Short term view - higher next week, the current move from June is not finished.
Intermediate term view - after it is finished(in the next week or two) lower for 6-8 weeks into October.
The market fall a sleep for three weeks... the indexes are around the same levels. It is not a surprise that the rally has stalled (just look at market breadth), but on the other side "nothing happening" is information too and now the pattern looks more bullish. First such sideway move in a tight range is usually a consolidation and wave 4 from an impulse. Not a perfect impulse from the June low wave 3 is shorter than wave 1 (because of that and market breadth I was betting on more bearish pattern), but five waves higher is an impulse... just waiting for higher high from DJ for a confirmation. Second the indexes are spending more time around the highs and cycles look more bullish now.
EW - bullish pattern waiting for a week or two to be finished and after an impulse correction follows.
Cycles - the price has not changed a lot but hanging around the highs for longer time means bullish cycle. The average length for 40 week cycle is 32-34 weeks with 25 weeks from the February low 3/4 of the 40 week cycle should be behind us. First the signs are for a bullish cycle right translated with 3/4 of the time moving higher, but on the other side we are entering the time window when cycles should start turning lower.
Market breadth - the indicators are in bullish mode, but making second top with divergences... indexes should follow soon moving lower and market breadth should reset before the next move higher.
Seasonality - not the best for stocks. We are entering a period when stock usually correct lower.
All signs are pointing to a bullish pattern, a week or two the current move to be finished, but than lower for a correction. I think we will see wave ii of 3 with target the middle of the range mid-April to mid-June(see the second chart). Of course there is a bearish option, but as long as price stays above the June low the pattern stays bullish.
TECHNICAL PICTURE and ELLIOTT WAVES
Short term - higher for wave 5 from the June low.
Intermediate term - I have drawn deeper retracement because of market breadth and 40 week cycle low expected in October. The price likes to test such congestion zones around this levels are MA200 and 61,8 Fibo retracement.
Minimum we should see test of the break out and MA50 around 2110. When the price starts moving lower we will see if it will be deeper retracement or the indexes will just burn time with sideway move.
The June low is the level which makes difference if this is bearish or bullish pattern.
Long term - the bearish pattern(if we see the price below the June low) is shown on this chart - three lower for A, three higher for B and final wave lower C for a flat correction. If you are a bear it looks nice, but you do not want to see this. It will just prolonge the bull market and it will move higher.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - do not look good at all second tops with divergences.... only McClellan Oscillator is pointing higher for the short term waiting to see divergences too.
McClellan Oscillator - one more high for the indicator and divergence expected.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - second top with divergence.
Percent of Stocks above MA50 - second top with divergence.
Fear Indicator VIX - very low level and a lot of complacency.
Advance-Decline Issues - lower high and divergence expected.
Day 28 of the 40 day cycle we are nearing the time window for a top of current daily cycle.
Week 6 of the second 20 week cycle. The 40 week cycle looks bullish now with the price moving higher 3/4 of the time.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
One more higher high and we will see a combo finished on the weekly chart. Time for an intermediate term top?