Apr 6, 2014

Weekly review

Short term view - probably bounce higher for a day or two and lower again.
Intermediate term view - I think we will see a move lower for several weeks.

Ok I am back online:) Nothing interesting this 4-5 weeks choppy moves up and down in a tight range.

Now we have ugly candle on daily chart wiping out four days advance and producing bearish weekly candle. We have MACD divergence daily and weekly, on the DJ it looks even worse. The price could not reach the upper trend line(see the daily chart) the new highs were met with selling. Tom Demark daily and weekly counts reached 13 at the same time, cycle ripe enough to support a move lower for several weeks.... My conclusion - the market looks tired and needs a correction for several weeks. The logical target I think is the lower trend line and support around 1800.

Short term - it is difficult to say if we will see a bounce on Monday or later during the week(watch the opening on Monday), but I think any bounce is a sell. We have a free space lower with first support level around 1840.
- Triple cross(EMA10 and EMA20 crossing EMA50) - short term is still up, but I think it will turn lower.

Intermediate term - new highs which were met with strong selling, MACD divergence, the price could not reach the upper trend line.... weak price action. So I think the price will visit the lower trend line and support around 1800.
- Trend direction EMA50/MACD - intermediate term trend is up, but with MACD divergence and it will probably reverse.
- Momentum Histogram/RSI - momentum has turned lower.

Long term - the price action start looking to me like a topping process in early stages... I do not think that any move higher will clear the MACD divergence and start another long lasting rally. I think the next big move will be lower, but it could last months until we reach this point.
- 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 is reversing.
- Momentum Histogram/RSI - momentum is still up.

The Market Breadth Indicators - a lot of divergences on the trend following indicator.... we should see something to the downside for at least several weeks.
McClellan Oscillator - moved bellow zero after another divergence.
McClellan Summation Index - just turned lower after making a lower high.
Weekly Stochastic of the Summation Index - sell signal for several weeks, the indexes are not finished to the downside.
Bullish Percentage - another lower high and double divergence.
Percent of Stocks above MA50 - slightly lower high compared with previous peaks.
Fear Indicator VIX - another higher low...
Advance-Decline Issues - weak could not reach the overbought level... I think this is because this leg up was part of a bigger corrective structure.
Put/Call ratio - another lower high.

We are in the second 40 day cycle. I think the 80 day cycle has topped out and a move bellow the last minor low should confirm it.

Week 9 of a 20 week cycle. If a correction has begun expect a move for 3 to 5 weeks lower.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
The new high could be counted as 13 and finished countdown. The technical picture and the indicators support it we have price flip so i think correction has begun.
The same story - the new high could be counted as 13 and finished countdown. The ugly candle, finished countdown and daily technical picture say to expect several weeks lower.

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