Intermediate term view - after the move higher is finished expect correction for a few weeks.
The indexes spiked higher.... someone surprised:) Now waiting for the move higher to be completed. After that we should see at least 2-3 weeks correction for 20 week cycle low, but looking at market breadth it could be something much bigger(the pattern which I discussed last week).
TECHNICAL PICTURE and ELLIOTT WAVES
Short term - so far the pattern does not look finished waves 4 and 5 are missing. Target - still waiting to see waves 3 and 4 for accurate target... I am seeing something between 2330-2350. Time - another 1 week max 2.
Now we have a new support area+MA50 - below this level I am wrong.
Intermediate term - I would say the indicators and market breadth favor the bearish scenario. Usually you do not see such divergencies(RSI/MACD) in iii of 3. The divergencies start building between iii and v of 3 and than follows double divergence with the top at wave 5.
Long term - no change, waiting for the wave from Feb.2016 to be finished.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - short term the indicators are getting ready for reversal signal. Double divergences on some indicators suggesting that we could see something more bearish than most expect.
McClellan Oscillator - more lower highs.
McClellan Summation Index - still buy signal.
Weekly Stochastic of the Summation Index - it could turn lower any moment.
Bullish Percentage - starts turning lower.
Percent of Stocks above MA50 - weak and struggling to stay above 75 despite the new highs.
Fear Indicator VIX - heavily beaten down. A lot of complacency and very tight BB. The surprises for the indexes will be to the downside not to the upside.
Advance-Decline Issues - in the middle of the range.
HURST CYCLES
Day 18 of the second 40 day cycle for the 20 week cycle.
Week 12 of the 20 week cycle... the indexes should make a top in the next 1-2 weeks.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Day 4 of a setup... it will be interesting if it will be finished. Than we will have a finished 9-13-9 on the daily and weekly chart.
Morning Krasi,
ReplyDeleteSplendid, you saw it super well, congrats, it wasnt easy... but now you see the spx going to 2330-2350 within 2 weeks, or in march? Looks like a powerful move then, which may seem surprising with a vix so low? Is there any way to see if your more bearish view (outlined last week) happens to be the right one before we actually break 2220-2233?
Thank you and have an excellent weekend.
The current move does not look finished. If it reverses now it will be only three waves. There is no tops with three waves higher.
DeleteThe indexes need at least one more higher high it could be 2320 not 2350 but still something to the upside.
You were right:) With VIX so low the pattern will be a different one.
DeleteBut still many indexes with unfinished pattern so it is more likely that this is not major top.
Well, you saw the upside move very well... maybe this is just the february correction you were waiting before the index makes a new low in march like your medium term chart shows.. it is going to be an interesting two weeks for sure, already keen to see your next update :-)
DeleteGood luck!
JD
Sorry, i meant 'make a new high in march'
DeleteYes, in the moment I think this will be just a standard pullback 3%-5% with a new high.
DeleteThe next 2 weeks will be really very interesting - the price action could reveal what will happen in the next few months.
At this stage betting on one or other outcome is too risky. I have closed my longs and waiting to see what will happen.
3-5% pullback being wave 4? you don't think that's worth shorting from here? Is that because you think it's equally possible we make a new high from current levels?
DeleteI do not trade such moves any more. It costs too much time and energy and I do not have them now:)
DeleteIf you are lucky you can catch half of it 2%-3%. You can not nail the top and the bottom of corrective moves.
I learn so much by asking you these questions and reading comments :) had no clue you were long until the yellow line...for the last year i only bet and speculate on waves 2 and 4 hoping for the big Kahuna ( very bearishly biased)...such a painful way to learn :) ...finally this week i understand what you're saying/the way to trade the charts you are showing :) p.s. I admire your discipline, after you said expecting one final spike higher, and it happened! what gave you such confidence you didn't miss the small degree 4th and 5th wave?
