Nov 16, 2013

Weekly review

Short term view - top next week.
Intermediate term view - intermediate term top next week and 10%-12% correction to begin.

Up to the trend line even overshot it a little bit(SP500 daily) nothing unexpected. The intermediate term and short term forecasts played out so far as expected.
What about the long term? - I have posted the first weekly chart with topping pattern on 18-th of May exactly the last green week for the rally before the choppy pattern to begin. It worked prefect for the DJ for 6 months(not bad:), but not so perfect for SP500. It has drifted upward and it is 6% above the May top(not that 6% is a huge gain for 6 months).
What I want to say is, that I have run out of excuses why the market should go higher:) if we speak about technical analysis, "irrational exuberance" is another story. Either I am right and a correction should start next week or I will be wrong and the market will continue parabolic until the end of the year probably SP500 - 1900.

Technical analysis,Cycles,TomDemark Sequential,EW... I can only say that we should expect correction. And again until we see confirmation from the price all this means nothing.
Lets say there will be a correction. How should it look like, so we can prepare better for it? - this last 20 week cycle is taking to long to the upside, which means the last part of the cycle, the last 4-5 weeks, we will see sharp move lower. When there is too much greed it is purged from the system with sharp but short living correction. In October and November we saw only strength and I doubt that in December(holidays) we will see a plunge. Based on this thoughts I think we will see a pullback in the next two weeks, indexes crawling higher in December probably the year finishing near the highs and in January very sharp and strong move lower to scare the herd. I expect now shorter 4-5 weeks and milder 10%-12% correction.

Short term - I expect something like this if the correction start next week. For a short wait for a divergence or a move bellow 1775.
- Triple cross(EMA10 and EMA20 crossing EMA50) - short term trend up.

Intermediate term - I was waiting for this final high and the MACD divergence - now we have it. Correction target 10%-12% is around 50% Fibo retracement and support, where the choppy move has begun.
- Trend direction EMA50/MACD - the intermediate term trend is up, but we are seeing MACD divergence.
- Momentum Histogram/RSI - momentum has turned up, but I expect to see an histogram divergence.

Long term - we have reached the point where the price should decide to follow the pattern, as for the last 6 months, or it will negate it and go parabolic higher.
- Trend direction EMA50/MACD - long term trend is up - the price above MA50 and MACD above zero. Watch out for the MACD divergence.
- Momentum Histogram/RSI - momentum has turned up, the intermediate term trend is up.

The Market Breadth Indicators - ticked higher but has not really improved justifying another rally higher.
McClellan Oscillator - another lower high and divergence is coming.
McClellan Summation Index - sell signal we see a divergence for the short term - new ATH not even a buy signal.
Weekly Stochastic of the Summation Index - sell signal generated as expected.
Bullish Percentage - buy signal, do not get exited:)
Percent of Stocks above MA50 - another divergence... as predicted for now new ATH with lower peak.
Fear Indicator VXO - veeery narrow BB, which means expect explosion in some direction... do you think it will be to the downside???
Advance-Decline Issues - moved higher but we are seeing huge divergence.
Put/Call ratio - another extreme another lower high...

The 40 daily cycle is now mature for a cycle top - compared with the previous cycle highs it is lasting longer...

At week 52 of the 18 month cycle. It has reached size and length where we see the top for the cycle. Again the big picture - the 18 month cycle peaked at week 59/53/51 in the last 20 week cycle and a correction for 10/12/9 weeks has followed.Do you believe that the rally will accelerate now when it is already one year old?

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
On the daily chart another combo has been finished. We have setup+countdown/combo followed by another setup+combo and this combined with 9-13-9 finished on the weekly chart. That says to me expect reversal not a rally.
The index has completed TD Sequential 9-13-9 Sell Count, that is why I expect correction and not another rally for 3-4 months.

No comments:

Post a Comment