Intermediate term view - when it is finished the high should be an intermediate term top followed by a correction for 2 months.
The indexes moved higher as expected, now waiting this final move higher to be finished. Currently I think we are in wave iii, the rally is not very strong so just waiting for 5 waves higher and to see if it will be an ED or simple impulse. When the current move higher is finished, we will have - finished EW pattern, MACD/RSI divergences on the daily chart, bearish market breadth with divergences, cycles in the time window for an 18 month cycle high, TomDemark finished 9-13-9 on the weekly chart. To me all signs are pointing to an intermediate term top around the corner. TECHNICAL PICTURE and ELLIOTT WAVES
Short term - changed the ED a little bit to be synchronized with the DJIA. If this is the right pattern the indexes should continue crawling higher for a few more days. If the price just continue higher on Monday/Tuesday it will be a simple impulse.
A move below the support area means with high probability a move lower has begun.
Intermediate term - it looks now like mature pattern with the final move higher running. We have MACD/RSI divergences, which is usually a signal to expect a bigger move in the opposite direction.
Long term - no change, waiting for the wave from Feb.2016 to be finished.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - the big picture is bearish with divergences, waiting for the indicators to turn lower and sell signal.
McClellan Oscillator - positive, but series of lower highs.
McClellan Summation Index - still buy signal.
Weekly Stochastic of the Summation Index - turned up gain, but should not last for long.
Bullish Percentage - buy signal, I expect lower high
Percent of Stocks above MA50 - heading higher, I expect another lower high.
Fear Indicator VIX - a lot of complacency and very tight BB. Volatility will rise sharply soon.
Advance-Decline Issues - one final spike to the overbought area will look great.
HURST CYCLES
I have explained last week about longer and shorter cycles and that I suspect a stealth wave 4 and 20 week cycle low behind us. I have adjusted the counts for shorter cycles.
Day 8 of the 40 day
Week 3 of the last 20 week cycle..... waiting for the 18 month cycle high.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Still no price flip(sell signal) on the weekly chart. Day 6 of a setup on the daily chart... it will be interesting if it will be finished, than we will have a finished 9-13-9 on the daily and weekly chart.
What does ED and BB mean?
ReplyDeleteand thanks so much for your Insight, Albert
Ending Diagonal and Bollinger Band
ReplyDeletethank you
ReplyDeleteKrasi,
ReplyDeleteCould you explain the phenomena when intraday vixx rises while the market is rallying? Why would that occur?
Thanks
VIX calculation is not based on SP500, it is based on out-of-the-money options. I have seen many times VIX higher with indexes rallying, it is nothing extraordinary.
DeleteThank you Krasi, for long term, sounds like this Bul lmarket is running for ever.
ReplyDeleteYes, for the bears it lasts for ever..... I am so happy that I do not care any more about bull or bear markets, why the market does not go up or down:)
DeleteEarlier I was so impatient expecting the moves to be completed in days or a few weeks. Watching all day the charts expecting to be surprised.... the big bad bear:)
With the time I have learned to be more patient, to wait the pattern and the cycle to be finished, trading longer time frames. No more stress, no more hanging in front of the screen for hours:) In reality the direction is reversing seldom and the moves last for months.
Yes, it is boring look at the last two months... but it is what it is.
Hi Krasi,
ReplyDeleteMarket looks very strong. What would be your signal to reenter the market on the long side again?
Nothing... this is final move before a bigger correction so not interested in long trade. It will not last for a long and the risk is too high.
DeleteSwing trading is ok for a few days, but I do not do that any more.
Yes, it seems like this bull will last forever. To infinity and beyond.
