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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.


The SPX and INDU have moved lower in a halting fashion, neither confirming that the correction we have been looking for is underway nor suggesting that prices are about to propel higher to our upper Fibonacci targets. This no-man's land makes trading difficult and frustrating and does not present an immediately attractive opportunity.

My position, however remains thus: if prices break down below SPX 1124 and INDU 10309, that would confirm that the larger 2-4% (at least) correction we have been looking for is underway that should take at least the next 2-3 weeks to develop. Otherwise, the potential exists for prices to move higher toward our targets of SPX 1149/51 and INDU 10525-550. So far, the declines off the 6/25 peaks in the SPX and INDU have been far more impulsive looking than the bounces, suggesting that the 6/25 tops were important pivot points that will act as important tops for the next several weeks.

Existing prices look as though they could be continuing the downtrend, unless they break through the SPX 1146 and INDU 10487 levels, on the basis that the more probable scenario calls for prices to start impulsively declining soon (perhaps after the Fed meeting). If those levels are reached, I'll stand aside and await my upper targets to be reached before entertaining a downturn.

For the NDX, I still believe that another large impulsive wave lower is needed toward the 1426-1442 area before prices see some type of important bottom. Hourly momentum is decidedly not confirming these latest new swing highs in the NDX and hourly Demark trend exhaustion indicators are near registering as well (in the next several hours of trading). It is my opinion that these technical conditions, along with the incomplete correction off the large move off the 5/17 lows, could make the long side very risky here (not advice, of course).

I still have 1514 as a potential target for the NDX. A "5" wave impulsive move down may have formed from the 6/28 highs but it is not a high confidence call right here. As such, I will stand aside and wait for either the SPX and INDU to break their 6/22 lows (thus confirming the bearish trend) or for a clean "5" wave move lower to form in the NDX that takes prices below the 1485 area to analyze an NDX continuing downtrend.

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No positions in stocks mentioned.

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