Intermediate term view - at least a week the waves to play out, after that we start watching for a bottom.
The market even the bookies were sure that the result from the referendum in UK will be "Remain" - well they were wrong. The futures made higher high and I was wondering if I am right, but even the alternate scenario was pointing lower. Now we are watching the pattern which I am talking for a few weeks - expanded flat. If this is the right pattern we need a move lower to 2000-2010(at least below 2020) for wave 3(futures did this) bounce higher wave 4 and one more weak move lower to 1980-1990 wave 5.
Yesterday I explained what I think. Short said I do not think that something has changed. If you have not noticed the correction has begun in April two months ago not yesterday... but I was missing the smell of fear - now we have it:) The August "crash" - the correction has not begun August it has begun three months earlier in Mai, the January "crash" - the correction has not begun in January it has begun two months earlier in November. It is the same game repeating over an over. Psycho games of greed and fear which you have to learn to play.
It will last for a while the dust to settle down and the waves to play out. No need to think about longs at the moment. What if I am wrong? - than the big bar is the beginning of a correction and the market will move lower for much longer.
TECHNICAL PICTURE and ELLIOTT WAVES
Short term - ADDED SECOND CHART
With the gap is difficult to count short term waves. I think we are in wave 3... I have some suspicion that we can see a surprise on Monday, but first to see the opening.
First normal wave 3 impulse and one bigger bounce is expected later next week for wave 4, but first we should see SP500 below 2020.
Traders sleep on it this weekend and decide that it is not so bad. Than we can see surprise rally for wave 4 and later to visit 2000 or slightly below to finish ED. This will explain the overlapping I see(the triangle story). It looks better than the pattern above, but how to say on Monday we will see strong rally after 75 points lower:)
Intermediate term - the correction has begun two months ago, but now it is well visible. It has more to go at least until September.
Long term - no change. As I wrote the indicators need more time to reset and wave 2 has more to go.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - not so bearish as I though, still have not reached oversold levels. Obviously it will last a few weeks before we see a bottom.
McClellan Oscillator - below zero has more to go lower before we see oversold levels.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - in the middle of the range.
Bullish Percentage - sell signal.
Percent of Stocks above MA50 - sell signal, nearing oversold levels.
Fear Indicator VIX - now we see fear, another push higher to 28 will be great.
Advance-Decline Issues - still in the middle of the range, this will change next week.
HURST CYCLES
Day 25 of the 40 day cycle. We need at least a week so that the cycle does not look too short. The waves need at least a week too.
Week 6 of the 20 week cycle. The M pattern looks even better now.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Price flip lower on the daily and weekly chart.
As you can see the histogram bellow it will last a few months before it moves lower and turn up for an intermediate term bottom.
Thanks for the updates. It's such an interesting time. I think that we need a little more time to the downside before we get a relief rally. and that relief rally should ultimately fail. the bigger intermediate swing trade to the upside is around that 40 week cycle bottom.
ReplyDeleteYes, a lot of emotions... but I think it is just that emotions and nothing more. If you take a step back and look at the big picture the last two months are just noise. I hope we will see a nice move lower into September-October and not only this constant up and down.
DeleteHi Krasi,
ReplyDeleteThanks for your posts!
Your long term shows Dow going to perhaps 21,000. So, at that point, the final 5 of (5) waves are complete? This means at same wave scale, wave 2 down could be .5 to .68 of rise from 2009?
This is one possibility. What i will do is following - the saying is cyclical bear in secular bear cuts the price in a half the range is usually 40% to 60% loss. That makes 10500 +-2000 points so range 8500-12500. I will watch the waves lower and than measure where the low should be and second we have the time frame for the low 2022-2023.
DeleteExample - wave 2 and severe bear market should retrace price not time so betting on a zig-zag and not triangle or flat which are more typical for wave 4. Where is the first support 14k which makes first leg lower 7k, than retracement lets say 50% 3500 points from 14000 to 17500 and than one more leg lower 7k of the zigzag makes 10500... nice coincidence:)
61,8% Fibo is the upper range 12000-12500... nice coincidence again:)
Any thoughts on FTSE?
ReplyDeleteThe European markets look very messy it is difficult to count. I think they will continue lower until September-October with sharp bounces along the way. I do not see sustainable sell off.
DeleteThanks for your awesome post, Krasi. Can i know what is your definition time line of short term and intermediate term view? Thank you
ReplyDeleteShort term one week... max two weeks. Intermediate term longer than two weeks something like what will happen the next month.
Delete