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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.

Friday's price action only added to the short term view: a correction appears nearing to "take back" some of the impulsive gains made from last week's Monday to Friday bounce. The depth and length of that correction would then provide important technical evidence in support of either the intermediate term bearish view for a decline to new annual lows or the bullish view for a thrust to new annual peaks over the next few months.

Friday's price action, which registered new peaks in all 3 indices, was even more bearishly diverged than Thursday's price action. These bearish divergences, against all four of the key indicators we look at (momentum, ticks, breadth, and volatility), come also with a completed (or 95% so) Elliott wave impulsive move off the lows set last Monday and hourly Demark trend exhaustion signals. As a result, each of the technical tools we use suggest the gains made from last Monday to now are due for some sort of near term correction at least toward lower Fibonacci support.

As our Friday note suggested, the depth of whatever correction soon develops will tell us much about just what the multi-week/month trend is. The highlighted parameters based on the analysis from Friday remain today: For the INDU above 10250 is extremely bullish, below 9800 is extremely bearish. The conservative view suggests waiting for one of those price points to confirm the larger trend is the "right" interpretation. A more aggresive interpretation calls for weakness in the INDU at current prices for a move to at least 9800-9900 with trade powering thru 10128 negating this bearish view.

For the SPX below 1100 is intermediate term bearish, above 1138 is intermediate term bullish. Again the conservative approach would be to wait for either of these price points to be violated. A more aggresive interpretation suggests weakness from current prices for a move to 1105-1115 with only trade powering thru 1136 negating this near term bearish view. For the NDX, the analysis suggests above 1500 after a pullback is bullish and bearish below 1440. Again, the conservative view awaits confirmation of the intermediate term trend with a break of either of these levels. The aggresive interpretation calls for weakness from current NDX prices for a move to the 1450-1465 area over the next several sessions with trade moving thru 1503 negating the bearish view and forcing us to stand aside.

Our short term analysis, a correction to lower Fibonacci support, remains high confidence given the divergences we highlighted above. Our intermediate term analysis remains of medium confidence until the larger break points (above or below) are triggered.

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