Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Advanced Technical Analysis



Note: the following analysis is formulated as an assimilation of Fibonacci, DeMark, Elliott Wave and other technical indicators. It is offered as education and not intended as advice in any way.

In Thursday's note we suggested there were two interpretations of the current technical action: (1) our preferred (70% probability) interpretation of a 3rd wave down starting from the peaks on the 18th which should, in time, easily slice through lower Fibonacci support or (2) the possibility (which we posited was 30%) that the entire move down from the peaks on January 3rd was a correction that should find substantial support in the SPX 1169-1172 and NDX 1515-1520 area.

Friday's action witnessed a continuation of the sell-off from earlier in the week, closing bottom tick on the day on better than average volume; down vs. up volume however was not confirming the new lows nor was short term momentum. As you can probably see clearly on an intraday chart since the 18th, there are 5 waves down from those peaks. It is probable that prices see some sort of corrective bounce in the short term to 'correct' this small degree impulsive move down, possibly closing the gaps that remain open at SPX 1185 and NDX 1546. If the bearish interpretation is correct (and again, we place a high degree of probability that it is), then closing these gaps will be a 'kiss goodbye' for the market and should result in a serious decline in prices that could very well startle the bulls on the Street (not advice). 3rd waves down are usually the most violent of all the waves within an impulse wave.

If that is what is underway, the next leg down should be the most intense selling of the year so far. Bear in mind however, that should a short term bounce to fill those gaps materialize and go well beyond those gaps to the upside, that will decrease our confidence in the immediately bearish interpretation. So therein lies the dividing line between the bull and bear interpretations: for the bearish case to remain high confidence, any bounce that develops should not move materially beyond those open gaps.

With respect to the bearish analysis, we're keeping stops at the lowered levels we cited in our Thursday note: SPX 1193, NDX 1565, and INDU 10615 and RTY 625. Positioning for weakness off any bounce to the NDX 1530-1546 area, SPX 1178-1185, and INDU 10480-10540 is a good risk reward scenario using the same stops (not advice)

< Previous
  • 1
Next >
No positions in stocks mentioned.

The informatio= n on this website solely reflects the analysis of or opinion about the perf= ormance of securities and financial markets by the writers whose articles a= ppear on the site. The views expressed by the writers are not necessarily t= he views of Minyanville Media, Inc. or members of its management. Nothing c= ontained on the website is intended to constitute a recommendation or advic= e addressed to an individual investor or category of investors to purchase,= sell or hold any security, or to take any action with respect to the prosp= ective movement of the securities markets or to solicit the purchase or sal= e of any security. Any investment decisions must be made by the reader eith= er individually or in consultation with his or her investment professional.= Minyanville writers and staff may trade or hold positions in securities th= at are discussed in articles appearing on the website. Writers of articles = are required to disclose whether they have a position in any stock or fund = discussed in an article, but are not permitted to disclose the size or dire= ction of the position. Nothing on this website is intended to solicit busin= ess of any kind for a writer's business or fund. Minyanville management= and staff as well as contributing writers will not respond to emails or ot= her communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.<= /p>

Featured Videos