Advanced Technical Analysis: NYA
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.
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Today we're publishing a note on the NYA for two reasons: (1) because, like the RTY, NDX, SPX, and INDU, the NYSE index is suggesting that a major bearish trend is potentially fast approaching and (2) the Fibonacci relationships and pattern dynamics of this index are particularly clear and, as a result, provide a very nice example of the usefulness of this type of technical analysis.
The charts mentioned, the weekly, daily, hourly and 13 minute charts, show a progression of "5" wave moves with momentum divergences off the lows in 2002 that are potentially very near completion into a Fibonacci target derived from each of those time scales. Thus, we have a high degree of confidence that one of the two Fibonacci price targets we identified will turn prices down in a major bear market correction for this index. We would note too that the lows on August 12th 2004 bisect the entire span from the lows of 10/10/2002 to today (2/14/05) by exactly 0.786, which is the square root of 0.618 or phi. Also, the peak on March 5th 2004 bisects the entire span from 10/10/02 to today by 0.60, which is remarkably close to phi or 0.618. From a Fibonacci price perspective, we would note that 7323 is a target derived from the weekly chart (see below) from the low of August 12th 2004 whereby that low bisects the entire distance from 4407 (10/10/02 lows) to 7323 by exactly 0.618. Further, on the same weekly chart, wave 1 (from the 10/10/02 lows to the peaks on 11/06/02) and wave 5 are equal at 7322; wave 1 and wave 5 equality often exist in a span where wave 3 'extends'. In the case of the NYA, wave 3 (March 2003 lows to March 04 peaks) certainly extends as it is 3 times (exactly) the distance traveled in wave 1. So there we have two independent targets that show 7323 and 7322 as potentially important Fibonacci turn points.
Looking more granularly on the daily chart from the August 12th 2004 lows, derives Fibonacci targets slightly higher for the NYA using the same techniques: 7456 (where wave 4 would bisect the span from August to now into perfect 0.618 relationships) and 7409 (wave 5 = wave 1 in the August to now span). So based on an analysis of the spans from both 2002 to now as well as the August 2004 lows to now, we have 4 different important targets for NYA price where we can look for a potentially major peak: 7322, 7323, 7409, and 7456. In essence then, we should look at the hourly and smaller charts and determine if the 7323 area of the 60 bps area around 7410-7460 is likely to turn prices down. Based on the Fibonacci time window we also identified (this week) as well as the short term charts, we believe that the lower 7323 target is the more likely to cap prices and lead to a major bear market decline for this index. The ETF for this index is the NYC.
The aggressive interpretation looks to position for weakness as prices approach 7320 with trade powering through 7365 forcing us to the sidelines. The conservative approach favors waiting for a small degree impulsive decline from the 7323 or 7410-7460 areas first before positioning for a move lower.
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