Intermediate term view - when it is finished the high should be an intermediate term top followed by a correction for 2 months.
Nothing new, the indexes moved higher as expected. The move develops as an impulse and now waiting for waves iv and v so that we have a finished pattern.
TECHNICAL PICTURE and ELLIOTT WAVES
Short term - small pop after the long weekend should finish wave iii then wave iv should begin. Target around 2325-2330 - 38,2% Fibo/the trend line/MA50. Support and invalidation level is now around 2300.
Intermediate term - the same like last week. Momentum(histogram) is up, RSI no such strong divergence, but only for SPX(other indexes are ok) and well visible MACD divergence.
Long term - no change, waiting for the wave from Feb.2016 to be finished.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - many indicators did not move higher despite the strong move, they ignored it - a red flag. The big picture is bearish with divergences, now waiting for the indicators to turn lower and sell signal.
McClellan Oscillator - around zero despite the strong move higher.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - in overbought territory, no sell signal so far.
Bullish Percentage - buy signal.
Percent of Stocks above MA50 - another lower high, despite the strong move.
Fear Indicator VIX - even more tight BB, is not moving lower despite the strongest part of this wave higher.
Advance-Decline Issues - turned lower despite the rally.
HURST CYCLES
Day 13 of the 40 day
Week 4 of the last 20 week cycle..... waiting for the 18 month cycle high.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Now we have finished 9-13-9 on the daily and weekly chart. The first sell signal is if you see a price flip,but there is no such so far - momentum is up and above the MA.
Nice work! Are you aware that the down volume on 2/16/17 was 23% higher than the 9 day vol. MA which is significant. The low for the SPY ETF was 233.85 on 2/16/17. Will be keeping an eye out for the bearish price flip which takes out 233.85 on at least equal volume to 2/16/17 for the sell signal.
ReplyDeleteThanks, Skinplayer
I have not found reliable way to interpret volume. One guy was talking about SPY and big down volume on up days and the opposite. I have checked a few times, but I have not found very high predictive value. I have to admit, I have not dug deeper. Maybe the message is the rally is used to unload shares which is a red flag.
DeleteMarket breadth is sending similar message - strong rally, but McClellan Oscillator/Advance-Decline Issues do not react at all.
Krasi,
DeleteThe Nasdaq 100 index looks to be leading indicator for the rally for some time and looks like it's on its final 5th wave. Your thoughts?
Kali
I do not see Nasdaq 100 doing anything different.... except it looks more bullish.
DeleteFinal 5th wave is possible only if you dig very deep the small waves, but not intermediate term. I would say the same count like SPX.
Any reason why Nasdaq 100 has to be around same count as Dow or S&P? Why can't nasdaq 100 be at a different count? For instance 5 wave whereas Dow being on 3rd wave? I ask because the waves look so different to me.
DeleteKali
Because it is not leading anything. It makes tops and bottoms at the same time like DOW/SPX so it is more likely the same count.
DeleteIt can have a different count. Why do you count acceleration higher and RSI at 83 as wave 5? This is more likely wave 3, wave 5 have different behavior.
Yes, they look different - more bullish. The sideway move for two months is missing.
It is either wave iii of 3 or it is 3. The most bearish scenario is the same like SPX wave 3 of expanding diagonal.
I do not see a way this to be wave 5 and major top.
Hi Krasi,
ReplyDeleteWhat's your expectations for the depth of the pullback? From what I see on the spy chart 218-220 is a pretty strong support. What do you think?
Krisarnold
Short answer - I do not know because I am not sure about the pattern. Since Feb.2016 I am just following the market up and down and let the moves develop.
DeleteLong answer - in the bullish case between support 2235(Fibo 38,2%) and 2190(Fibo 50%). In the bearish case it should move below 2110.
The bullish EW count looks obvious - strong market, but market breadth and cycles suggest something bigger. So my expectations are for 2190 and if I am lucky 2110:)
Hello Krasi! Thx for the update.
