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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…

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SPX: Follow Up of the Short Term EWP


So far we have a weekly Spinning Top, which is suggesting a slow down in the upside momentum (Since last Monday price has moved in a choppy way within a 6 point range).

Since probably price has not established yet a clear reversal pattern (Although there is a potential Double Top pattern, which will most likely fail) I don't rule out an exhaustion peak by Friday at the upper weekly Bollinger Band which stands at 1693.

The 2 weeks candlestick pattern (White Marubozu followed by a potential small range body) is raising the probability of a large pullback (20 handles or even more) for next week.

SPX Weekly Chart
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Even though I remain doubtful that price has resumed the intermediate up trend with a multi-month up leg, it is obvious that price at the June 24 low has established a new swing low, therefore during the expected coming pullback as long as the 10 wma which today stands at 1641 is not breached the most likely outcome should be a large impulsive wave (C) up. While in order to reconsider feasible a larger corrective pattern (Flat or a Triangle) from the May 22 peak bears have to recapture the 20 wma, which is standing at 1608.

If my preferred long term count is correct, from the November 2008 low, either price has kicked off the last wave (Z) up with a potential target in the range 1739-1849 (Blue path) or price is still involved in unfolding the wave (B) with a Flat or a Triangle (Green path).

If the correct path were the former then from the January 2013 (Dec 31) low price could unfold a Zig Zag up similar to the one traced from the October 2011 low to the April 2012 peak.

I will review the long-term EW count in the weekly update, which will be my last post for the summer since next week I will unplug from the markets until August 15.

SPX Weekly Chart 2
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Regarding the EW count of the advance from the June 24 low I maintain both the corrective option (Red count) and the impulsive one (Blue count).

Even though probability wise the impulsive option is at the moment the likelihood outcome there is a caveat since so far price has not unfolded a pullback larger enough to be considered the wave (4) unless the current pattern (From the July 17 peak) is forming a Triangle. If the Triangle pans out the following thrust will complete either the wave (1) of a large multi-month wave (Z) up or the wave (B) of larger corrective pattern from the May 22 peak.

SPX 60-Minute Chart
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