Apr 16, 2016

Weekly preview

Short term view - slightly higher high and another pullback lower.
Intermediate term view - another 2-3 week before an intermediate term top.

Two choppy days and the indexes turned up making another higher high. That what easy to forecast. The question is are we near the top of the move since mid February or this is just the top of wave 3, which means expect bigger pullback(wave 4) and test of the ATH(wave 5).

It is difficult to say. We have the minimum for a finished wave higher, but there is no problem to see another pullback and move higher with technical indicators and market breadth making bigger divergences.
We have ECB 21.04 and FOMC 27.04.... it will be strange to see a reversal and strong sell off before the CBs meetings.
I think we will see the more bullish scenario(green on the first chart), but if you do not like the risk take half of the profits next week and the other half on the next high or confirmed reversal averaging the exit price.

Short term - I think it is wave 3 with one more higher high late April(green). The current wave looks too short for wave 5 and in Europe the indexes have just begun a move higher.
Of course I can confirm this when we see the move lower if it is corrective or not.

Intermediate term - still bullish price action and indicators. Again preferred scenario bullish(green) and the only way to count this impulse as bearish is a huge expanded flat a-b-c/B(red)

Long term - no change.

The Market Breadth Indicators - building divergences, but probably only short term divergences for a bigger pullback wave 4.
McClellan Oscillator - oscillating around the zero line.
McClellan Summation Index - short term divergence - pullback expected.
Weekly Stochastic of the Summation Index - sell signal, turned lower at overbought levels.
Bullish Percentage - short term divergence - pullback expected.
Percent of Stocks above MA50 - short term divergence - pullback expected.
Fear Indicator VIX - short term divergence - pullback expected.
Advance-Decline Issues - divergences the move is tired.

Probably we have the 40 day low at day 38, but it can stretch a little bit if the next pullback makes lower low.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
We have finished countdown and combo for the first time since 2014. It looks like strength to me the market is trending for the first time since 2014.

On the weekly chart SP500 finished a sell setup.
Now I have noticed that if my preferred scenario plays out we will have an inverted H&S with target 2400.

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