Intermediate term view - a few more weeks before we can think of a top.
Nothing new just the charts updated. If this is a wedge from the February low a top should be imminent. Looking at the technical indicators and market breadth I do not see such outcome at the moment. So either the topping will continue for several weeks or it is the pattern which I am following - a wedge but from the June low.
TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the move from the November low looks like A-B-C to me.
Intermediate term - the two scenarios. Red is a wedge from the February low and this should be the last wave 5.
Long term - no change.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - is resetting higher, but it is visibly much weaker. Expect divergences and important top... but there is a few more weeks.
McClellan Oscillator - well above zero.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal.
Bullish Percentage - buy signal.
Percent of Stocks above MA50 - nearing the upper range.
Fear Indicator VIX - building multiple divergences for the next important top.
Advance-Decline Issues - nearing the upper range.
HURST CYCLES
Day 14 from the 40 day cycle. At least a pullback for 20 day cycle low is expected.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
The move is strong enough not to expect sudden reversal. We have finished setup and countdown is running.
Silver - the same pattern as Gold. We have 5 waves lower which means the correction which begun is not finished. There is two options - this is wave A and we should expect B and C(red) or we need 7 waves for finished corrective move double zig-zag W-X-Y(green). I thought the USD is still in the triangle in this case A-B-C(red) was looking great... now not so much.
In both cases bounce higher is expected because from the November top we have 5 waves lower with divergence followed by one more lower low. I can not see a finished pattern at the moment.
MA50/MA200 are resistance now. If the bounce higher hit them with a zig-zag than watch the green scenario. If the bounce hit them with an impulse than watch the red scenario.
I believe we should compare current situation with 1998-2000 (1 Kuznets cycle ago) period where stocks were rising along with USD, this was the case even on Emerging Markets.
ReplyDeleteWe will get correction in equities in Q1 2017 thats a given. USD will most likely fall during this period (like during July-October 1999 stock market correction. That means red scenario for precious metals.
I wrote several times about USD and gold comparing with this time period 1999-2001.
DeleteThe red scenario is not dead it is still my preferred one. Just the USD broke out higher earlier than expected and I am wondering if gold will make a low earlier.
USD is difficult to count, there is several options and I am just waiting to see what happens looking at alternative options.
Gold has much higher correlation with USDJPY than EURUSD. I have looked at this pair it shows more clear picture - the odds are much higher PM to make a significant bottom later in 2017 than early in 2017, so the red scenario looks better.
DeleteFalse USD breakout is the only scenario that rhymes with equity correction. Pullback to 98 would be best.
DeleteI would say the beat pair to watch when talking about PM is Cable. Don't know why honestly but it works. We have very nice 8 year cycle there. Last major low was on January 2009.
The big question is when Pound will stop getting pounded. Full disclosure of terms and schedule of Brexit to eliminate uncertainty would be nice.
Did we get a demark reversal today?
ReplyDeleteNo, there is no price flip, there is no finished countdown/combo, there is no setup in the opposite direction. Nothing to suggest a reversal.
DeleteWould you alert us if there is a demark sell signal?
DeleteI always try to post as soon as possible an update if there is a change. EW/TA will show earlier that something is going on. Demark signal comes later a confirmation.
ReplyDelete