May 27, 2012

Weekly review / Седмичен преглед

Short term view - still working on short term bottom followed by relief rally
Intermediate term view - lower low and intermediate term bottom second half of June

Nothing interesting this week. As expected bottoming process. Some relief as expected, but not much strength. Probably the traders are cautious because of the long weekend.
Short term the picture is unclear and with the long weekend its difficult to predict something. The formation looks like a triangle. The price is bellow the EMA50. The MACD is at the zero line and it looks like it want to plunge lower. The Histogram is not looking better either. Best guess - move lower with divergence before the expected relief rally. Lets wait for the opening on Tuesday for more information.
The Histogram is moving higher so any move lower should be short living and make a divergence. So I will stay with the prediction that we will see at least 1340 before any serious sell off.

Nothing changed.
The momentum indicators like McClellan Oscillator are working out the oversold conditions. The Trend following indicators are telling us that the move is still not over.
McClellan Oscillator - working out the oversold conditions.
McClellan Summation Index - the move on the downside is not over.
Weekly Stochastic of the Summation Index - the move on the downside is not over.
Bullish Percentage - the move on the downside is not over.
Percent of Stocks above MA50 - working out the oversold conditions.
Fear Indicator VXO - pullback
Put to Call Ratio - working out the oversold conditions.

CYCLES (TD - trading days)
Short term - probably bottom next week, which will mark the end of the 20TD cycle and the beginning of the next one. That will fit perfect with relief rally.
The bigger picture - 3 to 5 weeks to reach a 20 week and 40 week cycle bottom. The previous 20 week cycle lasted longer - 23 weeks, so I expect this one to be a shorter one. Currently its 12 weeks old so something between 15 and 17 week to see an intermediate term bottom.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Nothing changed - Countdown is at 5 now and Combo is at 10.
If the indexes move lower next week we could see Combo count marking 13.

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