool Head
  • 2 days Hackers Lift $30 Million In Crypto From South Korean Exchange
  • 2 days Tax Reform Could Push U.S. Profits Abroad
  • 2 days Pot Stocks Soar As Canada Legalizes Cannabis
  • 2 days How Chinese Investors Could Send The Tech Boom Into Overdrive
  • 2 days U.S. Market Growth Weighs On The Global Economy
  • 2 days The Trials And Tribulations Of A $4 Billion Blockchain
Stock Markets Open Lower On Renewed Trade War Fears

Stock Markets Open Lower On Renewed Trade War Fears

Stock markets opened lower on…

How Chinese Investors Could Send The Tech Boom Into Overdrive

How Chinese Investors Could Send The Tech Boom Into Overdrive

Chinese residents have long-since missed…

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

SPX: Follow Up of the Short Term EWP

I have a several meetings this morning hence this is just a brief update.

Yesterday, probably given to the desperation I wrongly discarded the Ending Diagonal option that I had been following for more than two weeks. I knew that price eventually would have formed a bearish rising wedge but for some reasons I had lost the confidence, maybe given the overshoot above the converging trend line and the lack of a visible Zig Zag of the assumed wave (V).

The fact of the matter is that yesterday an initial mild and corrective looking pullback morphed in an aggressive break down after the FOMC minutes were released. The end result is the typical reaction that follows a completed wedge.

SPX 30-Minute Ending Diagonal Chart
Larger Image

Further evidence that price has established a top (In my opinion the up leg off the November lows is over) is given by the VIX which rose almost 20% closing the day with a white Marubozu at the upper BB where it is also located the 50 dma. If as I expect the equity market has began a multi-week correction then VIX should easily reach the range 16.94 (200dma) - 18.02 (January 2 gap fill).

For the immediate time frame the stochastic has plenty of room to the upside before entering the overbought zone.

VIX Daily Chart
Larger Image

Moving back to SPX in the daily chart below we can see the break down of the bearish rising wedge with the loss of the short-term pivot support at 1514. The daily candlestick, a black Marubozu is indicative of the likely reversal.

SPX Daily Chart
Larger Image

We are at the initial stages of a likely multi-week pullback, which will be confirmed once bears reclaim the support at 1498.

If my preferred long-term count is correct the projected target should be located in the range 1460 - 1437 provided a break down of the September's peak at 1474.51.

Below I show you the Ending Diagonal project, which I have discussed, several times in the weekly updates. This pattern if it pans out will establish the top of the wave (X) off the 2009 lows.

SPX Weekly Chart
Larger Image

For the immediate time frame even though the pattern is not 100% clearly impulsive I will assume that price should be on the verge of establishing the bottom of the wave (3) of the first impulsive sequence.

SPX 5-Minute Chart
Larger Image

In addition the high eod print of TRIN at 2.98 is suggesting that today we should expect a bounce attempt (Possible wave 4).

 

Back to homepage

Leave a comment

Leave a comment