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Stock Market SPX Index A Possible 50 Point Drop?

Stock-Markets / Financial Markets 2011 Dec 14, 2011 - 02:57 PM GMT

By: Anthony_Cherniawski

Stock-Markets

Best Financial Markets Analysis ArticleThe SPX has broken through its supports and is ready to reach escape velocity. The next target is cycle bottom support at 1163.34, but that is a soft target and may only produce a small bounce, if at all. The real targets are either the new Head And Shoulders minimum target of 1025.00 or the original Broadening Top average target of 980.00.


The euro is now in its second day below the Head and Shoulders neckline at 132.00. The mainstream press finally realizes that something is wrong the euro, but offers no course of action. Meanwhile, we have been short the euro since it slipped below the broadening wedge trendline at 137.42.

Meanwhile the US dollar is now popping its head above its head and shoulders neckline at 22.62. The new minimum head shoulders target of 24.40 lends credence and support to the broadening bottom average target of 28.50. In the meantime, the strengthening in the dollar will hasten the unwind of the US dollar carry trade and the massive leverage in the markets.

Depending on how you wish to drive necklines, GLD has slipped through a more bearish, down sloping neckline near 161.00. The minimum target on both necklines is the same, 128.68. The daily and weekly charts support this claim as you will see below.

The weekly chart GLD shows that to the half year trendline being broken this week. As you can see, the head and shoulders target of 128.68 is pretty insignificant in the greater scheme of things. Elliott Wave guidelines suggest that a minimum decline could take GLD down to its wave four low as a more probable target.

I hope your seatbelts are buckled.

Regards,

Tony

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As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

Disclaimer: The content in this article is written for educational and informational purposes only.  There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

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