Short term view - short term top expected a move bellow the last minor low 1980.
Intermediate term view - I think that we will see a pullback and another high before something more serious.
No surprise this week. FOMC and traders are already trained like Pavlov's dog, so it was an easy bet that we will see a move higher.
Now what to expect... to be honest I am not sure. Enough signs for a trouble and important top but something does not feel right. The pattern does not feel right for a top. The more I watch the charts the more I think the red scenario is developing(chart 1 and 2). The market will kill the bears one more time than the bulls and correction will start - perfect as the big boys like it.
So instead guessing and trying to be smart I will keep it simple. What we have - higher high with MACD divergence daily, 40 day cycle at day 30 time for a top, Market breadth looking awful, bearish candle on Friday. I said this should be some kind of a top, at least a short term top and we will see a pullback.
For trading it does not matter wait for a lower high and open short position. If it is an important top great, if it short term top small profit... I can live with that:)
Short term - reversal candle and the move lower looks like a 5 wave. The safe bet is to wait for a bounce from MA50. The price is above it and all MAs point up so I am pretty sure we should see a descent bounce from MA50.
Intermediate term - Bounce near MA50 and MACD divergence as we wanted... but something does not feel right. I do not like the pattern and the waves for a top. If the indexes start moving lower I will watch what happens around 1960.
Long term - no change just more divergences. The short term uncertainty does not change anything.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - look awful. A lot of weakness and divergences... everywhere. We have not seen this at previous tops so it is different this time:)
McClellan Oscillator - could not make it above the zero.. very weak.
McClellan Summation Index - sell signal
Weekly Stochastic of the Summation Index - sell signal
Bullish Percentage - making lower highs
Percent of Stocks above MA50 - new ATH and only 62% are above MA50. How strong is that?
Fear Indicator VIX - another higher low.
Advance-Decline Issues cumulative - divergence lower high with 5 waves lower.
New Highs-New Lows - another lower high
Percent of Stocks above MA200 - new ATH and only 60% are above MA200. Divergences and weakness.
40 day cycle at day 30. I think it is time for the cycle to turn lower.
Waiting for the 20 week cycle to top.... currently at week 7.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
At 8 from a countdown... probably the move up is not finished.