Short term view - bottoming and reversal higher.
Intermediate term view - higher for a few weeks.
Reversal on Monday and strong rally as expected, but followed by a plunge for 2 days so far..... at first glance very bearish, but I am watching the chart and I see an overlapping mess running for 6 weeks. Look at the second chart - all I see is a surge higher and a bull flag, corrective overlapping waves, cycles in the timing band for a bottom, indicators and market breadth reseting after strong rally in October. So the forecast stays the same that we will see one more move higher unless the price continue to plunge lower without a pause.
The last chart - I am trying to find some bearish scenario. The usual bearish 1-2 1-2 or a diagonal. Next week we will have the answer.
Short term - the move from the low on Monday looks like an impulse so there should be more to the upside. Waiting for a confirmation on Monday.
Intermediate term - I see a bull flag and indicators reseting from overbought levels. The impulse scenario is out because there is overlapping which is good for the bulls. Watching the preferred count one more zig-zag from wave B of an expanded flat.
Long term - no change.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - I think they are pointing that the indexes are near to a bottom. Confirmation is still missing.
McClellan Oscillator - lower closing price for SP500 and divergence for the indicator
McClellan Summation Index - sell signal
Weekly Stochastic of the Summation Index - sell signal, close to oversold levels.
Bullish Percentage - in the middle of the range.
Percent of Stocks above MA50 - almost touching the oversold level.
Fear Indicator VIX - long term massive divergence pointing lower for the indexes. The question is if one more move higher(SP500) is left.
Advance-Decline Issues - lower closing price for SP500 and divergence for the indicator.
Day 82 which is the average length for the 20 week cycle.
Week 17... waiting for a confirmation if we have a bottom.
Trying to think like a bear....
- very bearish scenario the bears "evergreen" 1-2 1-2 which I listen every time when we see a correction and never played out so far. If this is what is happening we are in wave 3 and the price should continue lower for 1-2 weeks without a pause.
- the other option is diagonal which fits much better with corrective overlapping waves and the seasonality. In this case we should see a lower low to trap the bears and reversing higher for the next 2 weeks for the holidays.