Short term view - next week one more higher high and reversal.
Intermediate term view - after a top we should see 2-3 weeks lower.
At first glance more of the same 4 weeks sideway move, but the indexes continue to work on the final small waves and managed to squeeze a few points higher as expected. The pattern looks now mature... not much left to the upside price and time. I am struggling to find something bullish, but I can not, all signs are bearish:
- TA indicators with divergences on the hourly and daily chart.
- EW pattern - the indexes are heading for 5 of 5 of 5.
- Cycles - day 33 of the 40 day cycle, mature cycle and we should see a top soon.
- Market breadth - a lot of divergences.
- TomDemark - combo finished on the weekly chart.
We should see a top next week. I think the leg lower will not last very long. The indexes are above MA50 and the 40 day cycle is right translated which means to expect at least deep retracement before more serious sell off. VIX is at very low levels and Bollinger Bands are very tight so expect the volatility to increase soon and swings up and down in the coming months.
TECHNICAL PICTURE and ELLIOTT WAVES
Short term - I expect wave 5 and the whole move from the June low to complete next week.
Intermediate term - Above the June low we have a bullish pattern. Last week I have shown the obvious choice wave 3 and 1-2 i-ii count(green). I am still not fully convinced that the indexes are in wave 3.
The other option is a diagonal it fits much better with cycles and market breadth. Since February we have waves with internal structure 5-3-5 and the Fibo relationship between the two impulses is 0,681. At day 33 of the 40 day cycle we have right translated bullish cycle and the next 40 day cycle should make higher high followed by a 40 week cycle top. Smells like a diagonal.....
We will see what happens in the second half of August and the first half September.
Long term - switched to the diagonal scenario.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - the same like last week.
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 tight BB the volatility should shoot up in the next weeks.
Advance-Decline Issues - lower high and divergence expected.
Day 33 of the 40 day cycle. The cycle looks bullish right translated usually in this case the next cycle makes higher high..... diagonal?
Week 7 of the second 20 week cycle.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
We have combo finished and countdown at 10.... short term top and one more higher high to finish the countdown? diagonal?