Feb 1, 2015

Weekly review

Short term view - lower for a few days and than higher.
Intermediate term view - next move up should make lower high and "decent" correction lower to begin.

I was watching the triangle... it still looks like triangle, it is not busted the pattern, but it takes too long to reverse higher. That should have happened around FOMC and now I think the prices will break lower.

Short term - I think the price will break lower from the range(the hourly chart the red lines). Usually when you see corrective move crawling lower but not reverse higher for too long one final flush lower is necessary before a bottom.... two months are long enough time where are the buyers?

The move lower is corrective, we are near to 40 day and 20 week cycle low, market breadth is not clear but rather near to a bottom than a top.
Near term next several weeks - 1-2-3 days sell off next week and than we should see a move higher 1-2-3 weeks from 20 week cycle low. I suspect the indexes will make lower high because the the technical indicators on the monthly and weekly chart are pointing lower and we are nearing the end of a bigger cycle 18 month which is pulling the prices lower.
This should be the lower high (or higher high with divergence) I wrote about two weeks ago, which can be shorted with low risk and the move should be straight lower not like this choppy mess for two months.

Long term - I am talking for months that a bigger correction is coming and I see more and more signs... and I think the moment has come.
- Positive news like 1,1 trillion QE and.... no reaction, buyers are missing and the market looks tired.
- No progress higher for the last three months and the last two are red bars. In fact I wrote short before Thanksgiving take the profits and watch from the side line. Since than the indexes can not find direction.
- the current daily cycle is the first one for years which is left translated(top on day 8 early in the cycle) and we have only one 20 week cycle before 18 month cycle low.
- See the monthly chart(the last one below) - we have two consecutive red months. For the whole bull market this happened 3 times and corrections have followed respectively - 17% / 21% / 11%.
- the histogram moved below the zero line, RSI broke below it's trend line and retested it... now pointing lower, the price is on the verge breaking lower from the wedge.

To summarize - after the next high I expect the prices to drop 10%-15% lower, unless the indexes start rallying on Monday(the triangle).

Short term - measuring the size of the previous waves potential short term low should be in the 1950-1965 area.
Alternate scenario is the triangle if I am wrong, but we should see a strong rally on Monday.

Intermediate term - no signs for reversal so far. The price is near the MA200, I expect fake break lower and reversal higher before a significant correction.

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

The Market Breadth Indicators - are not very helpful, but I would say we are near to a short term bottom than to a top and long lasting sell off. One last flush lower and they will look nice for a short term bottom.
McClellan Oscillator - looks like a triangle too, with higher lows and lower highs.
McClellan Summation Index - nothing.
Weekly Stochastic of the Summation Index - can not take a decision lower or higher:)
Bullish Percentage - sell signal.
Percent of Stocks above MA50 - one final sell off and value like 25% or lower will look great for a short term bottom.
Fear Indicator VIX - divergences, makes lower highs.
Advance-Decline Issues - nothing interesting.

Waiting for the bottom of the current 40 day and 20 week cycle.....

A move from the 20 week cycle low should last 1-2-3 weeks, but the 18 month cycle will drag the prices lower.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
The monthly chart does not look very bullish... I have pointed above the bearish signs one more is the finished combo and countdown.


  1. krasi, eem retraced 61.8% of the move up this week. is this just a pullback or a new move lower?

    1. EEM will eventually trade lower to 30-32... I am just not sure for the path. It looks bearish at the moment
      The move higher was corrective... so two options - the next move lower has begun or worst case one more zig-zag higher to test MA200 around 42.

  2. I'm confused. first you say "lower for a few days" then you say "strong rally on Monday" ???? What am I to think?

    Short term view - lower for a few days and than higher.

    The indexes should start rallying on Monday or after the next high expect the prices 10%-15% lower.

    Short term - measuring the size of the previous waves potential short term low should be in the 1950-1965 area. The triangle is still possible, but we should see a strong rally on Monday.

    1. Ok my mistake, I must express myself better:)
      I always watch a scenario if I am wrong. As a trader you do not want to be caught on the wrong side and than start thinking what is going on.
      I think the indexes will move lower that is why several times "lower", but the triangle is still possible, that is why it is still on the chart - the alternate scenario if I am wrong.

      I have chaged the confusing sentences.