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Sunday, July 22, 2012

Sunday, 7/22/12 update

This site has been leaning bullish on the ES/SPX for a while now but last weeks action brings that into question.  The current bull alternate has the ES in a 3rd wave.   In equities 3rd waves are usually the strongest part of an impulse move.  However the action since the Minute W2 low of 1319.75 on Jul 12 has been somewhat tepid and currently has generated a sell signal.  In addition the whole series since the early June low has been choppy and kind of sideways with an upward bias - not very impressive looking.  Current count on the bull alternate has the ES tracing out a Minute W1 with the top @ 1375.00 on Jul 5, followed by Minute W2, and then a Micro W1 top @ 1376.00 last Thursday.  If this count is to remain viable the ES needs to bottom quickly in Micro W2 and move up from there sharply and in the sustained fashion typical of 3rd waves.

Bullish alternate

The bearish alternate has a better "look" to it at this point - the choppy, sideways pattern since Jun 1 is very typical of a corrective pattern.

Bearish alternate

One factor worthy of note is the lack of participation in Thursday's top in the SPX.  Although the Dow Jones also achieved a high, the broader based indexes such as the NYSE and the RUT did not - so the broader market diverged against the more narrowly based DJIA and SPX.  This is very bearish.

So the bullish case is in real jeopardy here.  Bulls need to take control and turn this thing sharply upwards in the very near future or they could become bear food.

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