Aug 8, 2020

Weekly preview

Higher as expected, but not sure it is Z. The pattern from the March low is really difficult to read... you can count several different patterns and each has its flaws. From cycle perspective 20w low late June looks more and more like the better choice and the high-to-high count imminent top for at least the 10w cycle so we should see 3-4 weeks lower.
On the daily chart I am showing the patterns I find best if the move from March is complete or one more leg up for 40w high. I have chosen this two because they will work with most of the other indices. We have to wait and see the coming decline to confirm one of the patterns.

From trading perspective as always wait for sell signal - even if the move is not complete with 2-3 weeks lower small profit is very likely and if we have reversal we will make a profit.


TRADING
Trading cycle - buy signal, but we have day 29 and very mature high-to-high count so I will not be surprised if we see sell signal triggered next week.
For reversal we need to see bearish final 1/3 of the cycle. Brake below the first line(last 5w low) confirms 10w cycle lower is running. Brake below the second line(the 20w low) will confirm the 40w cycle turned lower.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - really messy move like the whole one from March. I do not know if we wil see two more bounces in the wedge or not. At least the break point is clearly defined.


Intermediate term - w-x-y counts, the red one for completed pattern or yellow for one more high. X(red) is smaller than the two b(red) waves as it should be and the trend line connects the b waves so it looks good... but the last leg does not really look like impulse. If it is corrective maybe Y as a flat and 40w high later this will fit with cycles very good.
We have MACD and RSI divergence so we should see something lower and this lower will give us more information.


Long term - I think the bull market completed in 2018. Since then a bunch of corrective waves. Currently watching this pattern... but with corrective waves often you have to adjust so stay open minded.
Main scenario for now wave a up and wave b starting soon and moving lower into 40w low November/December.


MARKET BREADTH INDICATORS
Market Breadth Indicators - do not react at all to the last rally from late July, weak with divergences.
McClellan Oscillator - above zero... the same indicator for SP500 spent the whole time for the last rally below zero, not good.
McClellan Summation Index - turned up, but with divergence.
Weekly Stochastic of the Summation Index - buy signal, but the same indicator for SP500 turned lower with divergence.
Bullish Percentage - not reacting, with divergence.
Percent of Stocks above MA50 - turned up, with double divergence.
Fear Indicator VIX - closing the gap.
Advance-Decline Issues - turned up, with double divergence.


HURST CYCLES
Short term cycles - 5w low as expected and now this should be 10w high followed by a decline into 10w low. Day 12 so there is enough trading days for 20d/10w high, but it could take a few more days I can not say.
If late June was 20w low and you extrapolate the first 5w cycle the low of the 40w cycle is exactly at.... 3-4th of November interesting, isn't it:)


Week 6 for the 20w cycle. 20w low late June looks much better so I will follow this scenario.

Aug 1, 2020

Weekly preview

Long term update posted below and link in the left panel.

No continuation lower on Tuesday so it was clear the decline is not an impulse. I was talking in the last few weeks about alternate scenario, but I had nothing to show only it is taking too much time. Now without impulsive decline the alternate scenario is the primary scenario.

Make a step back and look at the chart - from the lows in June we have clear corrective pattern choppy mess no need to be EW expert. So what options do we have with corrective pattern? - it is some b/x wave, but the decline is missing.... the other option - corrective advance means some kind of ED(two versions shown below) to complete the rally from the March low.
This is the primary scenario now - in the next few weeks the rally from March should complete with ED. Time - possible 20w low late June or if we see a decline next week this could be the 20w low.


TRADING
Trading cycle - the price is oscillating around MA10 in a tight range so the signal is neutral. Nothing to trade is a signal too. I do not see neither reversal nor completed pattern from the March low so waiting is the best option.
With 24 trading days probably at 5w Hurst cycle low.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - one possible count a-b-c with c ED for Z... I am not a big fan of such complex triple corrections, but this will work with DJ for example.
If we see one more decline next week for a bigger corrective pattern(yellow) the other version of ED will look better - see the daily chart.


Intermediate term - a-b-c with c ending diagonal looks much better than triple correction wxyxz, but it does not work for DJ or NYSE for example.


Long term - I think the bull market completed in 2018. Since then a bunch of corrective waves. Currently watching this pattern... but with corrective waves often you have to adjust so stay open minded.
Main scenario is now wave a and wave b starting soon and moving lower into 40w low November/December. It could be b of a flat or triangle.
With corrective zig-zag there is always alternate scenarios - zig-zag W wave for combination, zig-zag X wave and the next decline begins, zig-zag wave 1 for ED. The first most likely and the last one ED the least likely.


MARKET BREADTH INDICATORS
Market Breadth Indicators - still negative pointing lower and not following the market.
McClellan Oscillator - below zero.
McClellan Summation Index - divergence and turning lower.
Weekly Stochastic of the Summation Index - turned up probably because we should see 2-3 weeks higher.
Bullish Percentage - divergence and turned lower.
Percent of Stocks above MA50 - divergence and turned lower.
Fear Indicator VIX - the same lows for almost 2 months.
Advance-Decline Issues - divergence and turned lower.


HURST CYCLES
Short term cycles - possible 5w low this week or a few days lower next week for 5w low... difficult to say.


Week 5 or 19 for the 20w cycle.... waiting to see what will happen next week. It will be nice to see one more decline next week it will count better. Even if it is not very deep it will be enough - dominant 40 week cycle with bell shape and not very well visible 20w low. The previous one was such with shallow and short low in January.