ReplyDeleteIs it possible and likely that wave iv was the move to 2338 and we are on to wave v? In that case what would the target be, or is it too confusing to determine any targets? Thank you again.
Less likely that this is wave iv. The count looks better as the top of wave iii... and I have heard somewhere D.Trump will present his "great tax reform" on 28.02. A few days to finish the pattern and the "great disappointment" as an excuse for a top will look better:)
DeleteMeasuring Fibo targets is not difficult, when waves 1 to 4 are finished.
Depending of the length of waves 1 and 3 sometimes the target is too short or too long exclude this one and use the others. Here the formulas:
70+2300=2370 -> 5 = 161,8% of wave 1 added to the top of wave 1
58+2338=2396 -> 5 = 61,8% from w1 bottom to w3 top added to the bottom of w4
43+2338=2381 -> 5 = 100% of w1 added to the bottom of w4 (seldom 61,8% or 161,8%)
Thx a lot for your answer! D.trump tax anouncement promises to be entertaining for sure, either way :) good luck to you krasi, and all the readers.
ReplyDeleteGeez. This bull market is unstoppable. Just keeps pushing higher. I guess the lesson is to just follow the trend long or short.
ReplyDeleteThis is the natural behavior of the market. Most of the time it moves higher with scary, but short living corrections. That is why patience is very important.
DeleteYes, this lesson is essential - just follow the market and forget about your feelings,emotions,bias,news etc...
Hi Krasi!
ReplyDeleteWell well, this wave iv is proving elusive... it is hard to imagine it with so much important announcement next week... could it be that she lasts a day and be very shallow, and wave v starting on trump announcement? Generally, do wave v last long? Saturday's update will be greatly appreciated :)
The indexes are moving as expected, I do not see something unusual. Trying to predict the shape and length of 4-th wave for such small degree waves is pure guessing. Using EW rules my guess:) is:
Delete- yes, this wave iv should be shallow 20-25 points (the low of the previous wave iv of lower degree)
- it should be a sideway pattern flat or triangle so taking time but not moving much lower,so rather 2-3 days than only one day.
- wave v - given the length of wave iii most likely Fibo measurement is 2385. It should not last more than a few days.
Hi Krasi,
DeleteThank you for your previous answer. I have been wondering about the waive iv which could have happened already between feb 15-17. A small retracement of almost 20% of waive iii. Not exactly 23% of fib but close. Which would mean that yesterday we had a top of waive v and this morning with everything in the red the correction begins. What do you think about this scenario?
Krisarnold
If you count from 31.01 it is a finished impulse, but how fits this impulse in the whole structure.... the only way I see is to count 1-2-3 from 23.01
DeleteWe need some 20-30 points lower, we need a few red days.
At the moment I can not see finished pattern. Which does not mean I am right. I have seen many times the top/bottom appearing one small wave earlier or later. Just at the moment it looks obvious like 1-2-3.
Because of that I do not wait for the last final wave any more. I start unload/load shares in portions a little bit earlier. At the end you have some decent average and you do not worry if you nailed the top or not.
Krasi,
ReplyDeleteWhat is your thought on IBB? Could you give me your insight into the index?
Thanks,
Kali
It looks like complex correction combination for more than a year. I think it is only a matter of time when it will turn lower again... probably when the major indexes make their top.
DeleteAnd how about PM? It seems still in the impulsive up wave... How does next week trump announcement affect Gold and gold miner? Thanks.
ReplyDeleteSilver looks like two impulses with the same size with small pullback in the middle which is just an a-b-c pattern and no clue about gold. The only way to count this bullish is 1-2 1-2, but I do not think PM are so bullish at the moment.
DeleteUSDJPY has more to the upside so I expect to see gold lower in March. Then I will see again how the pattern looks like.
I do not know if Trump's announcement will affect PM... more likely not. I do not follow news.
Thx a lot for your answer krasi! Lateral consolidation before wave v it is it seems like... :)
ReplyDelete