A very interesting closure of weekly candles for major US indices happened on Friday. Each index points to a different direction. Let’s explore the candlespeak and the waves perspectives.
SPX: the formation suggests the the index is consolidating before resuming the rally. As long as the weeks are closed above ~$4630, the odds remain bullish.
NDX: closed with a strong bullish candle, signaling a move higher. The odds are strong bullish until proven otherwise.
DJIA: technically confirmed the Dark Cloud Cover and the odds are bearish. However, the weekly candle stopped at the 8 EMA line and this is somewhat unusual for the confirmation. Perhaps a smaller frames could give an answer.
SPX: daily bearish Engulfing signals at least one day of lower prices for SPX. In the context of weekly formation, the beginning of next week could be bearish, but the index is expected to recover by the end.
NDX: the formation is bullish, a move higher is expected.
DJIA: the daily candle is bearish Maribozu. The odds are bearish and a move lower is likely. The index is oversold on the hourly frame and there is a chance that the bottom was formed on Friday. A strong green candle on Monday would confirm this hypothesis.
I track three short-term paths as shown on the chart above:
- Green (primary).
Wave 4 possibly completed and the target for wave 5 is in the $4770-4810 area. Note that there is a chance for a bigger wave “alt 4”.
This is well aligned with the SPX swing alert on October 18 for target – $4750-4800.
Wave (1) completed. A bigger pullback to $4450-4600 in wave (2). Red rectangle.
The correction that started in September is not over. Possible wave C, targeting $4250-4300.
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