ReplyDeleteHi Krasi, Trading & EW question for you. Suppose today's high was wave iii, and we retraced to 2307 for wave iv (38%), would you then expect wave v to be about equal to wave i (or +44pts to around 2350)? As always, I wa too aggressive on my initial short position :) and it "seems" we have simple impulse and not ED (i think)....but I also want to acknowledge what you said last week that 'final small waves' can be tricky. I'll take it down to 1/3 position, as I should have done in the first place...but just curious if you would have reacted today when seeing pattern was not ED (assuming you think it is now simple impulse in a 'small wave')... Would you normally cover your initial 1/3rd position immediately/wait for wave iv or ride it out because anything can happen in 'small waves' and you know this is the last wave higher? Just trying to understand the probability game as you see it :) Thank you for your valuable advice!
ReplyDeleteThere is several Fibonacci measurements for wave 5. The length/shape of the waves vary and depending on the concrete occasion one or other measurement looks unlikely(too short or too long wave 5) the rest are the targets(or target area).
Delete5 = 61,8% from w1 bottom to w3 top added to the bottom of w4
5 = 161,8% of wave 1 added to the top of wave 1
5 = 61,8% or 100% or 161,8% of w1 added to the bottom of w4
I am not short in the first place... in the last post there was a long discussion about MACD histogram and what it means. If you look at the indicator for SP500 you will see several troughs each one higher and accelerating higher->price is accelerating higher - NO GO for shorting. I am short SOX which has finished pattern, MACD divergence and the histogram turned lower.
Add some simple TA to your tools - just a few things MACD,RSI,moving averages. Very valuable tools which confirm or reject some EW counts narrowing down your choice and a good trigger for an entry.
There is no one right answer to fit every situation and for every trader. The trader should assess the risk for himself and make a decision.
I open a trade for a reason and my rule is to close it if the reason does not exist any more or the loss exceedes 1% of my account. I am conservative I do not like risk:)
In the current situation probably I would not have done nothing for 20-30 points. The risk is - I will know I am wrong lets say at 2370 and this will cost me X$.
The other option is to exit at the oppening seeing that this is not an ED and enter later which is 20-30 points better. The risk is to make a loss and miss the reversal.
In the current situation looks ok even the better options, but this is not always the case.
No matter how good you are most of the time the top/bottom will surprise you. I do not think that I have more than 20% success rate, most of the time I am one small wave too late or too early.
On top of this the reversal will start like small move lower 10 points for example and after the weekend you have a gap another 10 points.
As you can see at least 0,5%-1% deviation from the perfect entry are inevitable.
Another one for my trading rules book :-) So, I've been following SOXX which has been out of control and have to ask you now that you've piqued my interest....what finished pattern? finished v of V of 5? or v of III of 5? what is your target? stop loss is last high I suppose. AI graphic chips are all the rage now...surprised to you are shorting one of the highest momentum sectors...all I see in the last 9 months are fakeouts but I do see the divergences on the daily. Here is bberg's always wrong rendition of wave counts: https://postimg.org/image/yg3lmas1v/
DeleteThis should be v of III of 5, like the major indexes I expect waves 4 and 5 before the bull market is over. Target should be somewhere between 800-850.
DeleteShort term this could be small wave 4 with one more higher high. I do not have stop
because I do not have full position just 1/3 far far away from my 1% loss.
I watch just NVDA for confirmation, the craziest I think:) It looks ready with double top, bearish weekly candles and divergencies.
Hello Krasi,
ReplyDeleteSuch interesting markets! Very well spotted... are you still seeing the 2350 target for the spx for this simple impulse? It's day 9 of the tom demark set up, does this mean we are actually nearing the area of a short set up? Also, it's the vix expiry today, with so much long that are expiring. Thx!
For exact measurement we need to see first wave 4, but 2350 looks good... despite the small bearish surprise at the end of January, it looks like the target was right:)
DeleteTomDemark - it means that the move from the November low should be finishing, wait for a price flip on the weekly chart for confirmation.
I do not know what impact will have the VIX expiration. I think we will see a divergences the indexes making higher high the final small waves 4 and 5 and VIX making higher low.
It's so quick to pick up... now 2350, and then where to go? Market is rushing for what? Thanks.
DeleteThe market is rushing to finish big wave 3 from the June 2016 low. Typical price action for wave 3.
