Feb 16, 2013

Weekly review

Short term view - short term another move higher 1530-1535. Nothing bearish until 1514 is broken.
Intermediate term view - pullback 3%-4% expected 1475 +-5points and another higher high.
Trading system signal (swing trading) - Direction: UP | Last entry signal: at SP500=.... on xx.xx.xx | Stop at:

No surprises, another boring week. The range is so small... it is not possible to trade at all.

I have changed my view how the things will play out. I expect standard pullback 3%-4% before another move to higher high with nice divergences followed by a real 8%-10% correction.
The shocker - we are in the middle of the pullback:) I know you can not see it. SP500 chart is the wrong place. Take a step back and look at the indicators - they are saying we are correcting. DJ second red week, DAX the correction is real all my shorts are profitable. I think we will see another week churning up and down, followed by sharp but short living 3%-4% move lower.

Now I saw that there is FOMC meeting on Wednesday. If the pattern repeats again we will see the indexes pushing higher until the meeting and reverse after that. At least it should get the ball rolling... the last 2-3 weeks were not easy to trade if at all possible to trade.

Short term - a closer look of the hourly chart. Support 1514 has been tested three times and have another bounce of it. MACD looks like it wants to turn up from the zero line. I think SP500 will try to move higher again next week. The range is 10 points with target 1535. Bearish thoughts only when we see the price bellow 1514.
- Triple cross(EMA10 and EMA20 crossing EMA50) - the EMAs are still pointing up so the short term trend is up. We have MACD divergences so we must watch out for a reversal.

Intermediate term - As I have said I have changed my view - standard pullback 3%-4% before another move to higher high with divergences followed by a real 8%-10% correction.
Target for the pullback 1475 +-5 points - support from the previous high,MA50,38%-50% Fibo for the move since 31.Dec,3%-4% from the expected top.
If I am wrong this is just a pause and we will go higher... to the moon:)

- Trend direction EMA50/MACD - MACD pointing lower with a cross - we are in some kind of a correction. Prices are above EMA50 and MACD above zero so this should be a correction in an UP trend.
- Momentum Histogram/RSI - the histogram is bellow zero with divergences and RSI made another lower high.... we are in some kind of a correction.

Long term - the way an intermediate term top will play out does not change the bigger picture - it stays the same.

- Trend direction EMA50/MACD - MACD above the zero line and price above EMA50, the long term trend is UP. Quadruple divergence on MACD watch this veeeery carefully.
- Momentum Histogram/RSI - RSI and the histogram are now flat. Is momentum starting to shift from up to down??? We will have to wait several weeks.

The Market Breadth Indicators - no change - in overbought territory but no sell signals, just warnings.
McClellan Oscillator - SP500 making new highs, the oscillator is moving below he zero line - "hidden correction":)
McClellan Summation Index - flat for third week, no sell signal yet...
Weekly Stochastic of the Summation Index - issued sell signal, waiting for price confirmation that a swing lower has begun.
Bullish Percentage - still bullish...
Percent of Stocks above MA50 - moving lower... looks like the stocks participating in this rally are getting less and less.
Fear Indicator VXO - testing the bottom again
Put to Call Ratio - near to another top??
Advancing issues volume - can not make higher high, the indexes are advancing but the volume does not.
Declining issues volume - jumped a lot and is near to making higher high... is the pullback around the corner??

Currently at day 9 of the 20 day cycle and more upside is expected. The low of this cycle should be the low for the pullback which I am expecting.
Currently at week 13 of the 20 week cycle. The dominant 20 week cycle should take control in the next 2-3 weeks and bring a bigger correction of 8%-10%.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Combo 13 finished last week currently we have 9 from a countdown... will it be finished? I do not know. SP500 is moving up but the move is very weak.
The finished Combo and Countdown look like they have failed. As I have written I think we are in a "hidden" correction which is better visible in DJ - two red weeks, or in Europe where it is not hidden at all:) SP500 is just the wrong place to look for or to trade.


  1. Krasi, what do you think of binve's assessment of the VIX at http://marketthoughtsandanalysis.blogspot.co.at/?

    1. I think too that the cyclical bull market is not over. Bull markets does not end with the indicators showing strength, it is not only the VIX.
      For the short term I do not think that a divergence or not for hundredths of a point is so important. Technically we can have a double bottom on the VIX and VIX divergence is not a precondition for a correction.
      My observations when the indicators and the price diverge - eventually the price follows but that happens near to the end of the correction so the real correction in price is short living.