Nov 10, 2018

Weekly preview

We saw another higher high as expected, but much stronger and this changes the intermediate term picture a little bit. Such price behavior feels as part of corrective structure.... I know what you will say how could it be so strong and corrective:) That is the problem we do not have "stable" price behavior we have erratic price swings which is common for corrective structures.

Either it is a-b-c or if we see one more high impulse but way too strong for wave i of 5. If I am right than the possible patterns are wave X from a complex correction or wave iii of 5 of ED. The indicators and market breadth just turned up from very oversold levels and it is too early for another reversal lower. I expect something like 50% retracement in the next 2-3 weeks and another leg higher.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - it looks like a-b-c to me... one more high for impulse can not be ruled out, but this will not change much the big picture. After that 50% retracement expected and the pattern will look like inverted H&S.


Intermediate term - retracement and another leg with the same size to the upside... either connecting wave X from complex correction or wave 3 of ED(last chart DJ better visible). ED is more common pattern than such complex combination of corrective patterns... we will see in a few months. For trading the direction for the next 3-4 months is the same so it does not matter.
RSI is respecting the trend lines - testing the upper trend line defining the down trend and it is time to pullback lower to more sustainable trend line.


Long term - a few months to the upside before we can think about a top.


MARKET BREADTH INDICATORS
Market Breadth Indicators - turned up and we have buy signals.
McClellan Oscillator - overbought levels, which is sign for a strength.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal.
Bullish Percentage - buy signal.
Percent of Stocks above MA50 - moved up to the middle of the range .
Fear Indicator VIX - moving lower, expect another higher low for triple divergence.
Advance-Decline Issues - heading higher nearing overbought levels.


HURST CYCLES
Day 9 of the 40 day cycle. Most likely the retracement will mark half cycle low.


Week 2 of the 20 week cycle.


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Despite all this selling we have two failed setups to the downside which was a warning for the bears. In contrast we have finished setup to the upside which means strength.


DJ is stronger than SP500 - it made higher low above the June low and retraced big portion of the decline 76%. One more leg higher with the same size and we will see a new ATH hitting the upper trend line.... and the pattern will scream ED.

Nov 4, 2018

Weekly preview

We saw one more low and really nasty bear trap with reversal in the last 15 minutes. The signs for an intermediate term low were obvious, but of course it is scary to trade such volatility. With overlapping structure this second sell off was doomed to fail and one week later most of it is erased. We have impulse higher so next expect retracement lower and more to the upside.

The big picture - we should see a few months higher. The bearish case wave B to test the two tops from January/September, the bullish case new ATH... I will not be surprise to see ATH with corrective wave B either.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - I wrote that one more lower low is possible with oversized ED.... it though this has lower probability - well it happened.
Now the move higher looks like impulse, which confirms the reversal. I am not sure if this high is 3 or 5... with one more high we will have impulse with better FIbo measurements, testing MA200(hourly and daily), testing the RSI trend lines (daily chart), indexes like RUT and DAX need one more high for impulse, if you look at previous correction we have roughly 2 weeks higher and 2 weeks lower to test the low 3-4 days higher is too short.
I want to say that one more move higher next week Tuesday/Wednesday will look much better.


Intermediate term - it is official we have overlapping and the move lower is only corrective a-b-c. With this final low on Monday the Fibonacci measurements look perfect with a=c(for C) and A=C and for the trend line the shadows are included. The price is nearing resistance and MA200, the low should be tested and the gap closed, but this will be a buying opportunity.
The bulls see 3000 at the end of the year, but I think the index will spent the rest of the year between support/resistance zone for a-b-c->X or 1-2 i-ii.


Long term - the histogram with huge trough like 2011/2015/Jan.2018 it will take months to reset, RSI confirming a-b-c. We have an intermediate term low which will last for months. Now waiting to see how the move up will look like to confirm one of the two scenarios.


MARKET BREADTH INDICATORS
Market Breadth Indicators - most of the indicators are turning up after divergences. It will take time, I do not see V shape recovery.
McClellan Oscillator - above zero after triple divergence.
McClellan Summation Index - turned up from extremely oversold level.
Weekly Stochastic of the Summation Index - trying to turn up from oversold level.
Bullish Percentage - buy signal.
Percent of Stocks above MA50 - turned up and trying to move above 25 level.
Fear Indicator VIX - moving lower after a divergence.
Advance-Decline Issues - moving higher after a divergence.


