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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.


An overlapping, and so-far corrective looking bounce, from Monday's low continued Wednesday and Thursday and the key short term resistances I cited in the Wednesday AM note now loom ahead: SPX 1105, NDX 1410-1415, and INDU 10125/150. Prices have very clearly traced out three waves to yesterday's peak so the larger view remains that this bounce from Monday's low is still merely a corrective bounce that eventually will be worked off. The sticking point however remains this: daily and hourly oversold extremes still exist in the charts (and therefore a hard break lower remains a small probability), but the last 4 days action in prices is anything but inspiring (read: impulsive).

The key to the very near term price action (next 1-3 sessions) remains what happens at the cited key resistances. An impulsive break above those resistances suggests the peaks from 7/21 will be seen and/or slightly exceeded. A turn back from those resistances today would suggest a perhaps-more substantial decline to retest the Monday lows if not slip beneath them by a slight margin. The most obvious observation I can make of the price action then is that the market has, so far at least, struggled to move higher, despite the most oversold condition of the year. This struggle, along with the conflicting and unorthodox short term patterns, makes a good risk/reward possibility elusive, in my opinion.

That said, the price action in the intermediate term (multi-week/multi-month) remains bearish and the most probable view right now is that substantial new lows in the market could be seen before the year end. That said, in my experience with these indicators over the last few years, I have found that at times when the market is not providing clear clues, patience and observation are the most valuable assets to have.

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