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NDX, IWM and SP500 are Displaying a Corrective Pattern

Nasdaq 100 (NDX), IWM (Russell 2000 etf) and SP500 (SPX) are displaying a corrective pattern. If the count that I am following is correct the wave (C) of a Zig Zag is underway.

Once the assumed wave (C) is done a sustainable bottom could be in place.

A wave (C) can either be impulsive or Ending Diagonal.

If it is impulsive the current bounce should be almost done. A substantial move above the 0.5 retracement of the assumed wave (3) would jeopardize this scenario.

If it is an Ending Diagonal the rebound could last several weeks.

  • Nasdaq 100 (NDX): The Strongest (It is not displaying a sequence of lower high/low)
  • It has a huge monthly gap down
  • Price is below the 10 mma
  • But it has not tested the August low
  • January ends with a large bottoming tail (Hammer)

NDX Monthly Chart
Larger Image

Weekly time frame

  • It does not have a clear ending pattern and it even achieved a new 52 w high on December
  • From the summer high maybe it is unfolding a Flat correction (ABC) pattern
  • Second Hammer candlestick from the January low is suggesting that the rebound is not over yet
  • Resistance 1 at 4344 and Resistance 2 = 4451

NDX Weekly Chart
Larger Image

Daily time frame

  • The decline from the December high can be counted as a wave (C), like SP 500 (SPX) and the DJIA. If it is a wave (C) it has to be impulsive or an Ending Diagonal. So far it could be impulsive in which case the current bounce is a wave (4).
  • Friday's rally has shaped a white Marubozu with the hod at the 20 dma. Often a Marubozu is followed by a small range body
  • The support is located at Friday's break out at 4260
  • The next resistance is located at 4360 which coincides with the 0.5 retracement of the assumed wave (3) and the equality extension target of the 3-wave up leg rebound from the January's lod
  • Above 4360 the impulsive wave (C) scenario will be jeopardized

NDX Daily Chart
Larger Image

  • IWM (Russell 2000 etf): The weakest

Monthly time frame:

  • Sequence of lower high/low
  • Price is below the 10 mma
  • It has breached the trend line from the 2009 low and almost tagged the 0.382 retracement of the entire advance from the 2009 low
  • The Resistance 1 is located at 103.6; Resistance 2 at 107
  • January ends with a large bottoming tail (Hammer)

IWM Monthly Chart
Larger Image

Weekly time frame:

  • There is a potential ending pattern at the June top
  • It also displays a 3-wave down leg from the June high
  • It seems probable that the rebound from the January low is not over yet
  • The major resistances are the same highlighted in the monthly time frame

IWM Weekly Chart
Larger Image

Daily time frame

  • Another white Marubozu on Friday
  • The support is located at Friday's break out at 101.60
  • The 20 dma is slightly above Friday's hod
  • If the wave (C) is impulsive the current rebound is also a wave (4) which should not breach the resistance zone at 107 ish
  • Above 107 the impulsive wave (C) scenario will be jeopardized

IWM Daily Chart
Larger Image

  • SP 500 (SPX)

Monthly time frame

  • Sequence of lower high/low
  • Price is below the 10 mma
  • January ends with a large bottoming tail (Hammer)

SPX Monthly Chart
Larger Image

Weekly time frame

  • There is a potential ending pattern at the May high
  • The decline from the May high can be counted as a corrective 3-wave down leg
  • Two consecutive Hammer candlesticks are suggesting that the rebound from the January low is not over yet
  • The resistance levels are R1 at 1950; R2 at 1972 and R3 at 1993

SPX Weekly Chart
Larger Image

Daily time frame

  • Another White Marubozu on Friday
  • SP 500 has reclaimed with authority the 20 dma, showing relative strength
  • Support is located at the 20 dma = 1925
  • The immediate resistance is at 1950 then we have 1961
  • Above 107 the impulsive wave (C) scenario will be jeopardized

SPX Daily Chart
Larger Image

  • The RSI (14) has breached its trend line resistance
  • The MACD has a new bullish signal cross
  • If this is the wave (4) there should be more upside until the RSI(5) enters the overbought zone

SPX Daily Momentum Chart
Larger Image

In the technical front:

  • The McClellan Oscillator is displaying a breadth thrust. Above the overbought line the buying pressure could be rejected

NYSE McClellan Oscillator Daily Chart

 

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