Oct 6, 2012

Weekly review

Short term view - probably another one or two red days after that we will see what happens.
Intermediate term view - not sure.. favoring the scenario with move higher to the low 1500.

So I was wrong this week, the index has continued moving higher. The move up is corrective and weak but it is what it is. The move lower was very very shallow and lasted only several days so I thought one more leg down to the trend line is in the cards. Anyway we had our 3% pullback so now the higher probability is that SP500 will move higher.

For the next week I expect a day or two lower than moving to higher highs. I can not exclude the possibility that the correction is not over but now this scenario has lower probability. Until SP500 breaks bellow 1440 I do not see problems for the bulls.

Short term - we had on Friday shooting star on the daily chart, MACD cross and histogram moving lower on the hourly chart so I think the index will touch support between 1440-1450 and move higher. If SP500 breaks bellow 1440 than the correction is back on the radar.
Intermediate term - I think the SP500 will move higher to the 1500 area. If SP500 breaks bellow 1440 than the target is 1400.

Do not look very strong in fact some of them are still in sell mode. This is not a problem to see the indexes moving higher it rather means do not expect strong rally. There is now divergences or signs that a top of a higher degree is upon us, so no troubles for the bulls.. for now.
McClellan Oscillator - showed at last some strength moving above the zero line.
McClellan Summation Index - still on sell, saying that this rise is weak.
Weekly Stochastic of the Summation Index - in sell mode, do not expect strong rally.
Bullish Percentage - issued buy signal, no troubles on the horizon.
Percent of Stocks above MA50 - is bellow 75. Probably the next rise will lead to divergence.
Fear Indicator VXO - excessive bullishness has not been cleaned up. The market players are complacent so I do not expect strong rally.

CYCLES (TD - trading days)
This cycle 20 day cycle is getting to long. When 20 week cycle finishes and the next one starts you see descent sell off at least for a week or two and than strong move up. We saw nothing of that. When I look at the daily chart of SP500I I see only... two red bars and the move higher is not exactly strong. I see two options - sharp sell off next week to finish the 20 week cycle or the bottom was last week and the next cycle has begun but is weak and we will see it topping sooner than later marking the beginning of a move to the 4-year cycle low.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
This week we have 13 countdown completed. You can say we have countdown completed , shooting star candle and it looks like a double top. Or you can say the combo is still not finished 1500 is upon us. It depends on how you look at the chart:) so not much of a help.

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