Jan 30, 2016

Weekly preview

Short term view - we will see 10-20 points higher, but than we have to wait and see what happens.
Intermediate term view - higher in the next 6-8 weeks.

One more leg higher as expected. Short term waiting for confirmation to see which pattern is playing out, but intermediate term the indexes should be higher in the next 6-8 weeks.

So far the move is only three waves and it is difficult to say what pattern we have.
If it is only corrective a-b-c than it should find resistance around 1950-1960 and turn lower.
If it is an impulse we should see the price in the 1980-2000 area next week.
I think we will see a top next week for a-b-c, but that is just a feeling no prove at the moment. Wait for confirmation if you want to short.

Short term - the bearish scenario(red) the price will test MA200 for a-b-c and turn lower to test the low. The bullish scenario - the price continue higher above MA200 and reaches the resistance zone.

Intermediate term - the both patterns. Next week we will know more, but in both cases I think there is more to the upside in the next several weeks.

Long term - another bullish week, the weekly chart does not look bad at the moment. No change - expecting move higher for at least several weeks.

The Market Breadth Indicators - turned up from very oversold levels. They are sending bullish message. Worst case the indexes making lower low and the indicators higher low with divergences.
McClellan Oscillator - strong move above zero.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - still in oversold territory, but ready to turn up.
Bullish Percentage - turned up above oversold level 25.
Percent of Stocks above MA50 - turned up above oversold level 25.
Fear Indicator VIX - turned lower and we have lower top with SPX making lower low.
Advance-Decline Issues - turned up from extremely oversold levels.

It looks like we have 20 week cycle low. If this is the case than the next 40 day cycle has begun.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Buy setup has been finished on the weekly chart. If next week we see a close above 1920 we will have a price flip to confirm bullish outlook for a few weeks.

The monthly chart and the comparison with the previous two bear markets. It develops exactly like in 2000 and 2007 - first leg lower, rally higher to test MA20(red arrow), second leg lower(green arrow),a pause for 2 months, than the real bear starts.
The differences - the weekly indicators are correcting lower for a long time saying we are in a mature correction not at the beginning and the moves lower are much more shallow. In 2000/2007 the two moves lower are 18%-20% now we have 12%-14%. You can see that the price could not move much below MA20. That is why I think this is a huge correction, but not a severe bear market which will cut the prices in a half like 2000 and 2007.

When I watch the charts EW,market breadth definitely we will see a move higher for two months like 2000/2007, so even if you are a big bear just have patience and wait until March.

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