Sep 22, 2018

Weekly preview

DJI catching up with SP500 and gives the impression that stocks will go to the moon. The bulls cheering seeing of course 3 of 3 of 3 melt up for months... nice fantasy. The character of the market has not changed - neither the pattern nor market breadth nor the indicators nor cycles suggest that something changed.
So far SP500 is testing the trend line one more time with divergence nothing more. Short term I see corrective waves most likely the ED which I am showing in the last few weeks. Again no melt up before move lower.
More interesting is the big picture - either wave 3 is finishing or wave B so no change either. I think wave 4 and 5 to complete the move from 2016 will look better, but wave B could not be excluded as a possibility at the moment.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - RSI shows series of zig-zag moves... I can not see the impulse. Probably the ED which I am showing for a while with shorter wave ii. If this is the pattern expect lower until FOMC next week and one more high. Alternate this is wave b and decline for wave c will follow.


Intermediate term - MACD,RSI,histogram are saying toping not the beginning of multi month rally. Topping should continue the last week of September and in October at least MA50 will be tested. This move lower should clarify the big picture which pattern is running - impulse with 4 and 5 to be finished or wave C lower for 6-9 months.


Long term - no change waiting to see how the big picture will look like... one more high or not before a bigger decline. Again looking at the RSI and the histogram multi month melt up is a fantasy.


MARKET BREADTH INDICATORS
Market Breadth Indicators - the same turned up, but no run higher or overbought levels etc. to show strength.
McClellan Oscillator - around the zero line, most likely one more high with divergences.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - turned up, another high below overbought level.
Percent of Stocks above MA50 - turned up, another high below overbought level.
Fear Indicator VIX - divergences, I hear again VIX 9 and staying there - clear fantasy. Expect multiple divergences when we hit the top.
Advance-Decline Issues - turned up, around the middle area.


HURST CYCLES
Day 27 of the 40 day cycle.... sometimes the 20 week cycle consists of three shorter daily cycles instead of two 40 day cycles. This one feels like we have three daily cycles - the yellow count.


Week 12 of the 20 week cycle. It is time for a pause not a rally.

Sep 15, 2018

Weekly preview

Nothing new retracement higher as expected. I think we are seeing a high and correction should follow with intermediate term low in October. Looking at cycles and market breadth I do not see how this is the beginning of iii of 3 and multi month rally. We will see a rally into year end, but first a correction to kill the dip buyers.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the most bullish pattern I see is ED(yellow) if we have a shallow pullback. Looking at cycles and different indexes/shares a bigger correction for a few weeks will look much better.


Intermediate term - even if SP500 makes a new high this will be just another touch of the trend line with MACD/RSI divergences. I do not see the beginning of a strong rally. Market breadth and the indicators are topping and not resetting for a run higher.


Long term - the same story... the histogram and slow stochastic are topping and not preparing for a run higher.


MARKET BREADTH INDICATORS
Market Breadth Indicators - no change I see topping indicators with some already flashing red.
McClellan Oscillator - resetting higher after plunge lower.
McClellan Summation Index - sell signal with divergences.
Weekly Stochastic of the Summation Index - sell signal, turned lower with double top.
Bullish Percentage - hanging below overbought level after another top.
Percent of Stocks above MA50 - hanging below overbought level after another top.
Fear Indicator VIX - expect series of higher lows and multiple divergences.
Advance-Decline Issues - broke the trend line and made a lower low after holding the trend line for months.


HURST CYCLES
Day 22 for the 40 day cycle. I think me have mid-cycle low at day 17 and after this high the indexes should turn lower for a few weeks.


Week 11 for the 20 week cycle. The average length is 14-18 weeks. At week 11 the cycle is mature we have 3 sideway weeks and I think the 20 week cycle is topping and it will turn lower.

Sep 8, 2018

Weekly preview

I was expecting to see correction in September and it is running. Target should be at least MA50 on the daily chart. The last leg higher looks to me like three waves. If we see only a zig-zag lower to MA50 it should be ED. The problem is we have very ugly weekly candle and cycles with marker breadth are pointing to decline for several weeks for 20 week cycle low.... I am curios could we see a decline for a few weeks to MA200 and the trend line from the Feb.2016 low for a rare pattern?(see the last chart). Anyway the leader the tech sector with clear impulse lower so expect more to the downside.

Some changes for the long term charts:
Cycles - the move up takes too long so it is more likely that the cyclical model with shorter 18 month cycles is the right one. Indexes like DJT,DJI,XLF,NYSE made a significant low right on time in June so I switched back to this cycle count.
Long term chart and EW - the current 4 year cycle is strong right translated and with high probability the next one will make higher high. This means it is more likely that the expected top is wave III from 2009 and not V. In 2019 we should see 4 year cycle low and most likely we will see scary but short living correction 20%-30% which fits with wave IV from 2009.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the bulls see i-ii iii of 3 of 3 to infinity what else:) nonsense of course. I see only three waves higher and decline which is not finished with target MA50 daily at least.


Intermediate term - we have two zig-zags higher B(red) or with some creativity you can count an impulse(green). Looking at the indicators and market breadth 3 of 3 of 3 is clear fantasy. RSI is saying a wave of bigger degree is running.
I will love to see a drop to MA200 and the trend line connecting the lows from Feb.2016(yellow) for a crazy pattern - expanded ending diagonal.


Long term - I was not very bearish for the long term, but now with the price moving higher more than 2/3 of the time it is more likely that this is wave III. Strong divergences MACD/RSI so the indexes are close to important top. Strong decline to purge greed are common in a bull market. Since 2009 we had twice 20% corrections after 2-3 years rally higher.
In the case of B wave(red) the decline will be too short both price and time testing MA200 and 0,236 retracement and wave II was already some expanded flat(EW alternation rule). The green scenario will look perfect - alternate pattern zig-zag, 38,2% retracement to support and the trend line, just on time for the 4 year cycle low. This is the preferred scenario for the long term.


MARKET BREADTH INDICATORS
Market Breadth Indicators - weak could not move into overbought territory and divergences. The difference is this time they are reacting to the move lower and I suspect they will drop lower with the indexes making one more higher high and market breadth with clear divergences signaling reversal.
McClellan Oscillator - heading for oversold levels.
McClellan Summation Index - sell signal with divergences.
Weekly Stochastic of the Summation Index - in overbought territory expecting to turn lower.
Bullish Percentage - turned lower.
Percent of Stocks above MA50 - turned lower.
Fear Indicator VIX - divergence... expecting multiple divergences with the indexes making one more high.
Advance-Decline Issues - this time it is reacting to the decline. I expect to see lower low and broken trend line followed by lower high and divergence with the indexes making final high.


HURST CYCLES
Day 17 for the daily cycle. Another three weeks or more before an important low.


Week 10... With the old model in September/October 18 month cycle low was expected, but instead weakness we are seeing strength. This fits with my initial model with shorter 18 month cycles so I switched back to it.


DJ the "crazy" pattern is better visible. I have never seen expanding ending diagonal, but who knows.... it will solve a lot of problems with synchronization between different indexes and some shares which I watch for guidance. If we see a zig-zag lower to MA200 with very high probability this is the pattern.