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Advanced Technical Analysis

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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.

Tuesday and Wednesday experienced a very corrective looking bounce in all of the big three indices. Recall each of the Fibonacci resistance zones we cited for the immediately bearish analysis: SPX 1176-1184, NDX 1516-1546, and INDU 10470-10540. Prices yesterday tagged SPX 1176, NDX 1513.44, and INDU 10532 in what is an overlapped (corrective fashion). Though there are a few ways to acceptably interpret the short term pattern over these last few sessions, the fact that the move up from the lows on the 24th is corrective is a high confidence view.

Therefore we will remain confident in the view that prices are very ready to turn back down today in the sharp and very bearish 3rd wave decline we have been talking about for the last week or so (not advice). Our targets for this third wave decline remain "at least SPX 1140, NDX 1445, and INDU 10200" over the next several weeks. Should the current upward correction continue to extend higher, recall that the open gaps remain at SPX 1185 and NDX 1546. We cannot rule out the possibility that those gaps get filled but at this stage the technicals are not suggesting this is a high probability target. If prices turn down today from one more slight new peak in the SPX and NDX and fall below SPX 1167, NDX 1488, and INDU 10425 then we will assume that the sharp, high momentum move down of a third wave is underway based on the analysis. Coming under the lows from the 24th will almost certainly confirm that bearish scenario.

For now then, the analysis suggests weakness in the indices today either on the open or on one more slight new peak with trade moving through the peaks from the 19th forcing us to the sideline (SPX 1193, NDX 1565, INDU 10615, and RTY 625). If the bearish count is correct, prices should fall precipitously toward our lower Fibonacci targets in a 3rd wave decline.

No positions in stocks mentioned.

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