Jan 25, 2015

Weekly review

Short term view - lower for the start of the week than higher.
Intermediate term view - expecting correction of a bigger degree, but it is a few weeks away.

The indexes moved higher as expected, but we saw only one strong day for the US indexes and there was a lot of selling on strength. I suppose this QE is priced in already, or the market is simply tired. In contrast Europe was very strong working on the expanded flat if I am right.

The choppy pattern is almost two months old an continue to develop. The price action this week did not give us a clue what is happening. There is still many different options.
On the first chart is shown a triangle, on the second chart ending diagonal and there is more bearish scenario shown on the daily cycle chart below.
I do not see impulses lower and we are nearing a 20 week cycle low so even if we see the most bearish scenario from the three above, the time to be bearish will come later now it is too early.
On Wednesday we have FOMC so I will bet on the ED or triangle. If the price stays before FOMC above the low from Thursday around 2025 we should see ED. If it breaks below this level it is probably a triangle.

Short term - the triangle is shown... Monday and Tuesday should be strong down days breaking below MA50 and the low from last Thursday.

Intermediate term - weakness on Monday and grinding higher for w3 of an ED.

Long term - no change. Momentum points lower with divergence.

The Market Breadth Indicators - does not help us much too. For the longer term divergences and something bigger to the downside, but for the short term no clue.
McClellan Oscillator - looks like a triangle too, with higher lows and lower highs.
McClellan Summation Index - I do not know...
Weekly Stochastic of the Summation Index - can not take a decision lower or higher:)
Bullish Percentage - sell signal, but turned up.
Percent of Stocks above MA50 - in the middle of the range near 50.
Fear Indicator VIX - moved relatively higher so it favors more bullish outcome for the short term.
Advance-Decline Issues - in the middle of the range near 0.

Cycles are not clear at the moment. Both scenarios are equally probable.

Here is the bearish scenario lower in the next 2-3 weeks.

More bullish scenario we saw the bottom last week and we are currently at week 1 of the next 20 week cycle.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
On the daily time frame the price is turning up and down for two months. On the weekly and monthly time frames there is finished countdown and combo.... It smells like a top for me.
The monthly chart - the wedge is so tight there is no more room left for the price to move:)))) It should break soon higher or lower. With QE news behind us and very weak reaction is there something left to move the market higher? Breaking lower looks more probable.
It will be interesting if we will see a second red month in a row. It has not happened since early 2012 almost two years:)


  1. bullish on eem now? how about tlt?

    1. EEM bullish - it depends on the time frame:) At least for the intermediate term it is bullish.
      The correction has become more complicated and choppy. I wrote that it smells like another X lower and Z to follow... now it looks officials. The next target should be again around 45.
      I was wondering something does not add up - EEM in strong wave 3 lower and the commodities higher to retrace in wave 4. Now we have the answer:)

      TLT is bullish. I do not think the bonds will reverse in the next weeks even months. If you hold it great, but to jump on the trend at the moment is a little bit too late.... maybe after a pullback for a short ride.

  2. Hi Krasi,
    I see one of the targets for TLT as 172 measured from 2011 low to 2014 low in FIB. Please correct


    1. What should be corrected? I have not mentioned targets....
      I have just wrote, that I am not comfortable buying vertical moves far from MA50 and monthly RSI above 70.
      Patience is virtue do not chase it, it will come to you:)