Intermediate term view - the next bigger move is lower, but it could last a few weeks before it begins.
The indexes are lower for the week as expected, but so far the move does not look very promising. It is corrective - choppy and overlapping.
The big picture has not changed expecting a bigger move lower for the 40 week cycle low in October, but the short term pattern is not clear.
EW - the move lower looks corrective... it can extend lower or after correction a new high follows.
Cycles - Friday is day 43. It could be a low for the 40 day cycle with the next 40 day cycle making higher high or it could extend a few more days lower.
Market breadth - for the intermediate term negative, but for the short term correcting for several weeks for example McClellan Oscillator making second trough... smells like some move higher is coming.
Indicators - on the daily chart MACD has corrected lower to the zero line and the Histogram is making second trough.... like market breadth they are saying we have a correction for several weeks and to expect something higher. We could see lower for a few days, but after that a sharp retracement should follow.
Do you see what I mean - it is impossible to make a reliable forecast for the next 1-2 weeks. The market could take different paths. It could plunge for several days followed by sharp retracement, or it could try to make a new high... or something else which I do not see.
Personally I do not trade in the last two months and several times in comments I wrote that I am not interested to time this top and trade it... now you know why. Just waiting for a sign that something lower has begun or the move higher is exhausted.
TECHNICAL PICTURE and ELLIOTT WAVES
Short term - closer look the 10min chart... it is a mess,choppy,overlapping. This is a corrective move.
No clue which path the market will take.
Intermediate term - I prefer the bullish options 1-2 i-ii(green) or 1-2 of ending diagonal(white). We will see the correction in October and than we will know.
Long term - no change, cool off and reset of the indicators expected.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - are telling us that we have a correction for a few weeks. We need more to the downside so that some of them reset before the next big move higher, but short term McClellan Oscillator could be hinting to expect something higher.
McClellan Oscillator - below zero for a few weeks and working on a second trough.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - buy signal, no signs of a weakness.
Percent of Stocks above MA50 - in the middle of the range heading lower.
Fear Indicator VIX - moving higher as expected. Another low with divergence to expect?
Advance-Decline Issues - in the middle of the range after lower high.
HURST CYCLES
Day 43 of the 40 day cycle... we should be close to a bottom.
Week 9 of the second 20 week cycle... not much left to the upside.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Unfinished business 13 is missing on the weekly chart for a countdown. Will it be finished.... I do not know.
Jules: Thank you Krasi for the update!
ReplyDelete"I don't know" is an okay answer. Lots of time the market can go either way and on its own time schedule. Thanks for being straight with us. Keep up the great work.
ReplyDeleteDespite your insistence that you don't know, you nailed the call. This is one of your two path! So how far do you think this will extend? Thanks.
ReplyDelete-Kali
At the moment the mess looks like double correction lower. If this is the pattern we should see a bottom max around 2150 the previous minor low and MA50 on the daily chart.
DeleteYou are correct to call it a mess....2150 on spx...where does it leave the RUT? any idea?
ReplyDelete--Jules
Similar move for RUT points to around 1222.
DeleteIt looks like we have a bottom and finished double correction.
ReplyDeleteHi Krasi, according to you how much up S&P can go from here?
DeleteThanks
Neel
If I am right and this is a correction this should be wave 4 with wave 5 higher to at least 2225-2230 the usual measurements are even higher 2270. This is the only pattern I see at the moment...
DeleteYou got to be kiddin! this seem unreal! We rally on bad news! markets are detached from any fundamentals at this point. The way down, will not be pretty.
Delete--Jules
But of course, the biggest threat to this rally is Central Banks stepping on the brakes... bad news is this market's best friend. Currently $200 billion of QE per month, and $13 trillion of negative yield debt, so watch out!
DeleteMatt
Guys do not get emotional this is the worst think you can do. I do not follow news, I do not care about QE,FED,economy etc. for trading the charts tell you all you need to know.... real life is another story.
DeleteIt is not a mega rally just 40-50 points than 8%-10% correction. Patience THE top should be around mid-2017
Krasi...Matt, I agree with you. It's just funny to me how they are doing everything to keep things going to the upside. I was looking at the RUT charts tonight, by assuming the recent top of 1250 was (3) and we just finish (4) and we are in (5), then the targets become 1275 and 1300. am i correct ?
Delete--Jules
Correct RUT looks stronger already with impulse from the low, pullback for ii of 5 should test MA50 on the hourly chart and move higher.
Deletekrasi, should oil be bought on the current dip? thanks
ReplyDeleteNo unless the trade is for a few days. It looks like wave 3 of an impulse lower is running.
DeleteThis is a chart from my last long term update - https://1.bp.blogspot.com/-PsD5fhRTvtM/V4IrURDQcyI/AAAAAAAAGj8/u9r7dk01XtU5W31BBH0x84qQ7TLSQw24wCLcB/s1600/lt2-11.png
Oil moves as expected. One more leg lower November/December is expected than higher in 2017. The same for the indexes. The same for energy stocks. All move in sync without surprises so the odds for the forecast from the chart look pretty good.