Intermediate term view - pullback after a short term top and another move higher.
Nothing new, even more boring week than the previous one. Higher high on Monday as expected and than indecision candles four days in a row.... it would not have made a difference if the market were close for four days:)
As I wrote two weeks ago expect 2-3 weeks before a short term top and the market grinding higher playing within the 2030-2040 range. Next week is the third one I hope we will see some move up or down at last.
Market breadth shows weakness and the 40 day cycle looks ripe so the odds look good for a top next week.
The plan has not changed - I expect to see a short term top next week. I think the move lower will be only a pullback for several weeks followed by another move higher. But I will watch carefully the price action witch should not be impulsive and should not show strength.
TECHNICAL PICTURE
Short term - it looks like the SP500 wants to make one final high... but watch out for a reversal candle, maybe a intraday reversal.
Intermediate term - no change.... waiting for a short term top and how the move lower will look like.
Long term - the long term picture is unchanged.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - oscillators are moving lower the whole week and they look tired, the trend following indicators have not changed - swing higher is running.
McClellan Oscillator - moving lower there is no strength any more... short term top around the corner?
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal, but reached overbought territory.
Bullish Percentage - still below 70... not so much strength after such an explosive move.
Percent of Stocks above MA50 - in overbought territory, short term the move is still healthy.
Fear Indicator VIX - plunged but I think we will see another higher low.
Advance-Decline Issues - shows weakness moving lower for two weeks.
Percent of Stocks above MA200 - a lot of bullishness and ATH, but only half of the shares are above MA200. I think we are one step nearer to an important top
HURST CYCLES
Day 21 of the current 40 day cycle. I think next week we should see a short term top.
Week 4 of the current 20 week and 40 week cycle. If the alternate scenario plays out I will switch back to the previous cycle count that we are in the last 20 week cycle of the 18 month cycle.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Day 8 of a countdown... nothing interesting on the daily or weekly chart.
Carnap
ReplyDeletehello Krasi,
congrats to your update. Indeed the impulsive move was nearly vertical and is getting more and more exhaustive. Sentiment indicators showed capitulation of the bear camp with extreme multi-year low for AAII bearisch consensus. Such an indicator position is normally a good contrarian indication.
But on the other hand there is still potential for some days.
The move up is also difficult to interpret from EW point of view.
From the start of the bounce from mid October I thought about a corrective move that will reach min. 61.8 RT and likely to form a double top scenario. But now we have an dynamic overshooting wave that can be interpreted as a double or even triple ZZ or an impulse wave with elongation in wave 1 (typical for an V bottom).
An overshooting wave B or X has a MoB at 2142 which is quite high.
What is further interesting is that TD combo is at 12 on daily chart.
Spread quote chart needs a further drop to give a sell signal.
Watch for the Tristar formation. Not as significant as to wish but a hint.
Yes the EW pattern is not clear, too many options and I rely only on TA at the moment... until the picture gets clearer.
DeleteTD combo at 12 on the daily chart is interesting... will fit with a short term top.
Krasi, what's your outlook on EEM? Its been lagging the US equities rally.
ReplyDeleteImpulse wave C lower is running with target around 30.
DeleteWave 1 has finished and EEM is currently in wave 2 which will top probably with the US markets.
Than serious decline of around 10 points for wave 3 should follow.