Mar 2, 2014

Weekly review

Short term view - very careful we can see a pullback if price breaks bellow 1840.
Intermediate term view - my feeling tells me, the move to the upside is not finished.

Green week as expected. Short term we did not see a pullback, but 1835 has not been broken and the signal was not activated. Now the level is at 1840.

Short term - exactly the same story as last week. I can just copy/paste - toping tails, oscillators with divergences etc. The difference is this time I think we will see a pullback.
Intermediate term - I think that we have confirmation that the next 20 week cycle is running(4 weeks already to the upside), the indicators look to me like anything to the downside will be just a pullback(as long as the price stays above 1810).

Very often in March occur important reversals tops/bottoms, the whole move since 2012 is very stretched as time/price/sentiment, the current rally is not really healthy and convincing, I will not be surprised if we see a sharp reversal. It could be now it could be in 2-3 weeks. The strategy to follow the price higher for the last several weeks was right and my feeling tells me we are not finished to the upside but it is time to be cautious. This week we have another signal to the mix - see Demark bellow I think it is important.
Trading advice - if you see a move bellow 1840 for active traders you can short it... if you have longer term view and you think that there is more upside nevertheless be prudent and take some profits, later you can add to the position if the price start moving higher again.

Short term - If the price breaks bellow 1840 the next target is 1810-1815. Than we will see what happens...
- Triple cross(EMA10 and EMA20 crossing EMA50) - short term trend is still up, but with double MACD divergence I think we will see a pullback.

Intermediate term - the both scenarios. As long MA50 and 1810 support hold the red one is the preferred.
- Trend direction EMA50/MACD - intermediate term trend turned up.
- Momentum Histogram/RSI - momentum still points lower - pullback at last?

Long term - I do not think that this move will clear the MACD divergence and the move will fail to start another long lasting rally.
- Trend direction EMA50/MACD - the long term trend is up - the price above MA50 and MACD above zero. The MACD divergence should make you worry, that the long term trend can reverse soon.
- Momentum Histogram/RSI - momentum turned up, the intermediate term trend is up.

The Market Breadth Indicators - the oscillators show divergences, the trend following indicators look ok for now and do not show signs for a pending trouble.
McClellan Oscillator - divergence.
McClellan Summation Index - buy signal, looks ok for now, made higher high.
Weekly Stochastic of the Summation Index - buy signal, next week it will reach the overbought level.
Bullish Percentage - managed to move above 70, but still below the previous highs.
Percent of Stocks above MA50 - almost reached 75, but still below the previous highs.
Fear Indicator VIX - the next higher low... draw a line between the lows since 2013 and you will see that they are trending higher... this does not look bullish.
Advance-Decline Issues - I expect to see a divergence after the next move higher.
Put/Call ratio - still at elevated levels and with divergence.

This is the perfect time to see a 20 day cycle top and a pullback...
4 weeks higher this should be the next 20 week cycle, that is why I expect the move higher to last few more weeks.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
(mistake corrected on the weekly chart 13 is now... it happens when you count by hand:)
The Demark charts are interesting - we have finished combo countdown on the weekly and the monthly chart. This are the most powerful signals when you see counts finishing in different time frames and this time this is weekly and monthly - I THINK THIS IS IMPORTANT.
If you use the less restricted rules we have 13 on both time frames. If we use the restricted rules weekly is at 11 and monthly at 12. So there is a room for 2-3 weeks or one monthly bar more to the upside.
Beside the counts do you see the wedge - there is no more room to move inside it. Two options it breaks lower with first stop 1600 support and MA20 or it breaks higher we see a parabola of a parabola:)

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