Intermediate term view - after a pullback one more high is expected followed by a correction for 2-3 months.
The move from November is now too long... it force you to count an impulse currently in iii of 3 as the most obvious count. But is weird Bullish Percentage and Percent of Stocks above MA50 are making double divergence, MACD and the histogram with divergences on the weekly chart and all this in iii of 3 when the move should be the strongest????? Very strange, usually you see such thing around intermediate term tops. Looking at the price behavior, the indicators and other indexes there is high probability that we will see one more high around late January so no need to guess the pattern. There is time to exit longs and enter shorts no need to hurry. I am not comfortable with this count, but I will just follow the market. I have switched to the bullish count and I will keep an eye on some alternative patterns. In the previous post you can see this bullish count and some alternative patterns for most of the US indexes.
TECHNICAL PICTURE and ELLIOTT WAVES
Short term - it is possible the wave to extend with one more wave higher, iii of 3 always look like they will never end. It depends on what will happen on Monday/Tuesday if the trend line is broken or not. If the trend line holds one more "christmas rally", if not the "christmas rally" will be just a retracement to test the broken trend line.
Intermediate term - the bullish pattern is shown on the chart. The histogram with divergences pointing to a move lower, MACD still has not turned lower. This translates to a move lower, but one more high before a bigger move lower.
Long term - switched to the impulse pattern. This is either the end of the bull market V(red) or the top of wave III(green) and we will see one final mania phase in 2018.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - looking at the indicators I see that the indexes are nearing a intermediate term top, but there is no reversal signs. We need a few more weeks to see toping process and the indicators to start reversing. You do not short vertical move higher you are waiting for a test of the top with divergence or lower high.
McClellan Oscillator - around zero, a trough is expected than one more peak with divergences.
McClellan Summation Index - buy signal, but big divergence.
Weekly Stochastic of the Summation Index - buy signal, reached oversold levels.
Bullish Percentage - double divergence.
Percent of Stocks above MA50 - double divergence.
Fear Indicator VIX - look like it is bottoming.
Advance-Decline Issues - a lot of weakness compared to price.
Percent of Stocks above MA200 - another red flag huge divergence.
HURST CYCLES
Day 29 of the 40 cycle. It is time the indexes to turn lower for a 40 day cycle low.
Week 6 of the 20 week cycle
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Countdown and combo have been finished this week as expected. Now we have a green light for a pullback:)
The weekly chart - we have sell setup at 6 one more high to finish it in January looks good.
Krasi,
ReplyDeleteYour analysis is excellent as usual.
There is one aspect of the market that really bothers me. It's the fact that recent volumes of the DJ-30 have been highest in years suggestive of top. The open higher and sell through the day in such incredibly high volume is classic buying euphoria unlikely to be topped in another rally in such order.
Your thoughts?
Thanks,
Kali
I do not use volume. It does not help, just more confusion. At the end you trade price not volume or some other indicator.
DeleteI can say the buyers are strong that is why there is high volume and you need one more high with less volume so that the buyers are exhausted....
When the volume is high is exhaustion, when it is low this rally is weak... where is the useful information? Which is true?
Hahaha
DeleteThe volume price analysis states that large volume should produce large price change and small volume should produce small price change. When extraordinarily large volume causes little or no corresponding change as we have seen in DJ-30, it shows impending reversal or top. The volume tends to be the only other information that is not extrapolated from the price.
When volume is high and there is no corresponding price change, there definitely is an exhaustion and pullback/selloff likely to follow. When there is rally with anomalous low volume, again a reversal or sell off is likely. It's just another information that builds a case for a fall.
After learning so much from you, I finally have something to contribute!!
Kali
Except that we have exactly the opposite - average volume and big price change.
DeleteThere is no "extraordinarily large volume"... I do not know where do you see such thing.
"little or no corresponding change in DJ-30"???? - 2000 points, 11% for a few weeks is not little change.
You have big volume only at the daily chart at the start of the move in November which is positive and on Friday which is caused from quadruple witching.
Analyzing volume on daily basis means nothing... like candles predictive power a few days.
I am sure most of the indicators will show some signal too at top/bottom so what is the point using one more indicator.
I want to see something bearish which is not there.
i guess you don't like using volume. :)
Delete- kali
Moving on, in each of the areas you circled, the chart made a higher high in only one instance. Why do you believe this will be different? Why would we make a new higher high?
ReplyDelete- kali
Look at the previous post the US indexes and you will see why.
DeleteHello Krasi,
ReplyDeleteDo you think it's the end of the bull market after the Wave 5 ? What do you expect after the end of wave 5 ?
I'm talking really long term.
Thank you.
Yes in ü2017 or 2018 the bull market which begun in 2009 will end.
DeleteWhen the final wave V is finished the indexes will move lower until 2022-2023 after that at least 4-5 years higher.
Hi Krasi, thanks a lot for info. are you in Tweeter too?
ReplyDeleteI have account, but I do not use it.
DeleteHi Krasi,
ReplyDeleteIt looks market has made a point to confirm your view about volume. I was totally wrong. I appreciate your patience as I am obviously struggling to learn.
Kali
Volume is like every other indicator. It is not better or worse... it does not give you some extra information so need to waste time with it. On daily basis is useless to analyze it except if you are waiting for selling/buying climax. On long term basis too much room for interpretation.
DeleteLook at 2009 until now decreasing volume all the time, the bears crying it will crash any moment. Despite this it is one of the strongest moves ever.... so trade price volume is just distraction.
Love this: "You do not short vertical move higher you are waiting for a test of the top with divergence or lower high." why can't i remember this always? too much emotion
ReplyDeleteThat is the problem with trading. It is very easy, there is only two directions, you do not need some special knowledge, but emotions make it very difficult. This is human nature when it is about money.
DeleteYou can not learn it from books how to control your emotions. Every one is different personality and have to find the way on his own....
Love your blog. Keep up the great work!
ReplyDeleteBest wishes