Jul 19, 2014

Weekly review

Short term view - wave 5 up.
Intermediate term view - when it is over a pullback for 2 weeks probably.

Veeeeery choppy week it could be only a triangle this mess. A triangle is usually wave 4 and with 20 points rally I think wave 5 has begun.
I do not think that this wave will last for a long time.... probably it will end suddenly with intraday reversal so be prepared.

All different methods I use are starting to align showing the same, so I am pretty confident that after this high a pullback will start (see the second chart).
- EW - triangle which is usually wave 4, wave 5 up and a correction should follow.
- Market breadth moved lower substantially and divergence should follow after a new high... and the long term indicators are showing sell signal already.
- Cycles - day 25 near to a top of the 40 day cycle. Another 3-4-5 days up for a top and 10 days pullback for a nice 40 day cycle.
- TomDemark countdown finished - the previous two occasions have led to a pullback (see the last chart).

Not that I want to spoil the bull party, but we should be prepared. Short said enjoy the move higher, but do not fall in love with it:)

TECHNICAL PICTURE
Short term - probably small dip from resistance and continuing higher with 3 of 5.


Intermediate term - after a new ATH I expect a pullback. I see two targets 1925 support/first trend line/MA50/Fibo 38,2 and 1900 support/second trend line/Fibo 50%.


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...


MARKET BREADTH INDICATORS
The Market Breadth Indicators - moved lower substantially(not usual for a wave 4... a top around the corner?) and divergence should follow after a new high... and the long term indicators are showing sell signal already.
McClellan Oscillator - reached very low levels which often mark a low and now rising.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - sell signal.
Percent of Stocks above MA50 - probably it will move above 75 but with divergence.
Fear Indicator VIX - expect higher low and divergence.
Advance-Decline Issues - made lower low... the market is not very healthy. The market is making new ATH and the indicator is headed south.


HURST CYCLES
Day 25 we are near to the top of the current 40 day cycle.

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.
Countdown has been finished... not a surprise. The previous two occasions have led to a pullback... wait for a price flip to trigger it.

3 comments:

  1. Thank you for sharing the valuable work :)

    ReplyDelete
  2. Hi,
    Either triangle worked out (or) expanded flat from 1944 with wave B still going up and wrap up around 2010 area and have a C wave down.

    All of this is to begin another uptrend simply in my opinion. Please update wavecounts

    Thx

    ReplyDelete
    Replies
    1. I do not see the expanded flat.....

      Delete