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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:


I had been looking for one more swing low on Friday to complete the move off the June highs. Several important positive technical divergences are present and the pattern off the June highs counts as nearly complete, so prices could bounce at anytime once a new swing low is in place.

Friday's action seemed corrective still and did not produce that new swing low; I remain of the view that one more new low in all three indices could complete the move off the June highs, leading to a bounce of some degree. Recall that for the last several weeks, I have been looking for prices to "correct" the May-June advance by returning to some Fibonacci support level. The last 6 sessions have achieved that correction: all three markets are now within the 38.2%-61.8% support level (SPX 1103-1119, INDU 10100-10244, and NDX 1430-1465) of the May-June bounce.

Given the nearly completed pattern off the June highs, I could expect some sort of bounce in the next 1-2 sessions: the manner and extent of which will go a long way toward determining if the markets are going to register new annual highs in the next few months, or are going to break down below the May lows and confirm a new and potentially major bear trend.

Here's what to expect for both the bullish and bearish scenarios. (1) If the bullish intermediate term trend is operative (and new annual highs are to be seen), then prices need to find support very soon in the above Fibonacci support areas and move impulsively and decisively upward past SPX 1130, INDU 10350, and NDX 1480. (2) If the bearish intermediate term trend is operative, prices should bounce in the next 1-2 sessions toward, but not exceed the SPX 1130, INDU 10350, and NDX 1480 areas in that bounce, before failing at those Fibonacci resistance targets and falling quickly below the May lows and potentially much, much lower than that.

Since I cannot have high confidence about the multi-week (intermediate term) trend, I will simply have to keep time frames short and keep an eye on key levels. As a result, the analysis suggests a possibililty for one more new swing low in all three indices. This could occur unless levels surpass SPX 1100, INDU 10050, and NDX 1410. A more conservative view would find it prudent to wait for a confirmed trend change via a small degree "5" wave move up from whatever low is registered in the next two sessions. I will attempt to highlight such a pattern intraday.

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No positions in stocks mentioned.

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