DeleteKrasi,
ReplyDeleteI am growing a beard waiting for our party to get started.
Kali
I am literally growing a beard in the last two months... for the first time in my life:))))
DeleteThis is the way it works. You have to be patient, the price is not reversing all the time. Most of the time we have pullbacks 3%-5% and if you are lucky once per year 10% correction.
When a bear market begins, is different story. Until then shorting is interesting 1-2 per year.
http://www.zerohedge.com/news/2017-02-15/multi-billion-trade-meltdown-here-reason-markets-inexplicable-surge
DeleteEnjoy,
Kali
Forget the news, I would stick to the charts. The charts were clear that there is more to the upside. The herd(ok the majority of the traders:) have a bias up or down and they are trading accordingly. The news/events are just some excuse why the indexes should move higher or lower. It sounds better than I am betting on red or green, but I do not know why:) That is why the EW works in the first place, because it is tracking the mentality of the herd.
DeleteAnd for the article - maybe this has some impact maybe not. In best case, because of this the high will be 2370 and not 2350...
Hi Krasi,
ReplyDeleteGreat analysis, really enjoying it. I am quite a rookie with the EW count and get more confused when I compare different traders' count. About a couple of months ago I saw one trader suggesting that Spx may be in wave B following wave A which finished in February last year. This would mean the index may fall with wave C to test those lows. It also means that the break out of the B is the false break out. I wonder what you think about such an idea. Thanks in advance.
Yes, it is very confusing with so many blogs and so many counts:) EW is very controversial tool. My definition - EW is a great tool abused by many. Most of the EW guys have no clue what they are doing. I know only 2-3 guys who can really count EW and they have paid services.
DeleteThis count has very low probability for me.
If this is wave B the pattern is expanded flat for wave 4 from Feb.2009. Wave 2 was expanded flat too so this will violate the rule of alternation - wave 2 and wave 4 should be different patterns.
Expanded flat means lower low and pushing the cycle to a length of 9 years. Since 1980 the cycle runs like a clock with 6,5-7,5 years length between important bottoms.
Not to mention that when this wave is over wave B will be double the length of wave A which is nonsense for expanded flat.
DeleteHi Krasi,
ReplyDeleteAny implication of a very slightly higher RSI vs December high today? Also just sharing a trend channel I am following https://postimg.org/image/ktvay68p3/ . curious if you think red channel has any relevance or if I'm smoking something
No change, the only implication could be that the more bullish scenario on the daily chart(green) is running. Many indexes do not have higher RSI and freestockcharts.com shows me slightly lower high.
DeleteI am watching the trend line which connects the three highs April.2016/August.2016 and now.
I do not know if your trend line is important... probably not:)
Hi, Krasi So what's the status of PM? It seems still go up for its impulse wave? I expect it to correct and USDJPY to move up. But now it seems USDJPY and DXY still be around the bottom...
ReplyDeletePM - it looks like an impulse higher,the bullish scenario from the last long term update.
DeleteUSD - there is a lot of room for interpretation at the moment.
I think there is more to the upside for the USD and PM should move sideway/drifting lower.
The cycles show high for the USDJPY and low for PM in June/July.
How exactly it will look like depends on if the USD made already major top or not. If not how higher it will move, just a little bit or a stronger move.
The intermediate term picture is not very clear, but I think dips in PM should be bought.
Thank you. I recall you mentioned short term PM has reached peak and should correct to get March bottom
DeleteYes, the EW counts are not very clear, but I think we will see a pullback.
DeleteKrasi,
ReplyDeleteIn the big chart perspective, are we nearing an end of the bull market that started in 1930s next year? After this wave 3 is finished along with next wave 5, is that the onset of great collapse???
- Kali
No idea. You can not trade such forecast and do not try to make such analysis it is useless.
DeleteWorst case the market will move for decades sideways in series of violent cyclical bull and bear markets up and down.
The great collapse and DJ at 400 is ridiculous.