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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.


There is little to add to Friday's AM commentary: from 5/19's Wave 4 top (of the impulse wave down from 4/27), the 5th wave of a larger impulse wave down from the 4/27 top is likely underway toward (possibly initial) lower Fibonacci targets in the SPX 1066/1072 area, the INDU 9770/9824 area, and the NDX 1355/68 area. If and how prices bounce from these lower targets will help us determine just what kind of correction has taken place from the annual highs struck in Q1. From that information and those technical indicators we will be in a better position to determine the intermediate term trend. For now, those lower targets are the next best place for a bounce of some significant degree that will work off the daily oversold readings that have accumulated in the last several weeks. For example, 8 of the last 12 sessions, the total CBOE put/call ratio (index and equity) has been greater than 1.00, a record we have not been able to find in the data series gong back at least the last 10 years (we have read that this has never happened in the 35 years of the data record but we have not been able to confirm this). Friday's action strongly confirmed the current view that prices are in a 5th wave lower toward our cited Fibonacci supports: the phi-based rebound we were looking for in Friday's session took place, the 61.8% Fibonacci resistance level capped the rebound and prices moved impulsively lower from the 11:30 AM highs. Continue to monitor SPX 1102, INDU 10050, and NDX 1420 levels.


S&P 500 (SPX)

Very little to add to our Friday AM note with regard to the SPX: a 5th wave down continues to be underway that should approach our lower target range of at least 1066-1072. Friday's session produced a bounce that was both overlapping and was rejected by the 61.8% resistance level, helping to confirm the current interpretation that lower supports are targets for this 5th wave from the 4/27 impulse wave. What happens, if anything, at those lower levels should tell us much about whether those Fibonacci supports are strong enough to produce a meaningful bounce in prices that would allow the technically oversold conditions to work themselves off. SPX 1102 remains a key level to watch.

The Nasdaq 100 (NDX)

Here too, little to add to our Friday AM note: a 5th wave down from the 4/26 highs appears to be underway that should take the NDX to lower levels in the 1355-1368 area. Friday's session produced an overlapped bounce to Fibonacci resistance (61.8%) and was turned back impulsively. Continue to monitor the 1420 level. What happens at the cited lower support levels will help us determine the intermediate term trend.

Dow Jones Industrials (INDU)

Same with the INDU: Friday's session helped confirm that a 5th wave down started on 5/19 and is underway toward our lower cited target of at least 9770-9824. Continue to monitor the 10050 level. What happens at those lower Fibonacci (potential) support prices will help us determine whether the intermediate term trend is bullish or bearish.

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