Dec 15, 2016

US indexes intermediate term

The pattern for SP500 is not very clear so I went through all US indexes which I know and think are important:)
I would say the bullish case prevails. I wrote that I expect one more higher high with divergences, but it is more likely that this will finish wave 3 and the very long corrective wave from July to November disguised bullish move. The plan has not changed just the move lower into April could be smaller than expected.

- For the bullish case we should see one more higher high then lower into April wave 4 and 18 month cycle low.
- For the bearish case there is a lot of "if". Even than do not expect reversal and plunge lower so no need to rush with shorts.

Russell2000 the bullish case looks better, the bearish is possible, but first we need to see an impulse lower and lower high.

DJ transportation looks bullish. Sideway move into April will allow the MA200 to catch up with price.

Financial sector needs one more high.... or it is even more bullish and we have zig-zag from 2015 not a triangle than this is 3 like nall other indexes.

DJ industrial the strongest from the major indexes the bullish count looks better.

The indexes with not so clear pattern:
Nasdaq - the next high should be important high no matter bullish/bearish case. The tech sector looks weaker.

SP500 weaker than DJ and wave 3 is not so well visible. Alternate scenario is double zig-zag W-X-Y but it does not really fit in the big picture.

NYSE the weakest index. It depends on if we will see a overlap or not than we will know which scenario is running.


  1. Hello Krasi,

    I don't know if it's a dumb question but, what happens after a 5 wave and ABC correction ?
    I'm talking long term.

    Thank you.

    1. Another 5 waves in the direction of the trend.

  2. It looks like debt market is begin bottom and reversal? And gold also gap down, island reversal?

    1. Not impossible, but it is more likely to see a move higher and one more lower low.... or at least a test of the low. Usually there is no such thing like sudden reversal when everything is pointing lower. This could happen only in the direction of the trend and the price above MA50 or at least MA200, but this is not the case.
      I think it is too early for "risk off" trade. The charts above are telling the same story - we need at least wave 3 finished before the money start shifting from stocks to bonds/PM.

    2. Thanks. "This could happen only in the direction of the trend and the price above MA50 or at least MA200, but this is not the case." Does it mean sudden reversal usually only happen in the end of corrective move ( the meaning in the direction of the trend)? That's good point. Just short term I feel USD, bond and PM starting move to the opposite direction. Maybe only some small move...

    3. Yes, usually is after a corrective move for example October 2014 or this year in June and November.
      Short term we will see a move higher, but for bonds this should be just wave 4 with a lower low after that... gold is more complicated, but the same story I expect at least a test of the low.

  3. Krasi,

    Your new analysis shows highs being made in March countering the expected cyclical lows. Any reason why?



    1. The high is expected late January early February so not much different.... only the move lower is more likely to be 150 points and not 300.

  4. Hi Krasi, On Nov18 you said "above that level [1333] simple impulse from February will be invalidated", does that mean we should have to restart the count from the last low? (either June or November)? p.s., Bloomberg's EWAVE software says RUT completed Wave 4 this week (wave 1 starting Nov low); and for Russell 2000 futures shows wave 5 complete, with wave 1 starting from June low.
    Thanks for all your work!

    1. Above 1333 means the wave from the June low can not be of the same degree as the waves from the February or November low because wave 3 can not be the shortest.
      It must be a sub-wave from a bigger wave. On the first chart you can see the options either part of B wave or bigger wave 3.

      Short term from the November low it is possible to see one more higher high sot his week is wave (iv) for iii of 3.
      From the June low 5 waves.... I do not think so.