Weekly preview

Move lower and probable daily cycle low, but the market threw a curve ball:) we have enough to the downside for daily cycle low, but the expected b wave is bigger and it looks like a flat at the moment.

There is an obvious pattern which fits the most indexes, but the market is very creative lately so I am open for surprises how exactly it will play out. It is a day traders environment and if you are not such, just relax, focus on the big picture and wait for the pattern to play out.
The big picture - I do not know the exact pattern from the last two weeks, but I know it is corrective and when it is finished we will see another leg lower. Short term market breadth and the indicators are turning positive plus daily cycle low is expected, which means it is very unlikely that this leg lower has begun.... on top of this you have two bullish weekly candles with long shadows from MA50, the hourly chart do not override the weekly.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the obvious pattern is zig-zag up and zig-zag down with the same size which is flat correction and the next move should be final rally to resistance for b. As I said I am open for surprises like one more lower low for slightly different flat (red a-b-c).

Intermediate term - the price is bouncing between MA50 and MA200. If I am right about the flat, resistance and MA50 will be tested one more time and then the direction should be down until we see 40 week cycle low in October.
The indicators are turning positive so the most bearish outcome which I see is one more lower low(see above), but I do not expect the (c) wave.

Long term - I expect decline in three waves with the first important low in October - a/C/IV and 40 week cycle low.
Two bullish weekly candles in a row bouncing from MA50... this does not fit with another plunge lower more like something higher is expected - this is exactly what the shorter term charts daily/hourly are saying.

MARKET BREADTH INDICATORS
Market Breadth Indicators - signs for short term bottom, but nothing suggests intermediate term low.
McClellan Oscillator - oversold level,divergence and now close to zero - short term bottom expected.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal, in oversold territory.
Bullish Percentage - sell signal, in the middle of the range.
Percent of Stocks above MA50 - close to oversold level for second time - probably short term bottom.
Fear Indicator VIX - up and down, it should reset before continuation lower.
Advance-Decline Issues - turned up and in the middle of the range, it has not even reached oversold level so this should be just short term bottom.


HURST CYCLES
Day 1? Last week it was too early for a low and it was not confirmed. Now we have probable daily cycle low at day 52 and waiting for confirmation or final low next week. Price is still below MA10 and RSI below the MA so no confirmation so far.

Week 11 for the 20 week cycle, time for mid-cycle bounce.

Weekly preview

I was expecting fifth wave and retracement b or 2. I think we saw extended fifth wave followed by b wave as expected just the volatility was very high. The decline is too big to count an impulse, projection will show unrealistic targets so we have waves a and b of much bigger corrective pattern.

This is in line with my expectation for a big decline with corrective waves so nothing new to add - the same like last week.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the first leg lower looks like impulse to me with extended fifth wave. Wave 1 of an impulse does not fit - neither time nor price targets. I think we have a-b with c to follow. The most common measurement is c=a and it is getting interesting:) - this will hit the trend line connecting the lows from March and June(see daily chart).
As long as the resistance zone around 2960 holds the move lower continues. Above it and we have something else.

Intermediate term - so far the price action confirms the expectations from last week - zig-zag lower testing the last two lows slightly below MA200 which should be the low of the daily cycle. MA10 and MA50 has been tested, the move continue to follow the script from October 2018 even the candles and indicators look the same, so next we should see wave c lower. Now we wait and see if the pattern plays out next week.

Long term - I expect decline in three waves with the first important low in October - a/C/IV and 40 week cycle low.

MARKET BREADTH INDICATORS
Market Breadth Indicators - some were close to oversold levels, but not really oversold or something to suggest a low.
McClellan Oscillator - oversold level, reset and turn lower again.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - sell signal.
Percent of Stocks above MA50 - retraced in the middle of the range, I want to see oversold level for a low.
Fear Indicator VIX - resetting lower after explosive move higher.
Advance-Decline Issues - in the middle of the range and turned lower again, I want to see oversold level for a low.


HURST CYCLES
Day 48, with this strong bounce it looks like possible daily cycle low, but this time I will follow the pattern and wait for one more decline.

Week 10 for the 20 week cycle. If you look at the DAX or EEM you will see the following:
- the current 20 week cycle made a top at week 5/6, which means bearish left translated cycle and it is declining already.
- it broke below the low of the previous 20 week cycle, which is confirmation that the cycle of higher degree(40 week) made a high and it is declining.
Short said forget about new highs before the 40 week cycle makes a low in October/November.
On the surface the US markets look stronger moving higher for 8 weeks, but in reality it is just sideway move in July and 10 points higher in week 8 above week 6. So in theory stronger in practice the same like DAX and EEM.... I can not imagine how the US markets will decouple and suddenly make higher highs now or in September.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
The setup was negated at day 7, which is another sign that we do not have an impulse structure rather corrective decline.

Weekly preview

June was time for a rally, July to see topping and the last day confirmed it:) - bearish monthly candle. In August we should see 2-3 weeks lower and then retracement higher. Pattern and timing seem to work so no need to change or adjust the plan at the moment.
Because of time(cycles) I expect the decline to develop in three waves and on the charts is shown how they should look like.

I wrote two weeks ago do not expect perfection it does not work this way. The perfect pattern did not play out, but we have enough waves and plenty of signs that something is wrong. FOMC is sell the news event plus 3000 broken - game over. It is not an impulse.... may be, but cycles, market breadth and indicators are pointing to much lower prices and decline until October. Not a perfect impulse or just not seeing the right pattern at the moment will not change anything the direction is lower until October, focus on the big picture - sell the rallies.
This should be the top, 3 days wiped out gains from the last 5 and a half weeks. The only way I see to extend the pattern higher is very low probability patterns - bigger EDs.... like w4 for ED from the December low or w2 for ED c/B from the June low. The 1-2 i-ii bull count is nonsense - you do not see market breadth and indicators divergences on the weekly chart in the middle of the third wave.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the decline looks like impulse to me so there is more to the downside - what are the options a-b-c or impulse. We will know in 2-3 weeks when we see the low for the daily cycle.

Intermediate term - in the next few weeks we should see daily cycle low and retracement higher probably into the first half of September.

Long term - because of time(another 10-11 months for 4 year cycle) I think the decline will be in three waves, an impulse will be finished way too early(5-6 months). On the chart is shown how a decline in three waves should look like.

MARKET BREADTH INDICATORS
Market Breadth Indicators - signaling intermediate term top for a few weeks and now the price follows.
McClellan Oscillator - below zero.
McClellan Summation Index - sell signal after divergence.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - sell signal.
Percent of Stocks above MA50 - sell signal.
Fear Indicator VIX - bottoming and exploded higher as expected.
Advance-Decline Issues - pointing lower after series of lower highs.


HURST CYCLES
Day 43 - the daily cycle turned lower and it is moving fast. If it continue this way for another 2 weeks do not expect the next one to make higher high.

Week 9 for the 20 week cycle.... look at the last 5 weekly candles - it was topping and turned lower, which is not a surprise the longer term cycles are pointing lower.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
After the finished countdown comes the sell signal - price flip, triggered again with move below 3000.