Apr 25, 2014

Weekly review

Short term view - correction should be over soon.
Intermediate term view - after new ATH another correction to finish the 20 week cycle.

As I wrote on Tuesday correction should start... now we wait to see when it will finish.

We have very choppy price action for almost two months.... it is difficult to follow the market. I will not be surprise for example to see a fake move bellow 1840 and another reversal higher....
My best guess is that there will be one more leg higher but I do not expect long lasting or huge rally. Another correction should follow to finish the 20 week cycle... or another month with choppy action.
I think we have finished a-b-c at the moment. So either the correction should finish or it could mutate in something more complicated... another wave x and than y. Again for the bullish case I would prefer this move lower to finish above 1850.

P.S. I am on a vacation the next two weeks so no weekly reviews next two weekends.

Short term - now it looks like that we have 5 waves lower with divergence on the smaller time frames. That means we should expect something to the upside.
- Triple cross(EMA10 and EMA20 crossing EMA50) - short term trend neutral

Intermediate term - The price should stay above MA50 or move bellow it for no more than a day or two for the bullish scenario(green).
- Trend direction EMA50/MACD - still positive not convincing enough
- Momentum Histogram/RSI - ticked lower... too early to say anything

Long term - 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 topping.
- Momentum Histogram/RSI - momentum ticked up... but it's too early to say that intermediate term trend turned up.

The Market Breadth Indicators - do not help us much.... some are trying to turn up... nothing convincing.
McClellan Oscillator - around the zero line.
McClellan Summation Index - buy signal
Weekly Stochastic of the Summation Index - buy signal
Bullish Percentage - no idea
Percent of Stocks above MA50 - in the middle of the range
Fear Indicator VIX - jumped higher and another higher low DANGER!!!!
Advance-Decline Issues - in the middle of the range

It counts better as a longer 40 day cycle so I change it. The next one is already running at day 9 and should make ATH and than turn lower.

I think we will see a bottom for the 20 week cycle around the end of May.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
On the weekly chart the price is flipping up an down all the time. On the daily chart the current setup was aborted today which is a sign for a weakness.

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