May 21, 2016

Weekly preview

Short term view - higher next week.
Intermediate term view - the move lower does not look finished, I expect an intermediate term bottom first half of June around 2000-2010.

I was expecting to see some fear to finish the first leg lower.... no another very choppy week. Now it looks like the flat correction, which I have posted twice, is playing out. Europe looks like messy flat correction too(see below) and DJ/Russell2000 look like finished zig-zag two legs lower with the same size. The message is expect a move higher.

Technically you can say the correction is over we have the minimum as EW pattern and cycles, but it does not feel like finished correction. We have only 23,6% Fibo retracement, market breadth hanging somewhere in the middle, no fear..... it feels more like the first leg of a corrective move. So after a move higher I think we should see another leg lower.

The next long term update is the end of June, but the trades are reversing now. I warned that the USD is turning up, now I think yields made 4 year cycle low this week(see the last chart), next commodities should turn lower. So if I am right in the next 6-9 months USD/yields are higher and bonds/commodities lower.

Short term - either a flat or zig-zag higher than the indexes should turn lower again(red). Alternate we have finished correction and the first pause will be around the previous high 2110(green). I do not see sign for such development at the moment, but who knows.
Anyway we have resistance,trend line,MA200(the circle area) and a pullback is expected. If you see a higher low it is a buy and we see what happens.

Intermediate term - the histogram and slow stochastic are showing divergences and I expect at least 4-5 days higher.

Long term - no change. The oscillators are resetting and they have more to go lower... I would say the correction is not finished.

The Market Breadth Indicators - the same like previous weeks sell signals and in the middle of their ranges, the indexes are in a correction. Only the McClellan Oscillator hit levels common for at least a short term bottom.
McClellan Oscillator - hit 67 and reversed. I think we have at least short term bottom.
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.
Fear Indicator VIX - we saw small spike 17,65, but this is not enough for important low.
Advance-Decline Issues - in the middle of the range.

Day 31 of the 40 day cycle and week 14 of the 20 week cycle. We have the minimum for an intermediate term bottom, but the pattern and the indicators are saying we should wait a few more weeks.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
One setup lower has been negated. Currently at 6 of the next setup. There is high probability that it will not be finished too. The same message so far - to the upside the market is trending we saw finish countdown/combo and to the downside the price action is weak.

Last week I have shown CAC40 today the DAX. I was expecting strong move lower some fear.... and we have messy up and down moves (the rectangle is this past week). I think the European markets are in a choppy flat correction wave B. We should see a leg higher to finish wave B and another leg lower wave C will follow.

10-year yield - EW pattern I think we have impulse higher for A correction lower for B and now another leg higher C should follow. Cycles three 18-month cycles and finished 4 year cycle. We should see 6-9 months of rising yields/USD higher/bonds lower/commodities lower.

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