Intermediate term view - Probably 2-3 weeks higher.
It lasted a little bit longer with choppy final wave but we have the short term bottom. I hope you did no fall into the bear trap when the futures plunged on Friday.
EW - impulse lower finished, Cycles - bottom at day 39 for the 40 day cycle, Market breadth indicators - pointing to a bottom, TomDemark buy Setup finished, Technicals - DJ hit MA200 SP500 support and trend line with MACD divergence on the hourly chart. Short said I do not see a reason why that should not be a short term bottom and the candle formation from Friday confirms that the bottom is in - strong green candle closing above the highs for the previous two days.
We saw some fear and I think that before another move lower, the sentiment needs to turn bullish again. That means time, the traders should forget the pain. The next 40 day cycle has begun and I am thinking probably 2-3 weeks higher....
SP500 is the strongest index of all that is why I will follow the two options and read the signs:
- Lower high (preferred) - watch for signs like this - moving higher but with sudden drops for a day or two, the slope of the rise is not so steep, sentiment turning bullish after 2-3 weeks rise but the price is still bellow or around the 1965-1970 area, a week starts strong and than fades (missing strong bullish candle on the weekly chart).
- Higher high - signs moving rapidly higher and for 2-3 weeks at least near the previous highs 1985-1991. If I am wrong and this is what is going on, like the last time just say thank you mister market for the bigger gains:)
TECHNICAL PICTURE
Short term - I think we should see a dip soon to around 1920 and that should be another opportunity for a long entry.
Intermediate term - support and trend line touched and it is time for a move higher. The plan has not changed for now. Later we will adjust it if necessary.
Long term - no change bounce from MA50 as expected.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - oversold levels reached. I think it is time for a move higher.
McClellan Oscillator - oversold level reached and divergence warned us to expect a bottom.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - oversold level, swing higher should begin.
Bullish Percentage - sell signal but sill above 70.
Percent of Stocks above MA50 - hit the levels for a correction 25. Time for a bounce.
Fear Indicator VIX - spiked higher outside the BB, it is time to cool off.
Advancing Issues - almost touched oversold levels
HURST CYCLES
Bottom at day 39 for the 40 day cycle at MA200 veeeeery nice:))))
The bottom is lower than the previous 40 and 80 day cycle low and we should expect lower high. It is not a problem to see now 2-3 weeks higher (10-15 days). The 40 day cycle will be still right translated(bearish) with 25-30 days to the downside.
The 40 week cycle has toped out. I expect 4 to 8 weeks before we see the bottom for the cycle.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Buy setup finished....
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