HURST CYCLES
40 day cycle was finished which is not a big surprise, now day 4 of the next 40 day cycle is running.


Week 1 of the next 20 week cycle. I think we have 18 month cycle low.

Oct 27, 2018

Weekly preview

I have added charts below - for those who think we have a major top, correction has just begun, it is very bad third wave etc. I have a news for you the correction is not running for a few weeks it is running for 10 months already. Look at the charts below and look at SP500 no difference a-b-c in a channel but masked with higher high. I do no know how many times I have to explain it.....


I thought this b wave will take a few more days... I was fooled by this candle with huge shadow on Tuesday. No wonder this week we saw really crazy things 5-6 reversal 60-80 points each. At the end the pattern is overlapping crap, diagonal comes to my mind - wave c which should be done and we saw a reversal on Friday.

This move lower has all attributes of important intermediate term low. Since 2009(see cycle chart) this is the 8th sell off 10% or more. They all look the same - 5-6 weeks lower and most of the selling is concentrated in two weeks, on four occasions the low was tested one more time (2011/2015/2016/2018). Currently we have week 5 with 2 weeks selling... we will see a bottom soon(probably already done) statistically there is 50/50 chance the bottom will be tested. Looking at the indicators and market breadth which all point lower the probability is higher that we will see a retest. They need time to flatten and reverse.
Market breadth confirms it - we are seeing levels which are common for important intermediate term lows with serious selling pressure. Cycles - 18 month cycle low is expected. The wave pattern starts looking complete on many indexes not only in the US.
For me the signs are that we are at an intermediate term bottom and multi month move higher. Most likely we will see bottoming process first taking a few weeks, V shape bottom is less likely.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - overlapping mess probably diagonal. The important message - it is not an impulse. You can count a-b-c or 1-2-3-4-5(diagonal) it does not matter it smells like intermediate term low.
There is a slight chance to see one more low if you count the high on Tuesday as wave 4 and than a diagonal which needs one final low. The problem with this count is at the same time you count strength fifth wave extension and in the same time weakness diagonal.


Intermediate term - the lower trend line was touched if you ignore the long shadows, this is ok with trend lines. What happens next? There is two options - one more ATH(green) or B(red) to the resistance zone. We will have enough time to decide which one it is... no need to choose now.


Long term - the same on the weekly chart - ATH(green) for the bullish scenario, H&S for the bearish(red).


MARKET BREADTH INDICATORS
Market Breadth Indicators - extreme levels common for important corrections and divergences. Interesting is on Wednesday we saw huge sell off and A/D issues and the McClellan Oscillator barely moved lower.... most likely only a few big names moved the indexes lower.
McClellan Oscillator - after extreme we have triple divergence.
McClellan Summation Index - sell signal, very deep dive since 2009 only in 2016 at 4/8 year cycle low we saw such deep move lower.
Weekly Stochastic of the Summation Index - sell signal, at oversold level, waiting to turn up.
Bullish Percentage - sell signal, only in 2011 and 2015 we saw lower levels.
Percent of Stocks above MA50 - another extreme with divergence.
Fear Indicator VIX - lower high and divergence.
Advance-Decline Issues - did not move lower after such fear and sell off.... strange my only explanation is a few big names dragged the market lower.


HURST CYCLES
Day 35 for the 40 day cycle, the indexes are close to a bottom or it was hit already.


Week 17 for the 20 week cycle.... it looks like 18 month cycle low to me.




I showed NYSE chart and explained why we have big correction and it is wave B up. Below the updated chart - I am "shocked" what happened. The worst what we can see is the expected test of the low in November to be a lower low, after that it is multi month rally up.


DAX exactly the same the indexes are synchronized at important highs an lows and at the end the pattern is the same.


Market breadth percent of stocks above MA50 - in a bull market it moves in overbought territory stays there for months and correction pushes back briefly to oversold level followed by quick move to overbought, in a bear market it is the opposite. What we have in January - April oversold for a few months push to the upper boundary failed despite the "strong rally" and plunged to oversold again. Classical indicator behavior.
What we have? - a-b-c Do you get it why I was explaining correction no 3200? Do you think I was wrong? I will dear to say I was right, than will some one explain me why this is not just wave C and it is something else?