Short term view - I expect a move higher.
Intermediate term view - I think we will see in the summer up and down moves with the next important low in September.
The market chose a third path:) it was not neither short correction for w4 nor impulse to confirm reversal. The move lower looks corrective, it has found support at MA50 on the daily chart as expected and we have a break out higher from the wedge which I have shown in the last update.
From EW perspective we still could see w5 higher, but the wave takes way too long, MACD/RSI diving too deep on the daily chart and breaking below the trend lines... the price action and the indicators do not fit for wave 4. For me this move is not part of the rally since mid February. Probably we are in wave 2, but it is too short to finish now... indicators and market breadth has not really retraced too.
So too long for w4 and too short as a retracement of the rally since mid February - I think this move is a part of a bigger corrective structure and I expect move higher with lower high and another move lower.
If I am right we are entering a period which is for active traders. We will see several swings higher and lower with the next important low 40 week cycle low in September.
TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the zig-zag lower looks finished. We have break out from a wedge, MACD/RSI carved out divergences and broke above the trend lines. Now I expect zig-zag higher to the resistance zone.
Intermediate term - green is roughly the path up and down based on cycles.... It could be more bullish with higher high in summer(July) or it could be more bearish with a weak bounce in summer. We need more price action to see how the corrective pattern develops so that we can calculate the amplitude of the swings higher/lower.
Red is if I am wrong and severe bear market begins. It will just move lower... there is no signs at the moment. The current move lower is not an impulsive reversal.
Long term - no change. In the next few months we should see a confirmation if I am right or not.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - look bearish, but it is not "expect crash and burn" rather normal correction. The indicators has not really retraced, most of them just turned lower or are in the middle of their ranges. I think we will see more from this correction.
McClellan Oscillator - spending time below the zero line at levels expected for a pullback.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - sell signal, but still above 70.
Percent of Stocks above MA50 - sell signal, in the middle of the range.
Fear Indicator VIX - making higher lows...
Advance-Decline Issues - turned lower after divergence and in the middle of the range.
Day 21 of the 40 day cycle. I suspect another 2-4 weeks and we will see a 40 day and 20 week cycle low.
Week 12 of the 20 week cycle we are seeing the down phase of the cycle.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
The weekly bar could not close below the close four days ago and the price flip has not been confirmed. The move lower so far is not strong enough.
On the daily chart at day 7 of a buy setup. If the break out of the wedge is tested the setup could be finished on Tuesday.