Jan 12, 2013

Weekly review

Short term view - last final spike expected.
Intermediate term view - we are near to an intermediate term top. Dangerous on the long side early to be short.

A pause this week as expected. Nothing has really changed since last week just updated the charts.

If a new up leg is born there is several strong days a pause 1-2 days and the move continues... the action now looks more like the final surge of a move.
Ok what to expect - the market will try to trap as more traders as possible on the wrong side, that is the way it works. So I see two possibilities or a combination of them. The first one - a spike higher above 1475 to hit the stops of the bears and to trigger the buy orders of the bulls because this is a breakout to new highs. Second scenario is sharp decline followed by a marginal new high to confuse bears and bulls. Overall a topping process should start next week and last for a while 1-2 weeks.

Short term - this two scenarios are shown on the chart. This move higher looks very weak,the MACD is crawling on the zero line and working on a divergence...
Intermediate term - nothing has changed, both scenarios still valid. The broken trend line continue to be a resistance, the histogram is working on a divergence... The rally in September ended in a similar way - huge bars up, huge euphoria QE3, a week moving sideways, two sharp days lower and retest of the high before moving lower.

The Market Breadth Indicators - no change since last week only McClellan Oscillator and Percent of Stocks above MA50 are showing first cracks. The indicators are bullish at overbought levels but they can stay there for several weeks. Again the move is already mature and I do not expect long lasting rally.
McClellan Oscillator - has a divergence... several down days and the red scenario from the hourly chart?
McClellan Summation Index - bullish on buy...
Weekly Stochastic of the Summation Index - says we are near to the end of this swing not the beginning... but no sell signal for now.
Bullish Percentage - bullish on buy...
Percent of Stocks above MA50 - small divergence - the red scenario from the hourly chart?
Fear Indicator VXO - the market participants are complacent. VXO in the danger zone bellow 14 but it could stay there for a while. There is small divergences between the last two minor peaks... the red scenario from the hourly chart?

Two new indicators which I follow for several months and I can say that they are valuable. The volume for advancing/declining issues shows if the volume on the up side/down side is growing with the move.
Advancing issues volume - the indexes are advancing but the volume is shrinking(see the lower highs) - we have less volume committed on the upside.
Declining issues volume - the indexes are moving up but the volume on the downside is expanding(see the higher lows) - I think we have distribution.

At day 9 of the 20 day cycle - still pointing up.
At week 8 of the last 20 week cycle of a 4 year cycle. I expect to see an intermediate term top soon. The last cycle was longer so this one should be shorter 14-17 weeks.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
On the daily charts we have finished countdown and combo. That means that we are near to a some kind of top. If you look at the weekly chart you will see that we are near to a completed countdown too.... so it does not look nice for the bulls.
Tom Demark itself said that the market is sell
The weekly chart is 11 of a combo and countdown. A topping process for a week or two will finish the countdown.

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