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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:


Wednesday's and Thursday's market action keeps the "bounce" view intact, but has delayed it a bit as all three markets are in the midst of slowly finding a good bottom in prices from which to bounce. I have been saying that I would key off the NDX as it has the clearest pattern, but the SPX and the INDU are now clear as well: all three markets need another low beneath SPX 1106, INDU 10162, and NDX 1411 in order to complete the Elliott wave pattern off the June highs.

For the SPX and INDU, the bounce on Wednesday completed an internal 4th wave of the entire move down from the June 25th highs. The SPX has a Fibonacci projection of 1102 for a potentially important bottom and the INDU has its Fibonacci projection for a bottom in the 10100-10125 area. The next 1-2 sessions should prove to find these important bottoms: with all three markets now setting up for a good bottom target just below current prices, I should be able to granularly opine the bottom on an intraday basis.

In the meantime, key levels that could provide support and thus beginning an uptrend are in the SPX 1102-1104 area unless it crosses below 1096, the IND 10100-10125 area unless it crosses below 10050 and the NDX 1408-1411 area unless it crosses below 1397.

As I have made clear, a good case can be made for the bullish and the bearish long term trend: the only technical data that will help shift the probabilities to one or the other scenario is the size, scope, and extent of the bounce that could occur soon in all three markets. If the bottom we are about to see is a wave II, then SPX 1130, INDU 10350, and NDX 1475 will need to be exceeded very soon after a bottom is registered in the next few sessions. If the bearish interpretation is operative (and the bounce we are about to see is a wave ii correction) then these Fibonacci resistance levels could act as a ceiling on prices and lead to substantial selling pressure thereafter, moving well below the May lows. The SPX 1130, INDU 10350, and NDX 1475 prices are the demarcation then between the bullish and bearish long term trends. I remain of the view that this is a very very important moment for the markets. Not since October 2002 has the dividing line between the bull and bear markets been this clear.

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