Aug 10, 2013

Weekly review

Short term view - the short term is not very clear, I think the move lower is not over.
Intermediate term view - we are nearing an intermediate term top...

I am back from holiday and I will resume regular posts. Nothing really interesting this 3-4 weeks, just sideway action... no surprises.

For the short term I am not sure, but I think the pullback is not over(as long as the price is below 1700) and we will see another push lower - support and MA50 are around 1650-1660. The indicators are showing for a while that the indexes are in some kind of pullback and they are clearing the overbought conditions, but the price is moving sideways. That makes me think that after the pullback we will see another push higher.
The bigger picture - a lot of divergences on the daily charts,weekly charts, market breadth indicators... I think the indexes are near to an intermediate term top. This is what I am showing for months so no surprise. The only question is if we will see short term last push higher or the top is in for this move at 1710.

Short term - last minor support ~1700 has been broken and tested yesterday (I have warned you about that in the previous post:). I expect the pullback to continue next week followed by another push higher before the real move lower to begin.
- Triple cross(EMA10 and EMA20 crossing EMA50) - MACD is bellow the zero line and EMA10/EMA20 bellow EMA50 - short term trend is down

Intermediate term - If I am right the price will test support and MA50 and move higher again. If I am wrong we already saw an intermediate term top at 1710 and after short pause around 1650-1660 the price will continue moving lower - the red scenario.
- Trend direction EMA50/MACD - intermediate term trend is still up, but we have a lot of divergences. We must be careful for trend reversal.
- Momentum Histogram/RSI - momentum is pointing down.

Long term - no change, the indexes are following the plan. We have now MACD divergence... see the chart, the previous three occasions have signaled for serious correction ahead and the indicator were right.
- Trend direction EMA50/MACD - long term trend is up, but MACD and the oscillators show divergences and we must be prepared for a bigger correction.
- Momentum Histogram/RSI - momentum is pointing down.

The Market Breadth Indicators - show that market internals are weak.... divergences everywhere but the market players are very complacent once again.
McClellan Oscillator - negative for several weeks already. You can say the market is very weak the top is in and it will plunge to the oversold levels ~100, or the market is in a pullback the indicator is around normal levels -55/-60 for a such move and now we should see last final push higher with divergence... The short term is difficult to predict, but intermediate term we should see(we saw) a reversal.
McClellan Summation Index - sell signal. The market made new high, but the indicator does not reached even near to the previous high warning us for very weak market internals.
Weekly Stochastic of the Summation Index - sell signal. The indicator says the swing higher is already over.
Bullish Percentage - still above 75, but with huge divergence with the previous high.
Percent of Stocks above MA50 - still on buy, but with huge divergence with the previous high.
Fear Indicator VXO - the market players are very complacent once again and VXO is spending time in the oversold area 10-12.
Issues Advancing - only few advancing issues
Issues Declining - a lot of declining issues

We are in the second 20 day cycle and I think the low for the pullback will be the 40 day cycle low.

week 7 or in the middle of the third 20 week cycle. I think the top for this cycle will be and the top for the cycle of much higher degree - the 18 month cycle. Average length is 14-16 weeks so we are exactly in the middle of the cycle. It should top earlier because the 18 month cycle starts pulling the prices lower. That means that we saw the top already or it should follow in the next 2-3 weeks max.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Tom Demark sequential daily and weekly say - "you are right, you are right, just one more push higher":)) Usually when the daily and weekly counts finish at the same time this is an important signal. Lets see if we will see one more push higher to finish the daily and weekly countdowns.

At 12 of a combo and 10 of a countdown, one final high will do the job the counts to be finished.
At 12 of a countdown, one final higher high is missing.


  1. Great to have u back Krasi! Enjoy your insights and analysis on this market. Any short signals from ur trading system?

    1. Only short term signal but not very convincing. We have only candles with small range bodies on the daily chat. On the other side the weekly candle does not look very good for the bulls especially on the Dow.
      For a short on Monday we should see nice red candle moving below the range from the last 3-4 weeks (shown on the hourly chart with upward slope).
      If we see such action this will trigger an intermediate term short signal too.