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.
Wednesday's and Thursday's price action conformed to the ongoing expectation in all three indices: the NDX remains in a correction that could eventually take prices to the 1449 at a minimum while the SPX and INDU are very near a 5th wave peak that could result in the first substantial correction since the lows in mid May. Divergences are present in all of the important indicators: momentum (hourly), breadth (daily), and ticks (daily). These non-confirmations of these new highs in the indices, when combined with the hourly Demark trend exhaustion indicators that have registered in all three indices and the almost complete wave pattern off the mid May lows (INDU and SPX), suggest a high possibility for weakness is approaching.
The SPX and INDU would count "best" with one more slight new high today or Monday above SPX 1146 and INDU 10487, though it may not be necessary. If prices decline below SPX 1124 and INDU 10307 that will be evidence enough that the larger multi-week correction we anticipate is underway. Otherwise, the analysis suggests weakness could occur from a new high above SPX 1146 and INDU 10487 today or Monday with moves thru INDU 10560 and SPX 1160 resulting to a re-evaluation of that view. If the bullish intermediate term trend is operative then prices could correct and find a good bottom at lower Fibonacci support: SPX 1104-1122 and INDU 10100-10250. If those supports do not hold prices and the mid May lows are taken out, that would be very strong evidence that a much more bearish interpretation of the intermediate term trend is afoot that could cause a much larger decline. We'll simply have to see what happens at those support levels.
For the NDX, the expanded flat correction remains underway: the1481 level was broken on Wednesday though we advised at the time that the correction was still not complete. A small degree impulsive wave down from yesterday's high of NDX 1502.14 suggests that the next leg of the larger correction (the C wave) is most likely underway toward long standing targets of at least 1420-1450. The immediate trade for the NDX then looks for weakness today (with a move thru 1502 altering that view) for a move to 1449 at least (a more granular target is 1426-1442). It's possible that the NDX lurches higher to 1514 (1.382 times the "A" wave that traced out from 6/8 to 6/22) with the SPX and INDU new highs. If so, we'll highlight that action as caution would likely be warranted. As with the SPX and INDU, an intermediate term bearish interpretation is possible of the entire move off the January highs. If so, the 1426-1442 area will not hold prices: if they move through this support and break through the 5/17 lows, much lower NDX prices are implied.
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