Dec 29, 2012

Weekly review

Short term view - more on the downside before a bounce
Intermediate term view - we saw this week intermediate term top. Next move is lower bellow the November low for 8-10 weeks.

Well I was wrong how the top will play out. I thought that we will see a quiet week and starting 2013 the sell off which we saw during the holidays. The big guys played it out very nasty.... during the holidays.
On Thursday we saw strong rally from the lower trend line but no follow trough on Friday and the direction is now down.

We saw the top of this wave X or what ever it is and now the indexes should make lower low bellow the November low. Target is around 1300 and time frame around the end of February.

Short term - the futures look ugly the price and the indicators are pointing down... so I think there will be one final push lower before a bounce from oversold levels. If the futures recover on Monday watch the alternate red scenario.
Intermediate term - the broken trend line has been tested and now it is time the indexes to move lower. A move of the same size as W points to around 1300. There is support levels at ~1350 and ~1300.

The Market Breadth Indicators are showing weakness too, saying watch out problems on the horizon.
McClellan Oscillator - warned us that we should expect move lower. For two weeks I wrote expect it at -30 to -40 level. We are now at -39 so we should see a bounce soon of oversold levels.
McClellan Summation Index - issued a sell signal.
Weekly Stochastic of the Summation Index - still on buy but this indicator is slower so I expect it to show sell signal after a bounce up.
Bullish Percentage - still on buy not impressed with the sell off.
Percent of Stocks above MA50 - plunged to 56 area. I think we will see it bellow 25 before the end of the correction.
Fear Indicator VXO - was making higher lows during this rally hinting that the market players are nervous. Now it is stretched to do upside so the same message a relief bounce soon to be expected. Watch the 28-30 area for an end of this move lower.

Currently at day 9 of a 20 day cycle so we could expect some bounce soon after that moving lower again to a 40 day cycle low.
Currently at week 6 of a 20 week cycle. This one is the last one from an 4 year cycle and its bottom should mark 4 year cycle bottom.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Currently at 5 of a setup. At the moment I do not see a reason why the setup will not be finished.

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