Sep 26, 2020

Weekly preview

Lower as expected... this was the easy part - from the high the short term cycles guided us very well so far, but now comes the difficult part.
Do we have 10w low and what kind of pattern? There is no clear answer to this questions.
EW pattern - corrective waves.... possible diagonal or it is just a corrective leg w-x-y.
Cycles - now it is clear the 20w low was in July so the low this week looks good as 10w low, but if it was late July we can see one more lower low.

The big picture - this decline is too big and too long to be part of the March rally so main scenario is this decline is part of a bigger corrective pattern and we should see a move up soon, but I expect lower high around the elections.


TRADING
Trading cycle - sell signal. We should see a bottom soon for the third daily cycle and the next one should begin. The trend line hit again:)
Personally I am waiting for the next high - lower or higher high what ever it comes. This corrective waves are only for day trades.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - one possible pattern is diagonal which you have to construct differently on the cash index and the futures because you have overlap at different places. The futures overlap at the green arrow the cash index a few days later. Not a very good sign... not that the other count is perfect.
To be more precise we have to count double zig-zag w-x-y because we do not have impulses to call simple a-b-c.
Alternate if this is not the low a bigger diagonal like this


Intermediate term - most likely short term low and test of MA50 for 5w cycle high. Alternate we could see one more low, but not much lower slightly above MA200. MACD broke below zero - not a good sign.
Again main scenario we have a top early September and this decline is part of a bigger pattern lower. Waiting for now to see something convincing to put labels.


Long term - the bull market completed in 2018. Since then a bunch of corrective waves. Currently I think this rally should be a corrective wave of a bigger pattern flat/triangle or x wave. With corrective waves often you have to adjust so stay open minded.
RSI tested the broken trend line twice and we have a divergence - this has nothing to do with impulse.


MARKET BREADTH INDICATORS
Market Breadth Indicators - sell signals, but signaling it is time to look for a low.
McClellan Oscillator - bounce higher from slightly oversold level.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal, but reached oversold level.
Bullish Percentage - sell signal, but reahed levels where we see a low for a correction.
Percent of Stocks above MA50 - bounced from 25 where corrections usually are completed.
Fear Indicator VIX - doing nothing, most likely test of the previous low is comming before exploding higher.
Advance-Decline Issues - does not show a lot of weakness... we should see something higher.


HURST CYCLES
Short term cycles - lower into the next 20d cycle low, which is most likely 10w low too. Next we should see 3-5 days higher for 20d/5w high.
Alternate scenario one more low possible if the 20w low was late July.


Week 11 for the 20w cycle. Now it looks official that the 20w low is not in June, but rather in July. 20w cycle with length 14 weeks followed by 10w cycle with length 13 weeks does not make much sense. For now sticking to the scenario with a low first half of July, but if we see one more low in the next 1-2 weeks than the 20w low was the second half of July.
The price and RSI are now below their MAs, which means 20w cycle turned lower. Very unlikely to be the first one from March with length 27 weeks, which means it is the second one declining, which means we have 40w high in September and decline into 40w low is running.

Sep 19, 2020

Weekly preview

Sideways correction to complete 20d cycle high as expected. Next we should see move lower lasting another 5-6 trading days for intermediate term low.


TRADING
Trading cycle - still sell signal. Perfect hit of the trend line(I did not toucht it, I swear:) In a week or so this third daily cycle should be completed and we should see a bottom.... according to my cycle phasing.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - sideways correction, which looks like a flat. The pattern does not look like a bottom so we should see some kind of c wave lower... I doubt we have an impulse.


Intermediate term - MA50 was a support. SPX had the chance to bounce three times, but now it closed below it - this is not very bullish. Most likely the price will continue lower. MACD is starting to break below zero which is not good.
The cash index has target c=a around 3170 and the futures around 3120. Maybe the break below MA50 is a hint that MA200 will be tested.


Long term - I think the bull market completed in 2018. Since then a bunch of corrective waves. Currently I think this rally should be a corrective wave of a bigger pattern flat/triangle or x wave. With corrective waves often you have to adjust so stay open minded.
RSI tested the broken trend line creating a divergence nice short setup.


MARKET BREADTH INDICATORS
Market Breadth Indicators - nothing new correction is running and sell signals.
McClellan Oscillator - reseted from sligthly oversold level and turned lower again.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal, oversold level reached.
Bullish Percentage - sell signal.
Percent of Stocks above MA50 - pointing lower in the middle of the range.
Fear Indicator VIX - we should see a spike and cool off again.
Advance-Decline Issues - in the middle of the range after divergence and breaking the trend line.


HURST CYCLES
Short term cycles - we have the expected 20d high with length 10 days. Next we should see a decline for about a week for the next 20d cycle low, which should be 10w low. Cycle with the same length point to a low on 28th of September.


Week 10 for the 20 week cycle. I thought 3x10w for 40 week cycle is anomaly, but look at Q4/2018-Q1/2019 the same thing. I would say the reason is the speed - when the price moves too fast the cycles are shorter. Remember the down phase of this 40w high is 20w cycle lasting only 7 weeks(the biggest cycle anomaly I have seen). I would say it is perfectly fine if we saw the 40w high already.