• 108 days Will The ECB Continue To Hike Rates?
  • 109 days Forbes: Aramco Remains Largest Company In The Middle East
  • 110 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 510 days Could Crypto Overtake Traditional Investment?
  • 515 days Americans Still Quitting Jobs At Record Pace
  • 517 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 520 days Is The Dollar Too Strong?
  • 520 days Big Tech Disappoints Investors on Earnings Calls
  • 521 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 523 days China Is Quietly Trying To Distance Itself From Russia
  • 523 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 527 days Crypto Investors Won Big In 2021
  • 527 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 528 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 530 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 531 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 534 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 535 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 535 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 537 days Are NFTs About To Take Over Gaming?
Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

  1. Home
  2. Markets
  3. Other

SPX: Follow Up of the Short Term EWP


The failed attempts to overtake the 50 dma could spell troubles for the bulls (Short term time frame) in spite of the expected bullish seasonality surrounding the half trading day ahead of the US 4th of July holiday.

On Monday bulls failed to achieve an impulsive up leg (second up leg from the June 24 low). I thought that the overlapping structure could have resulted in an Ending Diagonal, but yesterday's weakness has invalidated this pattern as well.

I still believe that the overall pattern from the June 24 low remains "constructive" and should allow the suggested larger 3-wave up leg (Zig Zag) but if Tuesday's gap at 1606.28 is closed the short term bullish outcome will most likely be delayed and will be subject to the reaction of Friday's NFP release.

Today VIX must be watched closely since it would be unusual and a bearish signal if shows strength ahead of the 4th of July holiday. But there are reasons to be open minded since after completing a small wedge the pattern looks bullish if VIX overtakes the 200 hma located at 16.98 (eod print). If this is the case a move towards the resistance range 18 - 18.51 would be probable.

VIX 60-Minute Chart
Larger Image

If VIX fails to break above the mentioned short-term resistance then the Triangle idea I posted yesterday on Stocktwits/Twitter could pan out:

SPX 15-Minute Triangle Chart
Larger Image

If Monday's gap at 1606.28 is closed then I expect a larger pullback (Assumed wave B) that should be followed by a wave (C) up (the expected Zig Zag structure off the June 24 low), provided the gap at 1588.03 is not closed.

SPX 15-Minute Wave-B Down Chart
Larger Image

Even if in my opinion the pattern remains short term bullish (I am referring to a probable larger countertrend rebound from the June 24 low) the McClellan Oscillator must not deny my scenario with a substantial drop below the zero line. (more than one day below the zero line would be a warning)

NYSE McClellan Oscillator Chart

Just as a reminder as I mentioned yesterday I am "working with" two potential scenarios:

  • Larger downward correction.
  • Larger sideways pattern that could form a Triangle.

With the objective of keeping the analysis as simple as possible, we are talking about a countertrend wave (B) of a larger Zig Zag down or of a Triangle in which case the June 24 lod will not be revisited (Price will establish a sequence of higher lows/lower highs).

I will maintain the scenario of a larger down side pattern as long as the current rebound stalls in the range of the gap located at 1628,93 and the June 18 peak at 1654."

SPX Daily Chart
Larger Image

Daily momentum indicators are at a critical juncture for the following reason: If the assumed wave (B) has topped (I doubt it) it is exactly where it should stall since the RSI has not recovered above the 50 line and the MACD would fail to do a bullish cross.

On the other hand if the RSI recovers above the 50 line and the MACD triggers a bullish signal cross then the assumed wave (B) of the large Triangle option could pan out. (It should reach at least the upper Bollinger Band located at 1658)

In the mean time we have to watch the Stochastic, which should not accelerate to the down side if the scenario of a larger pullback is the correct one.

SPX Momentum Chart
Larger Image

This is the last post for this week as I am going to be away from the screens until next Monday.


Back to homepage

Leave a comment

Leave a comment