Intermediate term view - after last final move higher we should see a correction.
Trading system signal (swing trading) - Direction: NEUTRAL | Last entry signal: at SP500=.... on xx.xx.xx | Stop at:
Volatile market and complicated choppy pattern, the bottom and the trend line have been tested, but if you take a step back and look at the bigger picture the plan has not changed and it is in tact. I have posted once a NYMO chart comparing the indicator and the SP500 now and in April 2012 - for now the market action is repeating and if the patterns stays the same we should see several green days.
We have NYMO and histogram moving higher, momentum is turning up, SP500 bouncing for the second time from the trend line and MA50, MACD turning up from the zero line, on the DAX we have even histogram divergence, so I think that the green scenario from the charts bellow, has much higher probability. That means at least several green days or test of the high.
TECHNICAL PICTURE
Short term - looking only the chart the triangle and the red scenario looks possible, but looking at the daily chart and the indicators the green scenario has much higher probability even if we test the lower yellow trend line.
Intermediate term - I think the momentum is turning up and usually when NYMO hits -100 it moves above zero before any move lower resumes. This confirms the forecast for a short term move up. The subsequent correction will not be deeper than 38,2%.
- Momentum Histogram/RSI - start turning up.
Long term - no change
- Momentum Histogram/RSI - momentum is down which is a warning that anything on the upside should be short living.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - do not give much information if we are near a top or a bottom, probably because we are still in the middle of a corrective move.
McClellan Oscillator - moving higher after oversold levels. Usually it moves into positive territory after hitting -100. That means relief rally for at least several days.
McClellan Summation Index - sell signal. It plunged 1000 saying we are in a correction.
Weekly Stochastic of the Summation Index - sell signal. Very near to oversold levels. We are probably 2-3 weeks away from intermediate term bottom.
Bullish Percentage - sell signal, but still elevated levels.
Percent of Stocks above MA50 - in no mans land ~50%-60%
Fear Indicator VXO - fear has spiked up which is normal. For a real correction it should move above 20.
Issues Advancing - improving after extremes supporting the idea fro a bounce upward.
Issues Declining - we have less decliners after hitting extremes.
HURST CYCLES
The move was very weak and that does not look like 20 and 40 week cycle low. We are in the last 20 trading day cycle and we have not seen the bottom.
I think we have not seen the bottom and this cycle will be a little bit longer than the usual.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
A mess on the daily chart and a price flip on the weekly chart, which confirms that momentum has turned down on the weekly time frame.
The monthly chart - combo and countdown are finished later this year a significant correction should begin. The price is way too far from MA20, testing the upper trend line so it needs to cool down.
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