Nov 3, 2012

Weekly review

Short term view - the beginning of the week should be negative but after that I expect reversal.
Intermediate term view - final move lower has begun. I expect to see an intermediate term bottom next week.

Last week I wrote - "Target is the zone between 38,2% and 50% Fibo retrace 1428-1433 (MA50 on the daily chart is at 1434 so it looks like a logical target)". That is what happened this week - Thursday move up to 1428 and on Friday spike to MA50 on the daily chart 1434 followed by a reversal.

We are near to an intermediate term bottom. I think that next week the correction will finish and the next move up will start. The only question is from which level - something like double bottom around 1405 or SP500 will reach its target around 1395 which I am showing since the beginning of this correction

Short term - I am expecting SP500 to move lower to the 1398-1392 area. Its my preferred target since the beginning of this correction - 38,2% Fibo retracement of the June-September rally(see the daily chart), support zone, the trend line connecting the October 2011 and the June 2012 lows and if you measure the waves it looks perfect C=0,618xA/Z=1,618xW(Y).
The alternative is something like a double bottom around 1405.
Intermediate term - nothing has really changed since last week... just up-to-date chart. MACD is turning up at its trend line as expected and the price is near to the support line and the trend line(DJ touched them already).
A surprise move could be the break of the trend line in that case next stop is the 50% Fibo retracement and the support zone 1370-1375 at this levels we have C=A too.

The Market Breadth Indicators are confirming that the direction is still down but this move is mature.
McClellan Oscillator - I expect to see a divergence after the move lower is finished.
McClellan Summation Index - still in sell mode.
Weekly Stochastic of the Summation Index - reached oversold levels, now waiting for a bottoming signal.
Bullish Percentage - not impressed at all - stays at the 70 level. I do not expect to see it bellow 65 which confirms that this is just a pullback.
Percent of Stocks above MA50 - shallow sell off and divergence or panic for a day or two and levels between 25 and 35 will mark the bottom.
Fear Indicator VXO - reached 19 my target for the correction is 20... its not too late:)
Put to Call Ratio - moving towards a bottom.

CYCLES (TD - trading days)
This cycle is already very late in the timing band so waiting for a bottom any moment...

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Nothing interesting to show... as expected the buy setup was invalidated.

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