Sep 27, 2016

Update

UPDATE:
DJ is the weakest index and the bearish option looks much better. The charts look more and more like we are in wave 4 (from the February low) just waiting for one final wave lower and 40 week cycle low. For SP500 and DJ the pattern is double zig-zag and for Russell2000 flat correction.
P.S. the RUT index disappeared from freestockcharts.com?!?!?!? Am I the only one having the problem?

Here is how RUT should lok like if I am right.




From the weekend - "Short term - at the moment I think we should expect a move higher, but not so strong as the most think. The alternate scenario is a quick lower low with divergences before turning higher again."
As expected the market is not so strong as many thought. The move from the bottom 12.09 is overlapping so the bullish option is an ED, the bearish option at least a move lower with the same size to the support level.

And a chart to show what I am talking about.

Sep 24, 2016

Weekly preview

Short term view - on Monday we should know more. For a bullish outcome the indexes should turn higher.
Intermediate term view - the indexes should continue to levitate around the highs for a few weeks before turning lower for a few months.

Two days I am watching the charts and wondering what is the most probable outcome.... just to get more confused:) After the big red candle Nasdaq has a V-shape recovery and looks like impulse higher, RUT strong with higher high too but only with 3 waves so far, SP500/DJ the bottom was tested and only 3 waves higher so far. The usual correlations do not work... did you notice that the sell off was in all asset classes stocks,bonds,precious metals like 2008?

The indexes show different picture and correlations do not help either. With three waves lower and three waves higher there is many combinations. Cycles enough price action for 40 week cycle low, but it is not a problem to see it 2-3 weeks later. Market breadth - we should see move higher for a few weeks.

Short term - at the moment I think we should expect a move higher, but not so strong as the most think. The alternate scenario is a quick lower low with divergences before turning higher again.
Intermediate term - looking at the cycles I think the 18 month cycle is topping, but the indexes will levitate around he highs for a few weeks(the USA elections are in 6 weeks).


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - to count this as an impulse the price should turn higher on Monday and continue drifting higher with series of iii-iv iii-iv to finish wave 3(green).
The price should stay above 2152 the break out and MA50. If we see it below this level we have only A-B-C (red).


Intermediate term - the down trend is still in tact - SP500 reversed from the trend line(DJ from MA50 daily), the oscillators too. The bulls need a breakout on Monday/Tuesday for something more bullish.
I am not sure what pattern we have... the obvious choice is wave 5 from ED, but I am not sure about that.


Long term - I am not sure for the bigger pattern... the obvious choice is wave 5 from ED(red), but I think the top of the bull market will come later not this year.


MARKET BREADTH INDICATORS
The Market Breadth Indicators - a move higher for a few weeks should be expected, but short term a quick push lower and reversal can not be excluded.
McClellan Oscillator - strong move higher should be confirmed with higher low.
McClellan Summation Index - retraced lower,but still too elevated for a long and strong rally.
Weekly Stochastic of the Summation Index - turning higher from oversold levels.
Bullish Percentage - still above 70 no signs of a strong sell signal.
Percent of Stocks above MA50 - in the middle of the range, could not hit 25... quick decline with divergences is possible.
Fear Indicator VIX - a lot of complacence... should start building divergences.
Advance-Decline Issues - in the middle of the range for two months... like the indexes moving nowhere.


HURST CYCLES
I am in the camp that the cycles for the SP500 are shorter than the nominal model so 11-12 for 20 week cycle low and 30-31 weeks for 40 week cycle low are enough for me. Waiting to pinpoint the lows EW does not help either so we will have to wait.


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Finished combo marked the first top. One more move higher to finish countdown for the second top will look great.


DAX looks like clear A-B-C from the February low. One more higher high for wave 5 of C and A=C will look great. If the DAX moves higher the US indexes should move higher too.

Sep 20, 2016

Update

In the previous post I wrote that we should expect a move lower and 40 week cycle low. It looks like this scenario is playing out so no need to change it. I was a little bit too late for the short term, but for the intermediate term it is just getting interesting.

The move lower should not last very long, after it is finished expect the high to be tested. The short term pattern is not clear and volatility is expected (FOMC tomorrow) so it is a guessing game. I will wait to see how a bottom will look like (impulse or correction) than we will know what to expect from the next 40 week cycle - higher high or lower high. Do not get too bullish, the next bigger move should be lower.... no matter lower or higher high.

P.S. On the charts is shown bearish path this way my long term forecast makes sense. If you are bullish long term(2017) you want to see more to the downside and lower high. With higher high the pattern from 02.2016 will look like finished ED and the bulls do not want to see this.


Short term - only three waves down/up and volatility expected tomorrow there is too many options. What we know - the line in the sand is the same from last post 2160 and the move from the low(the big red candle) is choppy overlapping. So as long as the price stays below 2160 we should see one more lower low.

I think we have small M pattern(double top the second vertical line) and the second 40 day cycle is running. Now I am expecting 40 day/20 week/40 week cycle low around the end of September. Than we should see similar pattern on bigger scale and the second 40 week cycle should turn lower for several months.

The intermediate term if you zoom out (the bullish case). Even if I am wrong and we see higher high for finished ED(the bearish case) the next big move is lower.