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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.

US Indices - S&P 500 (SPX), Nasdaq 100 (NDX), Dow Industrials (INDU)

Impulse wave off 5/20 completed; correction underway; The form and extent of the decline will determine the import of the mid May lows. An overlap with the 5/19 highs would be bearish; the SOX has already overlapped

Confidence Level: Medium


Prices started lower yesterday and were never able to put in a slight new high above Wednesday's high, instead moving impulsively lower and signaling that the corrective move we had been looking for is likely underway.

As we have been saying, the importance of the mid May lows cannot be determined with great confidence at this juncture. The form and extent of the decline that we are currently witnessing will help us understand just how important those mid May lows were.

Ominously, as our intraday note on the SOX yesterday pointed out, the Semiconductor group has overlapped and put in a clean impulsive move off the 5/28 highs, suggesting that this index is not yet finished with its ongoing correction from January. Given the semiconductor sector's leading indicator qualities, this would seem to argue for a more bearish resolution to the NDX, SPX, and INDU patterns.

However, we cannot make that determination just yet, preferring instead to see if important Fibonacci support holds in the SPX 1103-1113, INDU 10050-10150, and NDX 1422-1442 areas. If, in this current correction, prices overlap with the 5/19 highs in the indices (as they have now done with the SOX), then the more bearish interpretation is operative. If prices remains above the 5/19 peaks in this correction, that would be considered bullish.

For now, those 5/19 peaks remain the line in the sand between a bearish and bullish intermediate term interpretation.

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