Mar 26, 2016

Weekly preview

Short term view - waiting for confirmation for a short term top and a move lower.
Intermediate term view - pullback in April expected.

Quiet week, the indexes struggling to move higher and finished with small loss as expected. Nothing new, waiting to see confirmation if a pullback has begun.

Current thoughts:
- EW - I think this is either wedge or impulse is running(green scenario).
- TA - see the second chart. When you see the histogram showing strength(strong move up/down or spending time above/below 0) expect subsequent top/trough with divergences. There is no guarantee higher or lower high, but the high should be tested.
- Market breadth - showing strength in overbought territory for a while. Usually when you see such strength expect another high with divergences before more significant top. Market breadth favors the green scenario.
- Cycles - currently day 29 of a 40 day cycle. Cycles look bullish - we have right translated cycle. Usually the next one makes higher high. Cycles favor the green scenario.
- TomDemark Sequential - needs a few more days making higher highs to finish countdown or combo. With the bullish scenario a sequential will be finished, but this is not a guarantee that this will happen.

Overall I can not see imminent reversal, higher high will look better, but this is not a guarantee. We have to see first how a pullback develops. I expect a pullback in April and the second intermediate term top in Mai.

Short term - only two legs lower so waiting for confirmation for a reversal. Both scenarios are shown wedge and an impulse after the first wave lower will know more which is it.

Intermediate term - the paths for both scenarios are shown with two 40 day cycles which should finish a 20 week cycle.
The histogram with divergences. When you see a sharp move lower/higher usually the bottom/top is tested.

Long term - no change. Indicators look bullish so worst case is topping with lower high before any strong move lower.

The Market Breadth Indicators - are turning down from overbought levels and a pullback is expected for the indexes.
McClellan Oscillator - below zero.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - at overbought territory waiting for the next swing lower.
Bullish Percentage - turned lower, but still buy signal.
Percent of Stocks above MA50 - turned lower after very overbought level around 95%.
Fear Indicator VIX - turned up.
Advance-Decline Issues - heading lower from overbought levels.

Short term cycles are shown on the second chart daily.
Long term week 6 of the current 20 week cycle. This is the bearish scenario with one more zig-zag lower.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Week 6 of a sell setup on the weekly chart. On the daily we need one more wave higher to finish combo or countdown.

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