Jul 12, 2014

Weekly review

Short term view - strong green Monday... if I am right.
Intermediate term view - another ATH... if I am right.

There is high probability that we saw running flat and the next wave 5 higher has begun. I have called the top of wave 3(first chart) and then I was wrong that we should see a pullback. A running flat will explain this - technically we saw wave 4, but with higher prices in the same time.

Now if I am right wave 5 has begun with target minimum 2000. If this is the case we should see a strong move up on Monday. Look at the daily chart and the last three bars - the price is trying to turn up so SP500 should rally on Monday or something else is going on.
The week should be green too... and not just a little bit, the price should be near the previous high. The weekly chart is not so bullish and another red week would be a confirmation for something bigger to the downside.

Short term - this is what expect for now....

This is if something goes wrong - the red scenario. The preferred scenario (white) we are in wave 5 and some kind of wave 3 should begin on Monday... brief pause at resistance and higher.
The red scenario we are in a double zigzag. Wave W has finished and we are now in X. Than Monday should be up but weak reaching resistance and 61,8% retracement and another wave lower to around 1940 begins.

Intermediate term - the chart adjusted. One final high before a pullback. The last three days argue that the price is trying to turn up - green day, hammer and another small green day with a shadow... but this must be confirmed on Monday.

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. Do not fall asleep, double MACD divergence on the weekly chart means expect something nasty...

The Market Breadth Indicators - ummmmm mixed signals. The message is we are near to a top, but I can not say if we saw it already.
McClellan Oscillator - plunged bellow the BB and bounce was expected. We will see if it is something more.
McClellan Summation Index - sell signal with double top.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - not really impressed, still on buy.
Percent of Stocks above MA50 - moved lower to 75, but still no sign for a strong move lower.
Fear Indicator VIX - jumped higher from very low levels.... probably it will cool off next week.
Advance-Decline Issues - continue moving in a range... now lower low to confirm something to the downside has begun.

I think we saw 20 day cycle low and the next one should bring another high and the top for the 40 day cycle... and a pullback will mark the 40 day cycle low.

No change - waiting a few more weeks and the top of the 40 week cycle.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
The daily and weekly chart are not so interesting that is way I thought I will post the monthly chart.
First from technical point of view you are seeing the wedge... I wrote already that the wedges are on all time frames. The boundaries are very tight and the price should break soon up or down. Do you think it will be up:)
Combo has finished and we are at 11 of a countdown at the moment. If this month closes above 1924 we will have 12 and any new high in August will be a 13... now when I think about it, it fits perfect with cycles and a top in early August... interesting.
The previous time we saw TD Sequential on the monthly chart was in 2011 and we saw serious correction. I bet this time we will see 10%+ correction too.


  1. Hi,
    Excellent wave counts & charts. Is is possible to change the background to a creamy/white color?


    1. I spent a lot of time in front of a computer and with something light-colored my eyes get tired very fast. The back-light of the monitor is on and after some tome I have the feeling like a knife stabs my eyes:)
      So everything I use is with black background - the blog, freestockcharts, my trading platform, all my computers... the problems of a modern human:)

  2. Hi,
    Wave 4 also seemingly taking form of triangle with below legs. Please review

    A : 1950
    B : 1985
    C : 1952
    D : 1970
    E : 1960


    1. If I get it right you mean that SP500 is finishing a triangle.... it is possible.
      As long as the pattern is corrective the message stays the same.