Inside view of a flipper machine - the playfield has its boundaries

SPX Pinball: Room To Grow… To the Right

The August SPX decline had strong momentum, and the October rally was also relentless. What is the trend then? When prices are capable of gaining momentum in both directions, it causes confusion in traders’ heads. Confusion calls for woes and fear. When the emotion becomes strong, price volatility increases and persists; trends seem to emerge suddenly but hardly ever get follow-through. This is the breeding ground for ranging markets.

It is time to recall my June post, when we discussed a chart about the expected magnitude of the circle wave 4 correction. It seems a lot has happened since then, but the weekly reproduction of the chart back then shows how slowly this rectangle fills up. The depth i.e the distance has been almost covered, but a good deal of time has to be consumed mostly within the boundaries of the range.

The June SPX chart's weekly updated version
Due to the swift test to the previous high the shallower Primary wave 4 in circle version is more probable

The one single plot I modified is that I drew the time consuming shallow version with a steady line as given the fast touch of the July all-time-high, it tops the rank of probabilities.

This leads us to the shorter term Elliott wave chart interpretation I present today:

Daily SPX Elliott wave forecast
Some details to the substructure on the daily

This is the pinball players’ market, when trading at or just beyond support and resistance into the developing rectangle is worth a trade, while the larger time frame breakout strategies tend to fail. Just keep playing between the walls.

Laszlo @ the Observation Point, Zion Park, Utah
Laszlo @ the Observation Point, Zion Park, Utah

You may be missing the Elliott Wave weekly currency update for a few more days, but The Wolf will be back with his Prey this weekend. Until then I have more in the pipes. I am just back from a long and never long enough road trip with a new list of topic ideas.

The time zone we reference on our charts is Pacific Standard Time. Therefore, the U.S. cash market opens at 6:30 AM PST and closes at 1:00 PM PST.

About Laszlo Nagyferenczi

Laszlo Nagyferenczi is a day trader, analyst and instructor as well as the creator of the proprietary Context-Momentum-Signal concept. He has authored over 200 blog articles about his unique approach to trading and the Elliott Wave Theory. His clients appreciate his ability to go from the theoretical to the practical i.e. all the way to the actual trade set ups.

Originally hailing from Hungary, Laszlo is fluent in English and Hungarian with a long list of education credentials including BA in Economics, Certified Elliott Wave Analyst (CEWA), Certified Adult Educator for T-Groups, Professional Co-Active Coach (PCC) at CTI. The real education, though, has been the trial by fire in the markets, with real capital at risk.

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