Intermediate term view - after that topping process should start followed by 8%-10% correction.
Trading system signal (swing trading) - Direction: UP | Last entry signal: at SP500=1558 on 27.03.2013 | Stop at: 1558
Last week I was expecting something on the upside... this whole choppy move took longer than expected but the direction stays up.
Short term I think that we will see small pullback which will be buying opportunity but be careful because I think we are chasing the last 10-20 points. RSI hitting 73,5 on the weekly chart.... do not expect much more upside. On previous occasions since 2009 when we saw RSI at this level the result was 17% / 21% / 11% / 9% correction.
The bigger picture has not changed - after this move a correction 8%-10% should start.
TECHNICAL PICTURE
Short term - I am not sure what kind of figure we are witnessing but the indicators are positive and the next move higher has begun. At this point any pullback should stay above the lower trend line and EMA50.
- Triple cross(EMA10 and EMA20 crossing EMA50) - Price and short term moving averages are above EMA50 so short term trend is up.
Intermediate term - the indexes are moving higher as expected and the indicators will make divergences as expected. The indicators look good for a short term move up but after that.... we should see a correction.
- Trend direction EMA50/MACD - price is above EMA50 and MACD above zero so intermediate term trend is still up. MACD does not made a new high, divergences are visible and we must be careful for intermediate term trend change.
- Momentum Histogram/RSI - RSI and the histogram have turned up, the momentum is now up and we will see higher high on the SP500.
Long term - the big picture has not changed. RSI hitting 73,5 on the weekly chart.... do not expect much more upside. On previous occasions since 2009 when we saw RSI at this level the result was 17% / 21% / 11% / 9% correction. So be smart and patient not greedy. It is too late to chase something on the long side.
- Trend direction EMA50/MACD - MACD is above the zero line and the price above EMA50, the long term trend is UP. No divergences so I think that the cyclical bull is not over.
- Momentum Histogram/RSI - momentum is still up but the move looks tired.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - exactly like last week. They do not look very bullish making their second top, what you should expect before reversal. The move is mature the next big directional move should be lower.
McClellan Oscillator - moved above zero as expected now waiting for the divergence.
McClellan Summation Index - no change, we have a divergence and a sell signal.
Weekly Stochastic of the Summation Index - buy signal, but I think it should be ignored.
Bullish Percentage - working on a divergence, but buy signal for the short term.
Percent of Stocks above MA50 - I expect to see another lower high and double divergence.
Fear Indicator VXO - working on its divergence....
Issues Advancing - the participations is not really broad... just inched a little bit higher.
Issues Declining - the declining issues are not getting less even with the indexes moving higher.
HURST CYCLES
We had 20 day cycle low last week and now we are at day 8 of the next one. I think there is another 3-5 days on the upside before we see the top of this cycle.
Currently at week 5 of the 20 week cycle. I have tried to adjust the projections to fit the time. I expect top for the current 20 week cycle in the first half of April and 20 week and 40 week bottom around the end of May early June.
I think the 40 week cycle is dominant and we are seeing the same shape like the previous two 40 week cycles - the first 20 week cycle moving higher the whole time and the bottom was just sideway move for several weeks, the second 20 week cycle topping very early after several weeks upside.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Another quiet week.... Best guess we will finish this combo (currently at 9) before the reversal.
We have a combo at 10. Should we expect another three weeks of higher highs.... I do not know but it is possible. See the top in April 2012 - the missing three higher highs without the index really moving higher just winning time and making top.
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