Jan 21, 2017

Weekly preview

Short term view - final spike higher.
Intermediate term view - after the final move higher correction for a few weeks.

I thought we will see more action after MLK day... no the sideway move continues and the analysis has not changed.

I wrote many times that the pattern is ambiguous. It is easy to say it is moving higher it is so bullish iii of 3 of III.... but I can not get rid of this feeling that the move since Feb.2016 has corrective DNA. That is not all, there is too many red flags - some divergences on the weekly charts, market breadth indicators with double divergencies, TomDemark 9-13-9 finished on the weekly chart. You do not see such conditions in iii of 3 rather when you expect correction... bigger one 10% not just pullback 3%-5%.
The market does not make a top with an A-B-C move higher... so which pattern has corrective DNA, but ends as an impulse? Which pattern will allow 200 points drop followed by another ATH?
The pattern which satisfies all conditions is expanding ending diagonal. It is shown on the second chart and on the last chart DAX it is even better visible.
I would say right away this is the pattern if it was not so crazy 10% lower followed by 25% higher:) Now I am waiting and I am very curious what will happen in the February-March-April time frame.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the same like last week except that the bearish case(red) has much lower probability now(it was not my favorite anyway). After the last top it is difficult to see impulsive reversal.


Intermediate term - the bullish pattern is clear the price should move higher in series of iii-iv/3-4. The difference between the two is how wave 4 and the 18 month cycle will look like. The new pattern(red) suggest very bearish February-April time frame followed by final mania phase 25% higher for the last wave... exactly what you want to see for an important bull market top.
As a trader I pray that it plays out, with the sideway move(green) you can not squeeze a lot of profits.


Long term - no change, waiting for the wave from Feb.2016 to be finished.


MARKET BREADTH INDICATORS
The Market Breadth Indicators - the same like last week. Short term no reversal signs, but double divergences on some indicators suggesting that something bearish is around the corner.
McClellan Oscillator - a third lower high will look great for double divergence.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal, in overbought territory for a while.
Bullish Percentage - buy signal.
Percent of Stocks above MA50 - showing weakness already, one lower high for short term divergence will look great.
Fear Indicator VIX - very tight BB again and complacency.... volatility will rise soon.
Advance-Decline Issues - in the middle of the range, one final spike to overbought territory will look good for a top.


HURST CYCLES
Day 13 of the second 40 day cycle.

Week 11 of the 20 week cycle... the indexes should be nearing a top.


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
9-13-9 finished two weeks ago, but no price flip so far.... no sell signal.



The same pattern for the DAX - it is even better visible. We see series of expanding a-b-c moves. It looks much better than some iii of 3 of III count.

Jan 14, 2017

Weekly preview

Short term view - final spike higher.
Intermediate term view - after the final move higher correction for a few weeks.

Boring week with sideway price action. We saw a small move lower and the final move higher should be around the corner. Overall for a month since mid-December the price moves in a tight range and time is running out.... volatility should rise soon and either we will see final spike higher or the price will reverse lower.

A month ago I have shown different US indexes... they are moving as expected, which does not really help us:). Nasdaq looks like finished impulse from the November low, SP500/NYSE mixed could be counted as finished or could extend a little bit higher, DJI,DJT,RUT,XLF - I do not see a way to count this as a reversal it should be wave 4 with one final spike higher before a bigger pullback.
As I wrote last week I favor the scenario with the indexes moving higher before a reversal.... next week we should have our answer.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - move higher(green) expected, but watch the support line. The price has nothing to do below support,the gap and MA200. Below this level something bearish(red) has started.


Intermediate term - no change waiting to see how a correction will look like. RSI either it rises from the trend line for a top with a divergence or accelerates and breaks below the trend line. The same for MACD - either it rises for a top with a divergence or it accelerates lower.


Long term - no change, waiting for the wave from Feb.2016 to be finished.


MARKET BREADTH INDICATORS
The Market Breadth Indicators - the same like last week. Short term no reversal signs, but double divergences on some indicators suggesting that something bearish is around the corner.
McClellan Oscillator - making lower highs.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal, in overbought territory for a while.
Bullish Percentage - buy signal, but double divergence.
Percent of Stocks above MA50 - second high still buy signal above 75, but double divergence.
Fear Indicator VIX - very tight BB again and complacency.... volatility will rise soon.
Advance-Decline Issues - one more push to overbought levels will look better.


HURST CYCLES
Day 9 of the second 40 day cycle.

Week 10 of the 20 week cycle... indexes should be nearing a top.


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
9-13-9 finished last week, but no price flip so far.... no sell signal.

Jan 7, 2017

Weekly preview

Short term view - I expect more to the upside.
Intermediate term view - after a top in January I expect a bigger correction in February.

We had a small pullback and 40 day cycle low as expected. Now waiting for the current move higher to be finished in January and the top of the 20 week cycle.

The pattern from February 2016 is not clear, it is ambiguous. Most indexes favor bullish EW pattern, but some like NYSE and Nasdaq look more bearish. All other signs are bearish and suggest something bigger to the downside - divergences on the weekly chart, market breadth indicators with double divergences, 20 week cycle top, TomDemark 9-13-9 finished on the weekly chart.
So think and act as a trader, which means follow the market step by step until we have more clear pattern. Now waiting to see first the move higher in January then the move lower in February before trying to guess the pattern.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the trend line was broken and we had the pullback lower. We saw already small impulse higher with higher high. This is enough to have a finished pattern, but it is more likely that the move continue higher. Watch the red line - if the price moves below it, with very high probability we have reversal lower.


Intermediate term - for the SP500 you can make the case for possible A-B-C(red), but if you look at other indexes bullish impulse(green) looks better (see the last chart).


Long term - most indexes favor impulse as a pattern... if this is III or V is another story.


MARKET BREADTH INDICATORS
The Market Breadth Indicators - short term no reversal signs, but double divergences on some indicators suggesting that something bearish is around the corner.
McClellan Oscillator - making lower high.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal, in overbought territory for a while.
Bullish Percentage - buy signal.
Percent of Stocks above MA50 - second high still buy signal above 75.
Fear Indicator VIX - very tight BB again and low values. Volatility will rise soon.
Advance-Decline Issues - one more push to overbought levels will look better.


HURST CYCLES
It looks like we have finished 40 day cycle at day 38 and the next one is running at day 4.

Week 9 of the 20 week cycle... in the next 1-2 weeks we should see the top and the cycle should turn lower.


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
We have finished 9-13-9 on the weekly chart. Waiting for a price flip and reversal.


DJI looks much better as an impulse. Other indexes like RUT, DAX, DJT show similar pattern.