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Advanced Technical Analysis - OSX



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.


We're updating our OSX technical note from 7/20/04. At the time we suggested that a potential 3 year bullish triangle had completed in November of 2003 that could result in the OSX reaching 170-185 by June 2005 if our technical interpretation was correct. We also suggested that the OSX was due for a short term correction back to important Fibonacci support in the 102-107 area and that patience was key until we saw this important support hold and provide some bottoming indicators that would allow us to analyze more confidently.

The OSX is now at 102.84 and showing just those potential bottoming indicators we look for: hourly (and daily) Demark trend exhaustion signals, a potentially complete ABC zigzag correction down from the 7/21 peaks, and some nice hourly momentum divergences. All of these indicators present a compelling case that the OSX could bottom in the next 1-2 sessions in the 101-102 area and bounce. If our wave count is correct, the next bounce in these stocks could then take them to new annual highs above 114 at least, and more likely toward 120-125 in the next 1-2 months, with potential thereafter toward our previously cited 170-185 June 2005 target.

The analysis suggests a possible rise to those levels unless a decline through 99.50 occurs: if prices move below that level, something more complex would be taking shape and we would need to stand aside until we get better clarity. Further, if prices do bounce in the next few sessions but that bounce is shallow and stays below 106.49 and then moves below 101, that would be potentially near term bearish as well, as that would leave a "5" wave move down from the 7/21 peaks, which would suggest a larger correction well below 100 was likely.

No positions in stocks mentioned.

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