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.
HURST CYCLES
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?
Hi Krasi
ReplyDeleteSwing cycles blog by Inlet shows a right translating 9 month cycle. All cycles from 2.5, 5, 10, 20 wks; 4.5 and 9 month cycles are heavy down into Nov.
However your charts show Nov as a mere correction. I know your bullish scenario, but do you have an alternative bearish scenario?
It is 200 points, 61,8 Fibo retracement this is around 10%. This is not mere correction this is a big one. Mere correction is 3%-5%.
DeleteAll cycles turning down does not mean huge sell off. You have to look at the context, the underlying trend. You can see the weekly cycle chart above there is many 9 month (which is 40 week) cycle lows where nothing happened. Right translated cycle means bullish cycle and the next one should make higher high this is the opposite of bearish outcome which you expect:)
Yes I have bearish patterns if the indexes make a top and move below the June low. Two options this is wave B of a flat correction or a triangle. But with bullish right translated 40 day cycle and 9 month cycle the probabilities are higher for a bullish outcome.
Glad you are back because I love your blog.
ReplyDeleteVic
Thanks! I give my best:)
DeleteThanks Krasi for your update! we are all waiting for this top :-)
ReplyDeletecan't wait to see a five wave structure ot the downside.
--Jules
Yes, four weeks nothing it is annoying already:)
Delete17/18-th full moon is a good date for a top.
Too much optimism in the media today. I am pulling the trigger and entering my short position today. I am ok with taking a little beating next few days. :)
Delete- Kali
Krasi, lets see how things play out. Im on sidelines for now until i see what you mentioned earlier: confirmation. Wednesday is FOMC minutes and maybe a little of hawkishness from FEDs will spook investors.
ReplyDelete-Jules
Often there is tops/bottoms around FOMC. Now 17/18 as top looks even more interesting.
ReplyDeleteThis explains it why this final wave is stretched in time as diagonal. Today we should see 4 and tomorrow 5 of the ending diagonal and something to the downside.
lets hope...this is the minutes from their last meeting. 4 was pretty deep though...not sure where that takes the finish of wave5 on RUT and SPX...
ReplyDeleteI think we saw the top already there is an impulse in the opposite direction.
DeleteLower high today will confirm it.
did u mean lower low?
DeleteFirst lower high to confirm that the count is right than lower low should follow.
DeleteYep...looks like an impulse to me too! looking forward to your analysis this weekend. If you have time to include RUT...that will be even better. Only if u have time...i know u r busy with kiddo
ReplyDeletegood trading....im short only 1/4 regular size.
--Jules