Intermediate term view - when the top is behind us, I expect correction for 6-8 weeks and 18 month cycle low in the second half of April.
We have now the expected wave v higher. There is still no confirmation for a reversal, only one red day. There is a chance for one more higher high as long as we do not see a break below 2350 with impulsive wave. We are trying to find a top for a 3rd wave in a bull market so do not get excited too much. Look at the weekly chart MACD/RSI, we see strength this is definitely wave 3. If you are not comfortable with risk and you do not care about 5% move do not try to trade on the short side.
TECHNICAL PICTURE and ELLIOTT WAVES
Short term - for confirmation I want to see the price moving below minor support 2350/trend line/MA200 and accelerate lower (red). If we do not see this most likely this is the top of wave iii and wave iv is running (green).
Intermediate term - looking at other indexes and indicators/market breadth erasing some divergences the green scenario looks more likely.
We have two support areas - one corresponds to 38,2% Fibo and pullback 5%(green scenario) the other 50% Fibo and correction 9%(red scenario).
Now just waiting for confirmation that the top is behind us.
Long term - no change, waiting for the wave from Feb.2016 to be finished. The indicators are showing a lot of strength, this is definitely wave 3.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - mixed picture, some indicators(McClellan) turned lower, Bullish Percentage showing strength erasing long term divergence, Percent of Stocks above MA50 doing nothing at the overbought level with multiple divergences.
All this means to me more shallow wave lower (the green scenario) and the first wave A will be weaker the sell off should come with wave C.
McClellan Oscillator - moved below zero
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - turned lower.
Bullish Percentage - buy signal.
Percent of Stocks above MA50 - around the overbought level, still no sell signal.
Fear Indicator VIX - BB starting to widen. I expect higher low and sharp reversal higher.
Advance-Decline Issues - in the middle of the range.
HURST CYCLES
Day 22 of the 40 day cycle. The 18 month cycle should start pulling the price lower.
Week 6 of the last 20 week cycle.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
We have combo at 11 and countdown at 10. We need one more higher high to finish the sequence. No price flip so far.
GDXJ - currently watching this two scenarios. The bullish (green) 1-2 i-ii. Bearish (red) much bigger zig-zag. I think it will be the green one and I think PM/miners will start really rallying after the summer because the USD is not finished to the upside.
Good Morning: May I look forward to an update soon on gold and GDXJ? Haven't seen one since the beginning of the year. Thanks very much.
ReplyDeleteI just started scrolling through the various comments from your previous posts and see you current thoughts on the gold and the miners. If you care to share anything additional, feel free!
ReplyDeleteKrasi,
ReplyDeleteWhen is your projection date for April low?
Thanks,
Kali
Just a rough estimate the second half of April. It is too early, lets see first reversal then the wave lower.... step by step.
DeleteI could be wrong and we could see just iv of 3 and not 4. The cycle guys do not even count the third 20 week cycle as finished. I think they are wrong:), but lets see first a confirmation.
Krasi,
DeleteWhy do the cycle guys not believe in March low? We have been in that trend since feb 16, June 16, nov 16. Do you see why it should not hold?
Kali
The think there will be a low in March, but that the indexes are in the third 20 week cycle and in March comes 20 week cycle low. In this case there is two options the fourth and final 20 week cycle of the 18 month cycle makes another higher high or it makes lower high.
DeleteTranslated in EW the low in March is either iv of 3(daily chart) and not 4 or with lower high the correction will last 5 months. I think both scenarios are less likely, but lets see first what happens in March and then we will think about April and later.
Thanks krasi.
DeleteKali
Krasi: a couple of questions after reviewing the various comments from the previous posts regarding the PM market: 1) Are you still expecting a higher low in GDXJ at this point: 2) If so, any potential projection on the low; 3) I see various mentions in previous comments of a final projected cyclical low in the March/April period and then another comment stating you don't think the PMs will move higher before summer. If I have that right, can you reconcile those two positions for me; and 4) From your January 7th depiction it appears you have a projection to 70 or so on GDXJ for the upcoming impulsive move higher by year end. Is that still a valid projection? Kindest regards.
ReplyDeleteThe 18 month cycle low for the miners should be in March/April and for PM in summer. I do not think the USD made it's top -> 3) I do no think the PM/miners will start rallying strong before the summer.... probably some kind of sideway move.
Delete4) I have just drawn a leg higher with roughly the same size like the one from Jan.2016 to Aug.2016. If you measure it from the last low Dec.2016 target is 63 so yes somewhere in this area.
1) I think this is the most likely scenario, but with the strong move lower I will be very careful watching what happens next. There is plenty of room for speculation and other scenarios.
2) GDXJ 29-30
Thank you for your response. Would it be safe to say you are expecting a corrective move higher in GDXJ commencing next week followed by move lower into that higher low over the next several weeks thereafter? Boy, with that kind of retreat all the way to possibly 29 it's hard to believe GDXJ could fly to 63ish from summer to year end. Just seems like a lot of technical damage that would impeded such a fast move.
DeleteYes, something like that. The move higher will not last until the end of the year. The cycles show a high around mid-2018. So bottoming, sideway/sloping higher move until the summer 2017 and one year higher. This is roughly the path according cycles.
DeleteAdded GDXJ chart.
Is gold bottoming or still hard to see? There's no bounce and EMA50 seems to test again. GDXJ is down so much again...
ReplyDeleteGold/Silver will look better if they make lower low. GDXJ looks like finished impulse lower.
DeleteFor GDXJ, last friday's drop looks like wave 5, how about today's drop? I know EW is hard to count, just out of curiosity...Thanks.
DeleteCan we say it's something like ending diagonal? In this sense, still two waves down waiting?
DeleteNested iii-iv-v->3-4-5.
