Jan 19, 2014

Weekly review

Short term view - not clear, but I am still leaning to the upside until proven otherwise.
Intermediate term view - still up, but again the next intermediate term move will be to the downside.

Last week we saw choppy move and I did not know where the low is, but as I wrote it should be bought. That was the right idea. The week was flat, SP500 closed the gap and closed at 1838... more confusion:)

Ok looking at the the charts,indicators,EW,cycle for the short term I do not see an edge to say the market will go higher or lower. I would wait to see what the market wants to do.
I am still leaning to the upside - on the daily chart it looks like the indicators are reseting, but the price do not want to move lower, which makes me think that the final rally is missing(or it has started this week). If the market wants to move higher it is allowed to move a little bit lower but than we should see sharp rally next week.
If something to the downside has started the bears should show strength - the market should follow the indicators and move fast lower to the first support - 1810.

Short term - for now the price action to the downside this week is similar to the A-B-C but on smaller scale. The indicators are reseting like on the daily chart... so we should stay with the green scenario, but be cautious. If we see sharp decline(red scenario) it will mean the indicators hourly and daily are not just resetting, but the divergences have kicked in.
- Triple cross(EMA10 and EMA20 crossing EMA50) - the short term trend is not clear.....

Intermediate term - no change final rally to the purple trend line expected.... than sharp correction.
- 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 weak, short term trend is not clear.

Long term - flat week no change waiting for the end of the blow off phase.
- 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 - the histogram printed another lower bar... momentum is reversing?

The Market Breadth Indicators - intermediate/long term red flags....
McClellan Oscillator - positive, but we are seeing divergence...
McClellan Summation Index - buy signal and it is rising...
Weekly Stochastic of the Summation Index - buy signal, it has reached the overbought area.
Bullish Percentage - another lower high, but at bullish levels.
Percent of Stocks above MA50 - weaker than expected, probably we will see another lower high.
Fear Indicator VIX - again a lot of complacency, at levels where we saw bottoms the whole year 2013, which means top for the stocks.
Advance-Decline Issues - weakness... I expect another lower high.
Put/Call ratio - the traders are very very very excited....

I think we are in the middle of the current 40 day cycle. We saw the first 20 day cycle bottoming on Monday and the next one higher has begun.

Nothing new the move is already very stretched in time matching the initial rally in 2009 and the size is the same like the previous two 18 month cycle tops. That makes me think the move into the 18 month cycle low will be very sharp and compressed in time - not more than 4-6 weeks but the usual 10%-15%.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Nothing interesting on the daily chart.... and it is matter of interpretation if this was week 13 or not. DJ did not make new high and Sp500 only 1 point. But we are geting close to another overbought level.

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