Jun 7, 2014

Weekly review

Short term view - short term top expected... this time I could be right:)
Intermediate term view - waiting for the move to finish and a correction for 2-4 weeks.

No change.... wrong forecast again:) no small pullback even to MA50 on the hourly chart. But as I wrote the trading is easy - stay long until you see signs for a weakness. There were no such so there were no need to take any action.

The forecast stays the same I expect a top and a correction for 2-4 weeks with target max 1850-1860. It is time for a 20 week cycle low and one year cycle low which we see every year in June-July. The strength only confirms my plan that after a correction we should see a new high.
The market feels on steroids again, a lot of complacency VIX at the lowest level since 2007 before the top... but I think this time it is weaker less shares are participating and not all indexes are so strong, weekly MACD divergence are still saying we are working on the top.... nevertheless this is not THE TOP it is months away (as long we stay above 1850-1860).
Long term traders can now sit back, relax and enjoy the summer. Intermediate term traders will have some work in June chasing a correction and waiting for a bottom around the end of June early July.
Trading - the same story like last week. Stay long until you see a lower high or higher high with divergence.
The DAX (see the last chart)looks like it has finished the move higher and next week we should see a reversal. That is why I think you should look closely for a reversal next week in the US markets too.

Short term - up is up until it changes... minor support and MA50 now at 1925.
- Triple cross(EMA10 and EMA20 crossing EMA50) - short term trend is up.

Intermediate term - I think the ED has been busted but the plan stays the same pullback to MA50/support and another higher high.
- Trend direction EMA50/MACD - intermediate term trend is up.
- Momentum Histogram/RSI - momentum is up.

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 nearing a top.
- Momentum Histogram/RSI - momentum is up.

The Market Breadth Indicators - are showing some strength which is good for the intermediate term and any top now should not be an important top, the long term indicators like McClellan Summation Index are still weak which is a warning for the long term.
McClellan Oscillator - made higher high.
McClellan Summation Index - buy signal, but could not really move strong higher. Still lower high.
Weekly Stochastic of the Summation Index - buy signal
Bullish Percentage - buy signal, but still long term divergences.
Percent of Stocks above MA50 - strength moving to 88.
Fear Indicator VIX - extreme complacency last seen in 2007 several months before the top.
Advance-Decline Issues - surprising, it can not move to the overbought zone and on Friday advancing issues moved even lower.
Put/Call ratio - at extreme again
Percent of Stocks above MA200 - moved higher but is stays in this range 60-75... surprisingly for almost vertical move and 81 weeks without a correction.

Day 38 - the move is getting extended in time, but I still think that we should see the indexes moving lower soon towards the expected 40 day and 80 day cycle low.

Waiting for a correction to finish the 20 week cycle.... The cycle will be right translated that is why I do not expect an important top rather a new high after the low.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
The setup has been finished as expected. Wait for the combo to finish or a price flip before any shorts.

There is very high probability that the setup will finish even if the correction begin next week.

Here is how the DAX looks like...


  1. if you see a low to 6/12 up to 16 and back to 23 lower?tq Krasi

    1. It is possible, the move lower should be a three so first down for a week up for several days and down again and overall three weeks.
      But I can not time the move so good:) I am just watching the price.

  2. Hard to believe, but market always right, must be in some kind of euphoria mode.

    Got a strong feeling it's in final wave 5 up from 2009 market bottom. Quote "The news is almost universally positive and everyone is bullish", at the moment, labour market seems doing as good as pre-recession, company profits keep going up, everything seems doing good... But that's the scary part, we should be worried if nothing seems wrong :-)

    However it doesn't mean we could see the trend change soon or see the crash in the next few days. Because still got someone out there trying to predict the top is right around the corner... I think the top will not come until it squeeze those people out :-)

    I think we could see 1953~1959 in pre-market next week, and maybe a minor pull back before hitting 2000... OMG, that's scary.. haha.. I'm going to short NASDAQ and long SPX and GOLD now...

    Once again, thanks a lot for your constant effort for writing these weekly review posts. I'm one of your big fan :-)

  3. Yes it feels very strong, but I think it is only at a first glance.... I think the market is weaker than in 2013.
    It is possible that there is a little bit more upside, but I still think that the next move is at least a pause for several days and lower to 1920-1925. Five waves on every index, extended indicators, euphoria... it looks like an exhaustion and not like a break out.
    If it can not break bellow this level than it will go parabolic and hello 2000 and more... until than I expect a pullback.

    This are good trades... it is right shorting weaker index probably Russell2000 even better and not the strongest.