Jan 17, 2015

Weekly review

Short term view - move higher expected...
Intermediate term view - expecting correction of a bigger degree, but it is a few weeks away.

Ok I am back online:) After several weeks I see only choppy price action, volatility is rising ,the pattern is not clear. Overall nothing new... it is interesting if you are short term or day trader.

For the short term I think the indexes will move higher frontrunning the ECB QE decision which now everybody think is 100% sure.
Longer term I still think that we will see a bigger correction 10%-15% followed by another rally to ATH, but it is too early to get bearish - wait 2-3 weeks.

What I see is:
- technical indicators - the weeekly indicators are bearish the daily bullish. In such situation usually the weekly time frame wins but it takes time the shorter time frame to synchronize with the longer time frame.
- market breadth indicators - look like we are near to a bottom, but not important bottom. I suspect short term bottom.
- cycles - the indexes are nearing another 40 day and 20 week cycle. It is hard to say if we saw it this week... ideally we should see another 1-2 weeks lower and the price below 1975 before a bottom.
- elliot waves - I do not see an impulse lower... so I can not be bearish at the moment.

To sum it up - higher probability we have short term bottom and move higher probably ATH before an intermediate term correction. Backup plan the 20 week cycle low comes in 1-2 weeks... but I am not bearish at the moment for the next 2-3 weeks.

About ECB and QE - first when there is important news/event when the big boys want to sell they push the prices higher to sell higher and the opposite, second I think EUR/USD is near to an intermediate term bottom. I think with or without QE from ECB it will be sell the news event. I do not expect long lasting rally.

SNB shocked everybody, we have ECB QE decision, Greek election, FOMC in the next 2 weeks... such events do not change the trend but cause sharp moves in both directions and add to this choppy price action, nervous traders, rising volatility.
So I do not trade this market, I like low risk. I bought for the short term natgas(UGAZ) and for the intermediate term coffee(JO) and I am watching the show:) Why bother trading the indexes? Let the dust settle down and wait patiently for a lower high or higher high with divergence.

P.S. I wrote that someday CBs will start do crazy things and eventually lose control. Well it did not last too long:) the first one SNB gave up and just let it go. This is the right decision let the market do its job. If they did this in 2008 the crises would be history long ago....

Short term - move higher... I think it has begun worst case I think we will see a fake break lower before moving higher.

Intermediate term - the plan has not changed. One final move higher followed by intermediate term correction.

Long term - no change. Momentum has turned lower with divergence.

The Market Breadth Indicators - not very clear signals. I would tip on short term bottom.
McClellan Oscillator - choppy like the indexes.
McClellan Summation Index - sell signal
Weekly Stochastic of the Summation Index - probably a bottom or final push lower.
Bullish Percentage - sell signal.
Percent of Stocks above MA50 - probably a bottom or one more push lower.
Fear Indicator VIX - should be near to a top
Advance-Decline Issues - somewhere in the middle....

Cycles are not clear at the moment. Both scenarios are equally probable. It depends on how high the indexes will move before the ECB meeting and on the reaction after that.

The daily chart the bottom will come later after two weeks probably(lower high after the ECB meeting).

Or we saw it this week right on time at week 14 (near ATH before ECB).

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Nothing interesting.... choppy moves.


  1. I agree....the clarity you display with the current market shows the break was good for your mind....I am still trying to guess at what or where will the trigger come from that finally causes markets to correct the central bank abuses.....any ideas? Another violent currency move maybe that infects the bond market ? In a more significant currency of course than the swissie.....

    Finally, I dont care who you are and what your purpose is ....how much longer will long term government debt, any government debt be worth buying at return rates of less than .45% for 10 years of more???

    Me thinks that IF the US ten year falls below a yield of 1% we have less than 3 months for a "game over" scenario....not that I want or need a market crash OR way overdue correction.....(wanting does not make it happen) but since when does all this market manipulation ever end well? Historically....never.....

  2. I do not know what is happening behind the curtain. I am just a "small fish":) which is watching the charts, because they reveal us what is going on... so I do not know what the cause would be. Usually when the time is ripe for a correction you need just a trigger and not a special event. This could be the ECB meeting. I suspect there will be a QE but the market will be disappointed because it is less than expected.

    There is a lot of money which is needed to be parked somewhere and government debt is considered the secure place even with very low yield. Lower returns will not change this as long as the bonds are considered a safe place. Some day the myth about the almighty CBs and governments will be busted and than the fireworks will begin.
    The market will win at the end and CBs trying to fight it made the problem bigger.

  3. carnap:
    Hey krasi, nice to hear from you again and congrates to your update.
    Obviously the stock markets need more time for the ending pattern as expected at the end of the last year.
    Beginning this year we could see a dramatic shift in outperformer stocks. The US stocks SPX, DJI, NDX are running sidewise/down while the DAX is under fire.
    The Spread quote Chart shows a break of the downtrend since July 2012 implicating that we will see further outperformance of the Dax compared to the US indices this year.
    read more on my blog: https://chartbuster.wordpress.com/