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Advanced Technical Analysis

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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.

Summary:


Thursday's and Friday's action remained in a tight range and, for the SPX and INDU, traced a series of 3 waves up and down, suggesting a 4th wave triangle may be forming before a thrust move to new highs in what should be a final 5th wave impulse move off the May lows.

For the last several sessions we have been looking for a near-term top in the SPX and INDU: if a 4th wave contracting triangle (labeled ABCDE) is taking shape from the 6/8 highs, it likely traced out the A and B waves of that ABCDE form with the A wave down from the 6/8 highs to the 6/14 lows, the B wave from the 6/14 lows to the 6/18 highs and the C, D, and E waves (down, up, down respectively) playing out in the next few sessions. The end of the e wave should end the entire 4th wave correction off the 6/8 highs and result in a sharp 5th wave thrust to new SPX and INDU highs in the SPX 1150 and INDU 10475 area.

If SPX prices immediately decline below SPX 1122 or INDU 10305, the triangle pattern will be invalidated and we can surmise that a larger correction has already begun that could take the SPX to 1100/20 and the INDU to 10050/200; A break of the SPX 1122 and INDU 10305 level would turn the trend negative and could suggest further weakness. If however, prices immediately move up above the 6/8 highs, the analysis suggests patience to see if a move lower from the SPX 1150 and INDU 10475 area could play out. We'll post an intraday note to highlight important technical conditions.

The NDX looks like it remains in a large correction off the 6/8 highs, with the lower support zone of 1420-1450 still the target for support. The trend remains lower with the 1482 level an area that would suggest an possible break of the trend. Should prices move above 1481, a flat or expanded flat correction will be underway that will seek higher prices (1505-1510) before starting the next larger impulsive wave down toward cited support zones.

This week could present some important inflection points for the SPX and INDU with possible weakness suggested by the analysis while the NDX remains trending down until prices head toward lower support in the 1420-1450 area.

No positions in stocks mentioned.

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