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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.


Last Wednesday's and Thursday's move down in the SPX and INDU was unclear insofar as if it was the start of a meaningful correction of the impulse wave up from mid May I have been looking for.

The INDU looks very overlapped and thus like an internal 4th wave correction while the SPX can be plausibly viewed as either an impulse sequence down (and thus the start of a more meaningful decline) or a corrective sequence off the 1142 high (and thus an internal 4th wave correction).

At this stage the analysis suggests remaining on the sidelines and awaiting confirmation that the entire 5 wave impulse move up from mid- May is complete (and thus ripe for a correction that takes prices back at least to lower Fibonacci support) or that Thursday's lows were a 4th wave correction that will result in slight new highs in the INDU and SPX before the start of a more meaningful correction.

The most important observation is that the multiple divergences that we have been tallying the last several sessions remain: this advance is in its late stages and long positions could be risky (not advice).

The NDX is much more clear in its wave form: 5 waves up from 5/17 likely ended at 1496 on 6/8, with a corrective "5" wave move down ending on 6/9 and Thursday's move up was overlapping and corrective, and thus either a wave ii bounce or a wave b bounce. Both of these interpretations call for at least another impulse wave lower toward the 1420-1450 support zone. We'll attempt to narrow that support zone as prices unfold in the next several sessions.

No clear path presents itself in the SPX and the INDU as the wave form is not clear insofar as an ending 5th wave from the mid-May lows. The persistence of the divergences make a cautious view somewhat risky timing-wise (it might still be too early); the limited upside suggested by the analysis also makes the long side potentially unrewarding. The NDX looks potentially vulnerable however in the 1480-1490 range with the 1491 level an area to re-evaluate. Should prices come under 1470 the likelihood will be that the next corrective wave lower has already started. Initial projections are in the 1440-1445 area at a minimum.

No positions in stocks mentioned.

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