Aug 8, 2015

Weekly preview

Short term view - move higher...
Intermediate term view - there is more to the upside...

Move lower as expected, of course stretched so that there is confusion and different scenarios. Overall the different indexes have different patterns and with zig-zags up and down for months we can argue about forecasts and top or not a top to eternity.
I say who cares - trading is not about the perfect forecast or nailing top/bottom. If we make a step back what we see - the moves lower are corrective so far, European indexes printing bullish waves higher, cycles are pointing higher, TA indicators weekly saying we are in a correction for a long time, it is rather time for a bottom than for a plunge lower. Even if you take more bearish looking indexes like DJI and DJT they are pointing to a move higher.
So short said - when you see a tradeable bottom go long and than we see how high the indexes will move and if the top is behind us or not.

Take DJI and DJT for example, they look bad, DOW theory divergences bla bla - even if you are bearish and the top is behind us the next move is higher. I have posted this chart DJT on the 5th of July when everybody was talking how bad it is... well a month later we have an intermediate bottom the trend line is broken and tested and we should see another leg higher. Below is a chart of DJI with some thoughts and it is the same story - for me the next move is higher even with a bearish pattern.


PM/Miners another week of choppy sideway action. Nothing has changed the price action confirms so far my preferred scenario for corrective move higher and one more lower low. Gold looks like a triangle the first wave from the bottom was a five so it should break higher and silver continues with the A-B-C. I suspect a little bit higher left. But no bottoming signature so far and I think any move higher should be short living before one final flush lower.


TECHNICAL PICTURE
Short term - the current move lower could be over as a-b-c and c=1,618xa (white) or we can see one more lower low for A-B-C (red) to finish another leg of the triangle and just redraw it's lower trend line... anyway expect a bottom.


Intermediate term - I am staying with the triangle as long as the price stays above 2044.
MACD and RSI are great indicators and you can draw trend lines which show you when a move is over. Usually when a move is over the trend line is broken and tested. Look at now MACD - for me a new move higher is running.


Long term - significant correction after the move higher is over. Target - MA200/the support zone/the start of the wedge.


MARKET BREADTH INDICATORS
The Market Breadth Indicators - again nothing useful
McClellan Oscillator - below zero, if we see a lower low we will have a divergence.
McClellan Summation Index - sell signal, but bottoming?
Weekly Stochastic of the Summation Index - sell signal, but it is in the middle of the range.
Bullish Percentage - sell signal, but bottoming?
Percent of Stocks above MA50 - in the middle of the range.
Fear Indicator VIX - nothing interesting.
Advance-Decline Issues - in the middle of the range.


HURST CYCLES
Day 24 I suspect this is half cycle low.

Week 4 of the current 20/40 week cycles.


You can argue this is bearish 5 waves lower for leading diagonal "THE TOP" is behind us or bullish zigzag with W=Y and correction near it's bottom.
Take the worst case scenario the top is behind us - even in this case you must admit we have an overlapping moves lower and this should be a diagonal and after diagonal a deep retracement follows. Such retracement will make a nice symmetrical top and touching one more time the arc, the chart will look like "Mona Lisa" of technical analysis:)
Again for trading it does not matter - first both scenarios say something higher so buy a tradeable bottom and wait to see what happens and second you do not short a high hopping for a top, you are shorting a lower high or a higher high with divergences and this will be the next lower/higher high what ever comes.

And here it is DJT a month later. Everybody was talking about DOW theory divergences how bad it is and I have posted a chart to show that the index is close to a bottom and forget about all this bearish talk. The upper resistance line around 8800 is 61,8% Fibo too, so expect a move between this level and MA200. At the same time at this levels we will have two legs higher with the same size.

10 comments:

  1. Do you see sp500 falling to 2040 again before any move higher and by what time would it again be a new all time high.
    Do you track NSE INDIA STOCK EXCHANGE.
    If yes, then where do we stand at this juncture.
    If you could please have a look at it. Thanks.

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    1. No, sp500 should stay above 2044 if it moves lower it will not be a triangle and something more bearish.
      It is difficult to say how fast the price will move if the triangle is the right pattern I expect this to happen early September.
      I do not follow NSE, but when I look at the chart it looks similar to the European indexes so I think a new high should follow before important top.

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  2. Krasi, before I say thank you for your analysis about Jkse, so help me, how do you think to jkse now? Thanks...

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    1. Now it looks like an impulse lower. I am not sure if this is the end of wave 3 or 5 of the impulse... Fibo measurements are saying this should be 3. The important is the next bigger move higher should be only a correction and resistance is 5250-5300 .

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  3. Krasi, in your view on how to lower the possibility of short term? Thanks

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    1. One more lower low below 4700 will finish 3 or 5. I do not have intraday charts and market breadth to say if this is 3 or 5.
      If it is 3 than 4 should follow to 5000 and than 5 to 4500. Just watch the next move higher if it is weak and corrective or strong an impulsive.

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  4. How are you interpreting this rally in gold so far, Krasi? The shares have taken off nicely. Grazie

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    1. Break higher from the triangle as expected..... I will post chart later

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