Sep 25, 2014

EW guys are questioned

UPDATE:
Here are the market breadth indicators - move lower for wave 3 usually does not start at such levels. At such levels you are looking for a bottom because the sellers are exhausted.
McClellan Oscillator - almost touching oversold level. This is the second trough. It never recovered after the top at 2011 so we can say this is a new move lower. The selling continued even with the new ATH at 2019. That is why I think the top was at 2011 and since than we have a correction. McClellan Oscillator is one of my favorite indicators it never lied me:)
Fear Indicator VIX - again above the BB should reverse soon. The high was 16.75 near the previous one.
Advance-Decline Issues - almost touching oversold levels
NYSE New Highs-New Lows - at oversold levels.

If I look only the indicators I would say the indexes should start bottoming(of course we could see lower low 1960 or 1955)... the other option is panic sell off for several days to send the indicators to very extremely oversold levels like McClellan Oscillator -110.

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I am not an EW expert and complicated patterns are not my thing. EW guys are questioned if the pattern below is allowed at all..... because expanded flat should be 3-3-5.
If this is the case a bottom is not far away. Bearish case is suspicious for me because market breadth indicators like New Highs-New Lows, Advance-Decline Issues, McClellan Oscillator are oversold and this happens around bottoms not at the beginning of a correction plus we have right translated bullish 40 day cycle which should bottom any moment.
It looks crazy to predict a bottom now but we will know soon and it is worth to keep an eye on this idea.

P.S. Do not get confused about the different ideas on the blog and in Internet hold the short and that is it:) we are not chasing the bottom for maximum profit.

4 comments:

  1. Krasi,
    Nice update. Bearish view is very doubtful as it can take SPX to 666 and hell, it's next to impossible :-).
    If you look at central banks QE cycle, US ends and EU begins one, BEARISH view is not too close.May be two more years to go.

    This October is key. My take is SPX will make another ATH to complete huge wave 1 from 2011 and corrects to wave 2 to level of 1640 level and makes huge 3rd wave cycle for 2015.

    Former levels 1740,1805,1897 all respected tend line support from 2011.Unless 1850 is broken, bearish view ruled out.
    And 1850 level is far far away, for that matter even breaking 1900 itself is real struggle.

    so I'm long

    Thx


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  2. Carnap:
    Dear Krasi,
    you asked for EW support. Here is my interpretation from EW point of view by using your count. My count is somewhat different because of additional rules I follow (rules for trend lines etc.) but my count should not be the issue here.
    I will present and discuss three different count scenarios by using the count you presented since the August low at 1905.
    1. Elongated flat in wave [iv] Minuette degree
    Wave (C) of [iv] is allowed to expand to 1934. But around 1950 there is the black trend line. So if the move is breaking the upcoming black trend line then an ending of wave (3) on Intermediate degree is very likely. And that means that we have to expect a correction to the target area 1889-1785.
    But if the wave (C) will end at around 1960 and subsequently breaking the down moving black trend line then there is a good chance for a final leg up as wave 5 of (3) on the Minute degree.
    http://www.pic-upload.de/view-24735321/sp4.png.html

    ReplyDelete
  3. Carnap:
    2. combination in wave [iv] Minuette degree
    The alternative for an elongated flat would be a combination in wave [iv]. The wave (W) on Subminuette degree would be a ZickZack as well as the wave (X) and the wave (Y). But such a combination consisting of three ZZ forming a correction pattern and not a triple ZZ is quite unusual. The second Z of the ZZ of wave (Y) has its ideal elongation level at 1959. But it has to be added that the ZZ of wave (Y) is not showing an ideal trend channel, since the more of wave C (the second Z in wave (Y)) shown to be very dynamic. Normally that is a sign or a hind for a starting wave iii of an impulse wave.
    As said before the upmoving black trend line is important. A break of the line will negate the scenario.
    http://www.pic-upload.de/view-24735364/sp1.png.html

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  4. Carnap:
    That brings me to the last scenario.

    3. already running correction in wave (4) on Intermediate degree
    With a break of the black trend line the Index will give the confirmation that a correction on the Intermediate degree is running already. The first down leg of the correction should be on the way then to the target area 1889-1785. But thereafter a bounce in Nov/Dez. could be expected followed by a second down leg into Q1 2015.
    We will see.
    http://www.pic-upload.de/view-24735437/sp3.png.html

    ReplyDelete