Dec 15, 2013

Weekly review

Short term view - one final lower low and short term bottom FOMC 18.12
Intermediate term view - intermediate term top should be in and I expect another 4-6 weeks of weakness to finish the correction.

SP500 made something like double top DJ more like H&S the call for a short at 1810 was very good so this week has not disappointed us:)

Now the charts are looking a little bit confusing...
- The weekly charts are looking bad - divergences MACD/RSI, TomDemark bearish price flip momentum has turned lower, bearish candle stick formation and this week candlestick closed bellow it, the last 4-6 weeks of 18 month cycle.
- On the other side the move is still not strong enough. We still do not have serious technical damages. On the daily chart you can count the move as A-B-C, the oscillators are nearing oversold levels (short term bottom?), FOMC and holidays(low volume) are coming which favors the upside. Some indexes look weak and finished their EW counts - Russell 2000, DAX, FTSE others like SP500 not so weak and XLF for example has not finished it's count.

Usually the bigger time frame wins(weekly), but in the near term it is not a problem that the smaller one(daily) plays out.
So my best guess is short term bottom FOMC(or the previous day) and drifting higher through the holidays. XLF probably will finish its count, SP500 could test the highs again or make marginal new high.
We will just wait and see what happens. If you are short from 1810 for example just put a stop on break even or several points lower and enjoy the holidays:) If we see something interesting you can even go long.

Short term - one final low and at least a retracement. Probable target the broken trend line around 1805. If I am wrong marginal new high around 1840.
- Triple cross(EMA10 and EMA20 crossing EMA50) - negative, short term trend is down.

Intermediate term - the same story, both scenarios.... we must be prepared and keep an eye on alternate scenarios if we are wrong.
- 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 is down, short term trend is down.

Long term - the weekly chart says it looks bad, intermediate top is in.
- Trend direction EMA50/MACD - long term trend is up - the price above MA50 and MACD above zero. Watch out for the MACD divergence - something bad could happen.
- Momentum Histogram/RSI - turned lower, it looks like the intermediate term reversed to the downside.

The Market Breadth Indicators - are negative as the last week, but showed a little bit more enthusiasm to the downside:)
McClellan Oscillator - made another lower low and bouncing from slightly oversold levels.
McClellan Summation Index - sell signal moving down.
Weekly Stochastic of the Summation Index - sell signal.... reached oversold levels. I hope it will stay there for several weeks.
Bullish Percentage - sell signal... showed some signs of life.
Percent of Stocks above MA50 - in the middle of the range... we are in a correction??
Fear Indicator VXO - shot up to 16... as i said there will be explosive move to the upside. Are the traders nervous?
Advance-Decline Issues - weak and probably we are nearing short term bottom with the indicator nearing oversold levels.
Put/Call ratio - third peak in a row...
Percent of Stocks above MA200 - continue falling... Think about it for a second, we are near to the highs huge rally and 41% of the stocks are in bear territory bellow MA200 and only 59% above it.... how is this bullish???

If wee see only a retracement the bottom was at day 41. If we see a surprise, stronger than expected move to the upside, the bottom will be Friday at day 47.

The weekly chart looks on track and we should see 4 to 6 weeks correction.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
The weekly candles look definitely bearish... and we have this week price flip - the momentum has turned lower.


  1. @Krasi:If we look HURST CYCLES, whether a bottom in Friday Dec. 20?Tq so much

    1. I do not see something special on Friday 20.Dec.... it is interesting if this Friday or in the next day or two we will see a 40 day cycle bottom(or it is already behind us at day 41). If so this could be a catalyst for retest of the highs even new highs for some indexes.

  2. Tq Krasi,I also really hope 18 into bottom and hopefully FED does not make this scenario becomes chaotic.Gbu