Sep 15, 2013

Weekly review

Short term view - more upside at least till FOMC
Intermediate term view - this coming week we will know if we saw already intermediate term bottom or not.

The move last longer and reached higher levels than expected... and know there is a probability that the short term bottom turns out to be an intermediate term bottom.

What is next? - The indicators look like they are reversing and the next intermediate term swing is underway, on the other side Market breadth indicators are weak after two green weeks, cycles do not fit at all. My bias is for a topping pattern, but based only on indicators to say now Up or Down is like betting in a casino. I prefer to wait several days an follow the signals. Soon we will know more.
For the next week we have the positive news about Syria, I think the news is already priced in but with FOMC on 18.September I do not think that we will see something on the downside. So short term more upside, intermediate term we will know after FOMC. Bearish case max to 1720-1725 and reversal next week, bullish case move above 1725 and/or no reversal next week(see the daily chart).

Short term - positive news and FOMC the pressure will be on the upside. I can not predict the exact squiggles but do not short before Wednesday and you can use pullbacks for a short term long trade.
- Triple cross(EMA10 and EMA20 crossing EMA50) - triple cross is positive and short term trend is up.

Intermediate term - my forecast for a topping sequence is in serious danger:) For bearish outcome the bears need reversal next week from 1690-1700-1710-1720 it is not important, important is reversal and very strong sell off. If we do not see a reversal next week, instead third green and strong week that will mean the bulls are wining the battle and we will watch the red scenario.
- Trend direction EMA50/MACD - the price is above MA50 and MACD above zero the intermediate term trend is up.
- Momentum Histogram/RSI - momentum is up, short term trend is up.

Long term - the pattern is still valid but the bearish case should play out. If the bulls win the battle it will be negated.
- Trend direction EMA50/MACD - long term trend is up.
- Momentum Histogram/RSI - momentum turned up.

The Market Breadth Indicators - confusing signals and I can present you "evidence" for both cases bearish and bullish. They look like reversing for the next intermediate term rally do not show a lot of "enthusiasm".
McClellan Oscillator - shows small divergence... too early to bet on it.
McClellan Summation Index - issued buy signal, but weak and way bellow previous tops... making a double divergence?
Weekly Stochastic of the Summation Index - issued buy signal
Bullish Percentage - issued buy signal, but no "enthusiasm" at all... double divergence?
Percent of Stocks above MA50 - no information to help us.
Fear Indicator VXO - higher low and divergence? bad for stocks.
Issues Advancing - bounce from oversold levels and for the strongest part of this rally does not moved up much, but still positive signal.
Put/Call Ratio - the traders are very bullish, which usually happens around tops.

The daily chart with the shorter cycles favors the bearish scenario. They do not fit very nice(unless if you are very "creative") with finished 20 week cycle and intermediate term bottom. Only 46 days... this is waaaay to short, the half of a normal cycle. But again we must see reversal next week... at the end the price action is more important than nice looking cycles.

It is difficult to say if we saw 20 week cycle bottom. 10 weeks will be the shortest one which I have seen till now and it is a little bit suspect especially if take into account the shorter cycle which do not fit at all. Next week we will know.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Setup was finished.. that does not mean sell right away. Wait for a price flip next week if you want to go short, or there is no reversal and we will start countdown.
Price flip on the weekly chart. Next week we will see what happens.

No comments:

Post a Comment