Feb 13, 2016

Weekly preview

Short term view - small pullback and higher.
Intermediate term view - now after the low has been tested we should see a move higher for 2 months.

The indexes opened with a gap lower on Monday, hinting what to expect - we saw 5 waves lower with lower low and divergences. Now the low has been tested, we have 5 waves lower from the November high, divergences on the weekly charts, market breadth with divergences, climax moves and reversals on other "risk off" markets bonds,precious metals,usd/jpy. Everything points to intermediate term low and a move higher for 6-8 weeks. Only a confirmation is missing - strong bullish week.

Again the two options I see - an a-b-c has finished and move to new ATH, or more complex correction move to around 2000 in the several weeks followed by another move lower for a few months. I think it is the second options, but let's see the move higher first.

Short term - I think we will see the indexes higher next week.

Intermediate term - the two options just an a-b-c to reset the bearish sentiment or a rally to a new ATH. For the next several weeks the direction is higher and we will see how the move develops.

Long term - no change another bullish candle after retest of the bottom and MA200.

The Market Breadth Indicators - we have divergences the indicators made higher lows when the indexes made lower low. This is a sign that we have an intermediate term low.
McClellan Oscillator - positive divergence.
McClellan Summation Index - still sell signal, but positive divergence.
Weekly Stochastic of the Summation Index - buy signal, new swing higher should begin.
Bullish Percentage - positive divergence.
Percent of Stocks above MA50 - positive divergence.
Fear Indicator VIX - positive divergence.
Advance-Decline Issues - positive divergence.

The usual length of the 20 week cycle is 14-16 weeks and this was week 13. I think this is the low for the 20 and 40 week cycle.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
On the daily chart we have a price flip and on the weekly finished buy setup but waiting for a price flip.

So far the move develops as expected comparing it with the other "plunges". Panic low with bullish candle followed by a test of the low and another bullish candle. All we need now is another bullish week for a confirmation.


  1. Any thoughts on whether this potential opening gap in SPY will hold? Futures up 1.5%. Debating how to jump on this train.

    1. I would wait for a pullback than another move higher close to 1940 - MA50 on daily chart and the last high.
      After the open it could move higher, but than it is a day trade for 10-20 points.

    2. Yeh I am waiting for a pullback to today's gap fill to go long btw 186-188 in SPY. Too overbought to enter long here.

  2. Nice charts Krasi.
    Interested to hear your thoughts on GDX and gold.