Oct 17, 2015

Weekly preview

Short term view - next week the indexes should turn lower.
Intermediate term view - lower for 1-2 weeks and than higher again.

This last 10 points higher were stretched in time longer than expected, but this does not change anything. Nothing new to add since last week. Perfect five waves higher, technical indicators divergences, market breadth divergences, close to resistance the break lower 2040... I can not imagine continuation higher at this point, I expect at least a pullback for 5-10 days.

Short term - now the move looks finished... ok a few points higher on Monday are possible.

Intermediate term - histogram divergence, MACD broke the trend line and is above zero. At the moment the more bearish scenario(red) looks less probable.

Long term - looking at the indicators the move looks corrective and not like the begging of a new bear market. In 2007 we saw divergences and price/indicators moving lower. Now we are seeing the price burning time and the indicators reseting for more than two years, RSI even hit 30 oversold level - it looks more like digesting the previous huge run and not like a reversal.

The Market Breadth Indicators - oscillators have divergences it is time for reset. No strong buy or sell signals for the intermediate/long term, short term looks like sell.
McClellan Oscillator - divergence after overbought levels hit.
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 with divergence.
Fear Indicator VIX - moving lower.
Advance-Decline Issues - divergence at overbought levels.

Day 38 of the 40 day cycle...

Week 8 of the current 20 week cycle.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Price flip on day 8 and one more price flip to the upside, even so it looks better than the moves to the downside.

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