Nov 30, 2013

Weekly review

Short term view - I am not sure if a pullback has begun or one more push higher is in the cards. Wait for the opening on Monday.
Intermediate term view - if we see a pullback this should be the beginning of the correction.

The indexes squeezed several points higher and finished flat for the week - exactly according to the plan. SP500 reached the 1810-1815 target which I showed with the inverted H&S for two weeks I think.

Short term there is two scenarios - the ending diagonal, which I showed during the week, looks much better as a pattern. On the other side it could be an impulse which has finished - with the "huge" bar (compared to the others) and the double MACD divergence(see the hourly chart) make this scenario more probable. On Monday we will know more - if we see a gap and decisive move bellow 1800 pullback has begun, if we see the price stalling at the 1795-1800 level than it is just 4 of ending diagonal.
Intermediate term - nothing has changed. I think we are in a "mania" phase (see the previous post). There is a lot more indicators, which are suggesting the same - huge "excitement" comparable with the previous two tops 2000 and 2007. The problem with such "mania" phases is, that you do not know, when they will end. All we know is that they end bad... always.
This levels 1810-1825 are a good area for a reversal. The signals are aligning - EW,Cycles,TD sequential, indicators... well let's see if this time all this will materialize into a pullback.

Short term - here the two scenarios - the wedge(red) looks better as a pattern, the reversal(green) looks more promising from TA stand point.
- Triple cross(EMA10 and EMA20 crossing EMA50) - positive,short term trend up, but be careful for a reversal we have double MACD divergence.

Intermediate term - waiting for the correction.... we will see if I am right.
- Trend direction EMA50/MACD - the intermediate term trend is up, but we are seeing now double MACD divergence. Watch out for a trend reversal.
- Momentum Histogram/RSI - Momentum ticked lower with another histogram divergence. Short term trend reversal is possible.

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.
- 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 is up, the intermediate term trend is up.

The Market Breadth Indicators - nothing changed....
McClellan Oscillator - another lower high and divergence is coming.
McClellan Summation Index - trying to generate buy signal... the next divergence.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - buy signal, do not get exited:)
Percent of Stocks above MA50 - yet another divergence... new ATH and another lower peak.
Fear Indicator VXO - BB even more narrow... expect explosive move in some direction. And strong candle on Friday, pullback has begun??
Advance-Decline Issues - expect another lower high and divergence of a bigger degree.
Put to call ratio - making several lower highs.

The top of the 40 day cycle is already long overdue....

At week 54 of the 18 month cycle. It has reached size and length where we should see the top of the cycle. Now it should be only downhill for the next 4 to 7 weeks... come on mother nature you are stronger than the FED:)

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Countdown could finish with 13 making just higher high(green short term top is in) or we will see one last surge(red scenario wave 5) to finish the countdown.
The rules are not exact in this case - no edge here. The message is we are near to a top.

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