Short term view - final spike higher.
Intermediate term view - after the final move higher correction for a few weeks.
I thought we will see more action after MLK day... no the sideway move continues and the analysis has not changed.
I wrote many times that the pattern is ambiguous. It is easy to say it is moving higher it is so bullish iii of 3 of III.... but I can not get rid of this feeling that the move since Feb.2016 has corrective DNA. That is not all, there is too many red flags - some divergences on the weekly charts, market breadth indicators with double divergencies, TomDemark 9-13-9 finished on the weekly chart. You do not see such conditions in iii of 3 rather when you expect correction... bigger one 10% not just pullback 3%-5%.
The market does not make a top with an A-B-C move higher... so which pattern has corrective DNA, but ends as an impulse? Which pattern will allow 200 points drop followed by another ATH?
The pattern which satisfies all conditions is expanding ending diagonal. It is shown on the second chart and on the last chart DAX it is even better visible.
I would say right away this is the pattern if it was not so crazy 10% lower followed by 25% higher:) Now I am waiting and I am very curious what will happen in the February-March-April time frame.
TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the same like last week except that the bearish case(red) has much lower probability now(it was not my favorite anyway). After the last top it is difficult to see impulsive reversal.
Intermediate term - the bullish pattern is clear the price should move higher in series of iii-iv/3-4. The difference between the two is how wave 4 and the 18 month cycle will look like. The new pattern(red) suggest very bearish February-April time frame followed by final mania phase 25% higher for the last wave... exactly what you want to see for an important bull market top.As a trader I pray that it plays out, with the sideway move(green) you can not squeeze a lot of profits.
Long term -
no change, waiting for the wave from Feb.2016 to be finished.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - the same like last week. Short term no reversal signs, but double divergences on some indicators suggesting that something bearish is around the corner.
McClellan Oscillator - a third lower high will look great for double divergence.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal, in overbought territory for a while.
Bullish Percentage - buy signal.
Percent of Stocks above MA50 - showing weakness already, one lower high for short term divergence will look great.
Fear Indicator VIX - very tight BB again and complacency.... volatility will rise soon.
Advance-Decline Issues - in the middle of the range, one final spike to overbought territory will look good for a top.
Day 13 of the second 40 day cycle.
Week 11 of the 20 week cycle... the indexes should be nearing a top.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
9-13-9 finished two weeks ago, but no price flip so far.... no sell signal.
The same pattern for the DAX - it is even better visible. We see series of expanding a-b-c moves. It looks much better than some iii of 3 of III count.