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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.

Monday and Tuesday saw prices in all three indices chop higher in an overlapping and clearly terminal (at least in the short term) fashion. This suggests that, at the least, a pullback is in order of some degree. Ticks, breadth, and momentum have been lower each day since November 4th (5th for momentum) while the INDU has posted a new peak while the SPX and NDX did not in the last few days. Admittedly the short term has been unclear so we don't have high confidence in this view right here.

If such a pullback were to take place, it could be either a (1) minor wave (iv) pullback on the way toward the wave 5 peak in the 1200 area and the 11/12-11/18 time window or (2) a deeper pullback as a wave ii decline that points considerably higher than the SPX 1200 level. The former is the more bearish in the intermediate term and the latter is the more bullish in the intermediate term. Either way, a move down is the highest probability in the very short term: its duration and extent should help us determine just where we are in the Elliott wave counts for each of the indices.

For now we remain focused on the SPX because it has the clearest wave pattern: the NDX and DOW are more convoluted. Still the risk/reward is bad on both sides of the ledger. For now, we're keeping an eye on our ongoing SPX 1200 and November 12th to November 18th Fibonacci targets and the short term path toward those magnets. Should the hourly divergences we usually look for manifest near those Fibonacci targets, we'll be in a better position to formulate a more confident analysis. For now, patience is key as the risk of being long or short here is very high.

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