Intermediate term view - move higher for several weeks when the current consolidation is finished.
The short term pattern is changing constantly... with all the up and down I think we have a triangle at the moment. Intermediate term nothing has changed as I wrote a month ago I do not see a reason for a serious sell off in December. The pattern looks like a correction/consolidation (we were expecting 20 week cycle low) with one more leg higher to follow.
The pattern for the DAX which I see needs one move lower than higher for a few weeks and synchronizes perfect with the US indexes. So if I am right we should see a boring week with prices moving slowly lower to finish a triangle and preparing for the next move higher before the FOMC meeting next week.
TECHNICAL PICTURE
Short term - we have a corrective pattern so we should see another move higher. Again you can count it as an impulse or zig-zag but at the end we will see the same outcome.
Intermediate term - the price is trapped at the moment between the broken trend line and MA50. It does not look like reversal pattern to me rather a triangle.
It is important to see how this move higher will look like. If it is an impulse than the whole move from the August low is an impulse and in this case there is a possibility that the bull market since 2009 is over.
Long term - I still expect the 7 year cycle to show it's teeth and to see one more leg lower next year.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - are pointing rather to some kind of corrective/consolidation phase than an important top.
McClellan Oscillator - below zero...
McClellan Summation Index - sell signal, but not like we have a top... just weak.
Weekly Stochastic of the Summation Index - sell signal the indexes are in a corrective phase. The next swing higher should star in 1-2 weeks.
Bullish Percentage - looks like wave 4 consolidating below overbought levels.
Percent of Stocks above MA50 - moving between 50-80... some mild correction
Fear Indicator VIX - too low for a bottom.....
Advance-Decline Issues - in the middle of the range.
HURST CYCLES
I think we have three shorter 40 day cycles which will finish a 20 week cycle and we need one more leg lower.
20 week cycle bottoming as expected... waiting for confirmation where exactly to put the bottom.
DAX - three waves lower, three waves higher and with high probability an impulse lower (one more wave lower needed) to the support level add to this expected 20 weeks cycle low. All this screams intermediate term correction expanded flat. The US indexes have different pattern, but with move lower and than higher European and US indexes will be in perfect sync.
The alternate scenarios is move lower has begun than we expect wave two with target around 11000 and we have H&S pattern. We will watch closely the next move higher corrective or impulse to see what exactly is going on.
Hi,
ReplyDeleteDo you think the move lower will find support at 1990?
Thanks!
If it is a triangle the price will stay above 2020.
DeleteEven if the pattern transforms into more bearish zig-zag lower I expect a bottom in the support area 1990-2020
How should one differentiate between a triangle event or zig zag event?
DeleteOnly when it breaches 2020?
Thank you.
At the moment with this overlapping waves the only possibility I see for a zigzag and a low below 2020 is diagonal and we have to wait a few more moves up and down before we can confirm it. I think it has low probability at the moment.
Delete