Mar 28, 2020

Weekly preview

One more low completed the pattern and retracement is running. MCO and RSI with double divergences and those expecting much lower are disappointed as expected.

Many are trying to count this as w4... this weekly candle does not look like the weakest wave to me. At the moment I think we have correction higher, which should take time another 3-4 weeks. For the big picture I have a suspicion that we have a combination this wave up could be X, but for that I want to see 62% retracement exceeded.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - I see a wedge and a break out higher. RSI broke the trend line and we need a pullback to establish the new trend line.
The move lower counts better as a-b-c and not as an impulse. To the upside - the cash index is not so clear, but the futures are showing impulse so we should see more to the upside after a pullback. It should be some pattern, which takes time. The retracement has just begun so the path shown below is speculation at the moment.
As long as the red line is not crossed this move up is not in danger.


Intermediate term - RSI with double divergence and we have move up. I think it should take another 3-4 weeks for 20w cycle high. 2900 looks like a good target to close the gaps and to test MA200, resistance and 62% retracement.


Long term - some already counting completed correction(expanded flat) other trying to fit impulse lower(the bull market is over). I do not think that it is so simple. In a few weeks we will know more. Some EW thoughts:
- if the correction is over with a flat we should see impulse higher. Than this should be i/1/V... too big too fast for my taste - suspicious.
- the bull market is over - then we should see impulse lower. If this is 1 for five weeks than around the end of the year SP500 will be at 500 - unrealistic. Realistic is "a" and the next one big zig-zag below.
- big zig-zag from Feb.2020 is running and it is so bad - than this is b and should hit 50% retracement and stay below the 62% or zig-zag will be negated. There is no such pattern expanding W-X-Y so suspicious. No, it is not expanding triangle either.
- the retracement takes longer and reaches 62% Fibo level or exceeds it - probably X wave and we have combination flat+X+corrective pattern. For NDX and SP500 big triangle could be an option, but for other indexes it will not work so well.

Too much theory from trading perspective just wait for the important cycle low - higher low or lower low with divergence. This will be the low risk trade.


MARKET BREADTH INDICATORS
Market Breadth Indicators - some are showing strength so this move up should not be just three days wonder quickly reversed.
McClellan Oscillator - reached slightly overbought level after divergence.
McClellan Summation Index - trying to turn up.
Weekly Stochastic of the Summation Index - sell signal, trying to turn up.
Bullish Percentage - sharp move higher, reached 70 with a buy signal.
Percent of Stocks above MA50 - trying to turn up, it will take time MA50 is far away.
Fear Indicator VIX - elevated levels. I think it should drop more before we see another surge higher.
Advance-Decline Issues - sharp move up.


HURST CYCLES
Daily(trading) cycle - buy signal was triggered, the price and RSI broke above the MA. The first trend line was broken, probably pullback and break above the second one. The next move lower should be corrective and it is a buy.
Do not forget - this trigger is nothing more than flip switch buy/sell. You have to put it in the context of the price action and the expected price action is corrective higher for a few weeks. If you are not comfortable with that ignore it.
Overall 35 days is a good length for the daily cycle and I think the next one is running.


Hurst cycles - adjusted the sine waves to fit the price action. I think we have 10w cycle low and next we should see several weeks higher for 20w cycle high.


Week 8 for the 20w cycle. Strong move up - most likely we have 10w cycle low.

Mar 21, 2020

Weekly preview

Another volatile week, more zig-zags and the next Fibo level 1,618 reached. I still think corrective pattern a-b-c counts much better. When you try some how to justify impulse it is just not an impulse.

In the last long term update I wrote we should see smaller version of 2008 - everything should be sold and the USD higher. Bonds after initial flight to safety are lower 20%(TLT) just like in late 2008 early 2009 before the bottom, the USD joined the party and it is sharply higher. Now it is only gold which refuses to comply:) it should retrace to support 1300-1350 and the picture will be complete.
The point is focus on the long term - this should be important 9 year cycle low, plenty of shares with clear corrective patterns.... look for opportunities.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - it looks like a-b-c to me. One option is c as a diagonal(red) which is not completed... I am leaning more towards second leg as w-x-y or completed ED(green). We will know on Monday.
RSI is compressed now between the two trend lines and break out is imminent. I think it will be to the upside.

AAPL reached the support area with clear corrective pattern - I do not see how this overlapping mess is impulse third wave. It is a summary for the pattern which many shares have, especially in the tech sector.


Intermediate term - next week we should see a bottom and I expect at least 50% retracement. The price is ridiculously stretched way too far from MA200. The more far away it is pushed, the more violent the snap back. On the way up the price was too far away from MA200 and now this distance below it, is even more crazy - 2.5 times bigger. Expect MA200 to be tested.


Long term - the trend line has been reached one option is the price low has been hit and subsequent higher low(green) the other option is lower low, but first lets see the retracement.


MARKET BREADTH INDICATORS
Market Breadth Indicators - extremes, VIX with a level seen in 2008 and McClellan Summation Index level seen in 2002/2008. Those who think there is much more lower to come will be disappointed.
McClellan Oscillator - short term divergences and turned up, heading to the zero line. Yesterday positive despite the 4% lower.
McClellan Summation Index - sell signal, extremely oversold levels.
Weekly Stochastic of the Summation Index - sell signal, oversold level.
Bullish Percentage - turned up, showing signs of life.
Percent of Stocks above MA50 - most stocks are far away from MA50, so it will stay for a while at this extreme levels.
Fear Indicator VIX - extreme level seen in 2008, now a log way lower begins.
Advance-Decline Issues - turned up.


HURST CYCLES
Daily(trading) cycle - still sell signal, but the cycle is mature at day 34. RSI with double divergence and preparing to burst above MA18, and M10 is catching up with price. It should not last long to see a buy signal.


Hurst cycles - speculating that we have shorter cycles and now we are seeing 10w low. Next move up should follow for 20w cycle high.


Week 7 for the 20 week cycle. Usually such sharp moves are compressed in time and the cycles are shorter - speculating that we have 10 week cycle high and low with length 7 weeks.