Short term view - next week the indexes should turn lower.
Intermediate term view - lower for two weeks and than higher again.
The indexes moved higher and we have an impulse finishing 3-3-5 sequence, which is a flat correction. At day 33 it is time the 40 day cycle to make a top, October is usually negative month for stocks, market breadth oscillators very overbought so everything points to a move lower.
Now the two options are - another leg lower begins or we will see a move lower which is part of the bottoming process/corrective wave higher.
I think we will see deep and steep move lower that should convince most of the traders that the "bear market" has resumed, but I think it is too early for the next leg lower. I have posted a chart historical comparison a week ago and nothing has changed since than. The move up is too short to purge bearish sentiment and the market breadth/technical indicators have not been reseted. Europe for example hit a bottom and moved higher for 1 week after a correction for 6 months. One week is definitely way too short for a retracement after a move which lasted 6 months.
I think the indexes will move lower for two weeks so that the pattern looks similar compared to previous corrections (2008 / 2010 / 2011) it was too early for a bottom at week 5. October is the most negative month for stocks. Ten days lower to finish 40 day cycle will look great, full moon 27.10, FOMC 28.10... all indications point to a low around this dates.
If you are long take profits no need to ride it all the way lower close to the previous lows. Use it to make some profits on the short side... and if I am wrong you will be on right side of the trade.
P.S. I was asked a month ago about China(SSEC) and now it looks like the sideway move is finishing with one last leg lower missing to finish huge A-B-C from the top (target 2700 +-50 points).
The point is it smells like tradable bottom in China, Europe and USA in a few weeks. Some will make lower lows other higher lows, but this is the point where you can take more risk to be long.
Short term - I do not know if there is 1-2 days left higher, but the next bigger move should be lower.
Intermediate term - indicators look strong breaking the trend lines and MACD the 0 line/RSI the 50 level. The pattern is corrective so we should see a move lower, but looking at Europe and China another leg lower for months has lower probability than some kind of intermediate term bottom.
Long term - no change. Interesting is all the moves had final two weeks lower... final effort from the bears. I think we will see the same now in the next few weeks from October.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - oscillators McClellan Oscillator / TRIN / Advance Issues overbought the other indicators in the middle of the ranges. There is no strong sell or buy signals. I think the next low will be tradable low.
McClellan Oscillator - very overbought, it is time for a move lower.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal.
Bullish Percentage - buy signal, in the middle of the range.
Percent of Stocks above MA50 - in the middle of the range.
Fear Indicator VIX - nothing, interesting moving lower.
Advance-Decline Issues - close to overbought levels.
Day 33 of the 40 day cycle... two weeks lower will look great to finish it.
Week 7 of the current 20 week cycle.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Day 6 of a setup... I am skeptical that it will be finished, but let us see what happens.
Here is how China looks like.... finished A-B-C pattern and the index cut in a half is a good target for an important bottom.