Thursday, February 21, 2013

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It’s pretty clear that the S&P 500 (SPX) four hour DeMark TD Sequential spoke this time. This selloff feels more like the real deal. 

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The current outlook is once the markets gets past this corrective phase, higher highs are likely and even all time highs as well on the SPX. If my wave labeling is correct, the SPX 1448 level is the top of wave one. If we are in wave four, the basic tenet of Elliott wave theory is that wave four can’t get past wave one. The main Fibonacci level also lies at 1448. Putting this together, SPX 1448 is the main bull/bear line. It’s still early so when more pieces are added, the picture will become clearer where the actual bottom will look likely. 

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Should have presented this yesterday as the Gold has already started to retrace. On the Gold futures (GC_F), the overall chart looks ambiguous. The waves down since the October top looks like a series of zig zags rather than a motive five waves down. Utilizing DeMark’s methods, it is not entirely in phase so making use of filters would help but it’s difficult to apply when trading real time. However, taking everything as a whole, it’s at levels where there is solid support. 

Looking how quickly sellers piled out yesterday, there was a lot of froth built up in the markets. So far the chatter is “It’s only one day”, or “The trend is still higher”. This will change when the potential C wave kicks in. 

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