Short term view - short pullback on Monday and another move higher.
Intermediate term view - waiting 2 weeks to finish the move up and correction to begin.
Well the correction was much more complex and moved lower than expected but in the end it is a corrective move. Corrections are always very tricky.... After the last two trading days I think we can exclude impulse as an option.
On Thursday I have posted a chart and what I think is going on - the market from different angles. Since than nothing has changed much... Yesterday we saw the confirmation that we have a bottom and most of the loses for the week were wiped out so I switch back to the plan from last week that we will see a higher high. Lower high is still possible but I am not really convinced.
Trading - I would wait for a pullback on Monday and get rid of shorts if you still have some and open long position. All this moves are for short term and swing traders. If you are not comfortable wait for the bigger correction.
Few weeks ago I wrote expect correction and new high, the big boys like to kill bears and bulls that is the best way to make more money. Well we saw a pullback but much deeper than expected with fake break out many were counting already the new bear market... and the bears got shot,burned,killed,raped call it as you want. Now it is bull's turn I think we will see higher high before FOMC and the bulls will celebrate the never ending bull market... just to be shot,burned,killed,raped as the bears.
Short term - the move up looks finished. I expect a pullback on Monday but this should be a buying opportunity.
Intermediate term - fake break out lower just for a day and back above the trend line. Bullish candlestick formation. The price will probably take a breadth just under MA50 and after that should move higher. The oscillators turned up, waiting for the MACD to do the same from the trend line.
Long term - no change just more divergences. The short term bullish forecast does not change anything.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - short term it is time to reset from oversold levels. Long term thy look bad as last week.
McClellan Oscillator - divergence and move higher. Is one of the greatest indicators. It warned us not to trust the move lower. It did not lie to us... again:)
McClellan Summation Index - sell signal,still pointing lower.
Weekly Stochastic of the Summation Index - sell signal, but entered in oversold territory
Bullish Percentage - still sell signal. In an area where we see bottoms for corrective moves.
Percent of Stocks above MA50 - did not make it to the oversold level, but we have only a deeper pullback and this is normal level.
Fear Indicator VIX - after several days outside the BB plunged lower... I think we will see another higher low.
Advance-Decline Issues - turned up after a double bottom near the oversold zone.
Percent of Stocks above MA200 - 50 points below ATH and only 45% of the stocks are above MA200.... one word awful. I expect a lower high to signal the beginning of a very deep correction. In 2012 in previous such occasions we saw higher highs... not his time.
This time we saw really a 40 day cycle bottom at day 38 and the next one should have begun.
Week 9 of the 20 week cycle... probably another 2 weeks to finish the move up and the indexes should turn lower for several weeks.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Buy setup finished and the indexes reversed. After a pullback on Monday we should see a price flip and opportunity for an entry with low risk.