DeleteNo good? https://postimg.org/image/hw4je7b75/
This is typical thinking - If I nail the move from top to bottom I will make so much money... this is because school,life etc. teaches you to be always better than the others, to have the best performance.
DeleteTrading is different - you have to be "mediocre" and this is against everything you have learned in your life.
Which is more profitable?
- trying to catch a top(less than 20% success rate) investing less capital for less loses(making big loses chasing big profits is not lucrative either with this success rate ) or
- making bigger bets on moves with very high probability?
You will make bigger profits not when you try to be smart nailing tops, but when you follow the market... doing nothing special. Waiting for confirmation and riding only 50%-70% of the move is much more profitable than nailing the top... but than you are not the smartest guy who nailed the top:)
Since Feb.2016 I am bullish because I see only corrective moves to the downside and this time it was not different. Now it is decision time between the two scenarios(red and green) so I am stepping aside. Even if I miss the top I do not care. There will be another opportunity to short.
The short term charts - I do not have a count with high confidence. I do not know the exact count.
Excellent stuff..I've cut and paste this into my trading rule book :) I think your strategy is great, it's all about risk/reward! But I don't have your expertise to know when "very high probability" is, even though I've seen your posts describing what a very high probability looks like.. in my eyes I recently see higher lows, and then higher highs that fail right away..and I've seen double divergences on RSI's with indexes that continue to grind higher afterwards..so i'm clearly clueless. Any chance you could possibly let us know next time you see 'very high probability'? even if it's wrong, it would help me so much to know what you see (whether on the hourly, daily or weekly)... or even if it's the recent entry point you took on your last long? I started out trading indexes way too aggressively and need to stop until I grasp the concept :)
Deletep.s., if ever you're ever in NY, my wife and I would love to treat you and your family to a wonderful (chart free) dinner! (the least I owe you for this site and your insight...you're a great person... always answering everyone's questions, I don't know how you do it!!)
I have started aggressively too, chasing the big profits... and it did not work:)
DeleteTrading is a long journey. I am doing it for 10 years and only in the last 2-3 years the analysis are decent.
Focus not on profits rather on doing it the right way with small bets. It will take 1-2-3 years it depends on you, but you will gain experience and this will train your discipline and emotions. Most traders do not have patience for this.
Something has high probability when all techniques play together - EW finished pattern, cycles, indicators and market breadth. This works great on longer term basis. The shorter the time frame the more drops the success rate. I suspect you are trading shorter time frames. Day trading/swing trading is more difficult. You need knowledge, experience, strict set of rules and iron discipline - a beginner has none of this.
I do not remember RSI failing:) I would rather say you have overlooked something because of lack of experience. This is not math there is a lot of shades. Your example could happen with a very strong move. Then after the first divergences RSI moves lower because acceleration drops(oscillators are measuring acceleration) and price is grinding higher for w5 as diagonal or doing nothing for w4 waiting for the MAs to catch up.
I usually warn at important inflection points that the trend is about to reverse... currently in 2-3 weeks I will say we have with high probability an intermediate term top:) or look at the RUT chart from the new post - this should be a pattern with very high probability.
The long entries were in Feb/June/Nov 2016 I was explaining all the time that this moves lower are corrective. I did not nail the bottoms, but we had plenty of time to ride the moves up.
P.S. Thanks for the invitation. I have not visited USA so far because I need Visa, but if I do it I will consider you offer:)
Ha ha,
ReplyDeleteYes it was surprising :)
Always appreciate your insight.
- Kali
You have some bearish bias:)
DeleteBears have been dancing lately.
DeleteCheers,
Kali
A little bit happiness for the bears:) Their time is coming no doubt, but the bears need to have patience a few more weeks.
Deletewhy was silver so strong compared to gold. don't they usually move together whether it's up or down?
ReplyDeleteAlbert
Yes, this sudden silver buying on Friday was strange. I do not know what cause it.
Delete