May 14, 2016

Weekly preview

Short term view - bounce up for a few days than lower again.
Intermediate term view - lower in the next 2-3 weeks for intermediate term bottom watch the 2000-2010 area.

Zig-zag higher and than the price turned lower, but with a lot of whipsaws especially the European markets. The intermediate term pattern develops as expected.

The EW pattern is corrective, but not completed. Cycle at week 13 in the time window for a 20 week cycle low. Market breadth says we are in a correction, but still no final push lower to oversold levels.
What is missing? - fear. So far we saw only choppy price action no straight lower for a few days. I think we will see a bounce and than "scary" sell off to around 2000-2010 to finish the leg lower which begun in April.

Short term - with all this whipsaws there is different options, but I think we will see another a-b-c shown on the chart. The price action develops below the MA200 and the index should be already in the second leg lower.

Intermediate term - different Fibo measurements are pointing to around 2010. This is the middle of the support area, MA200 on the daily chart and if the move overshoot lower the 38,2% Fibo retracement is at 2000. So watch 2000-2010 for a bottom.

Long term - no change. In a few months we will know which pattern will play out.

The Market Breadth Indicators - are showing that the indexes are in a correction, but the final push lower and fear is missing.
McClellan Oscillator - hitting 45 twice typical for mild corrections... a push lower to 60-65 will look great.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - sell signal.
Percent of Stocks above MA50 - in the middle of the range we need a push lower to 25.
Fear Indicator VIX - still no fear. A spike to 20-25 will be nice
Advance-Decline Issues - in the middle of the range.

Day 26 of the 40 day cycle. I think another 1-3 weeks and we will see a 40 day and 20 week cycle low.

Week 13 of the 20 week cycle. We are entering the time window for a low.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Price flips up and down on the weekly chart. The buy setup has not been finished. Price flips up and down on the daily chart.
This means for me confirmation that we have trending move higher and corrective move lower.

This is the French CAC40 hourly chart... the rectangle is the trading week a lot of sharp reversals and whipsaws 12 swing for 5 days:)
You do not need to be an EW expert to see what is going on. It is more bearish than the US indexes with impulse lower, but the intermediate term path is exactly the same - final move lower to finish an impulse, after a finished impulse there is a move in the opposite direction(rally higher in the summer) and another move lower should follow probably until September-October.

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