DeleteStrong move and wave 3 and you have to count 1-2-i-ii-iii-iv-v(3)-4-5
ED for 5 is a possibility too, but I have looked at the 10min chart and the last two waves lower are very clear impulses which means it should be nested iii-iv-v->3-4-5.
DeleteYeah, that's true that wave 3 is extended so long... So now we are finishing this count wave 5 and last friday's up is wave 4. Any indication about how large wave iv v compared to wave 4 and 5. I assume wave 4 should be still bigger than wave iv and so do wave v and wave 5?
DeleteI hope to figure out the wave 5 counting and not overlook additional wave 5 drop like today... from oscillator macd rsi last friday I can see "not yet" fully bounce. But I didn't notice such a wave 5 missing...
DeleteI can not count them too the last v and 5. It does not work perfect. On the hourly chart MACD/RSI with divergence now with double divergence:) When you dig deeper trying to find the final fifth wave it is just missing or one more wave appears... always surprises you.
DeleteI have just stopped trading short term frames and trying to catch the final wave. I moved to longer time frames and building a position with smaller lots minimizing the risk.
Thank you, I felt so confused before. So the next bounce should be Wave B bounce to the whole wave A drop from Feb 8? At least we can expect 0.382 bounce to 36.7 (GDXJ)?
DeleteExactly... around 37.8 there is a lot of resistance(highs), 0.5 Fibo and MA200 and I will not be surprise if we see the bounce reaching this level.
DeleteHi Krasi: Without fully understanding all the language above, this looks like it's going to plan. Another beat down day the longs should be just about out. You think we bottom today for that short term move higher or later in the week?
ReplyDeleteToday should be the bottom.
DeleteThanks very much. Now we get to see its strength on the way up and the next decline:)
ReplyDeleteSorry one more: would you be surprised to see some positive divergences between gold and the shares with gold falling to around 1200 while the shares begin to move higher now?
ReplyDeleteSuch divergence should be short living if Gold/Silver make lower low they will look like finished impulse too. So no it will not be a surprise.
DeleteI just remembered yesterday you thought the low in GDXJ on this move would be around 29-30. But, you now think the low has been struck at 32.90. What has changed your mind? Something on the charts no doubt.
ReplyDeleteNo, the 29-30 target was for the whole zig-zag. This is just the first leg of it. When we see the bounce will measure it again. At the moment I assume the usual case - 50% retracement and second leg lower with the same size which is roughly 29,50.
DeleteSorry! I messed up. The 29-30 projection is on the next move lower AFTER this rally. My mistake.
ReplyDeleteYes, we crossed posts. I realized it just as you posted. Thanks again.
ReplyDeleteFor those who are trading GDXJ - I have looked at many miners and most of them have finished wave 3. So 4 and 5 with lower low in sync with silver is expected. GDX needs one more lower low, for GDXJ... could be counted as finished pattern, but could make lower low for an ED.
ReplyDeleteIf there is a lower low on GDXJ at what price and when might it come do you project?
DeleteDo you see from hour chart or? I hope to see your picture to learn the EW counting? Thanks. It seems this morning GDXJ hits lower again with even small wave. Can we see the down trend is finished?
DeleteIt seems a good example to show how to count extended wave 3. Because I have seen a big impulsive low, bounce back and lower again, which I thought it just finish the five wave down. But clearly not the case... Or show an example of gold miner which just finish wave 3. For example, ABX, March 3, 9:30AM it finish wave 5? or from March 1 to now it only finished wave v of 3, and this v of 3 looks like ending diagonal? Thanks.
DeleteI have posted a chart... I am not so good in counting this nested waves, but I think the move is finished.
DeleteThank you. It's similar to what I initially thought. I thought yesterday's low should finish the wave 5, and today's drop could be some minor wave inside this wave 5. I'm worried that "So 4 and 5 with lower low in sync with silver is expected." Which degree of wave 4 and 5 is it about? Thanks again.
DeleteSilver made 5 waves lower so a bottom is expected they are in sync now PM and miners.
DeleteOh I see. March 3 silver up which I thought was wave 4? And I thought yesterday's drop has been wave 5? Clearly this morning's drop really finished the wave 5. Is my understanding correct? This time I learn a lot with the subtlety.
DeleteYes, correct. EW is not always very clear. That is why I did not want to use it for a long time. But than I thought it is more important to know if a move is impulse or corrective. This information is much more important than knowing where exactly a move will end.
DeleteFor example now - is it important to know if the move will finish today or tomorrow? Personally I do not care, I know we have an impulse lower then expect corrective move higher and another leg lower. Which means there will be a low risk entry to the short side for a nice gain. This is the important information for me.
Thank you. Sometimes it's hard to determine the entry and exit point. For example, we hope to exit the short side until the move lower finished? as we can see, always lower low and wished to exit the short side later. On the other hand, where to expect the corrective move higher finished to enter short again? I agree that we should follow the big trend like impulse or corrective. That really needs patience :) Nice to learn a lot from this discussion.
DeleteGood morning: I notice on your alternative red count for GDXJ you do not have a higher trajectory after making a series of lower lows. Any upward targets should that pattern develop on the downside?
ReplyDeleteIt is the same measurement - add the Jan-Aug.2016 move to the low.
DeleteCall me crazy and unless I'm missing something no matter which count comes into play for GDXJ once a bottom is reached this would seem to be the sector which has the most to gain among just about any other sectors in the market. Would you agree?
DeleteJunior gold miners are very volatile.... we saw more than 50% in less than two months and may be this was just a correction. It will not be a surprise if they start a trend higher.
DeleteThanks for the updates.
DeleteDo you still expect the deep correction begins or it seems only small wave 4 and a final wave 5 would be expected? Now it seems....
ReplyDeleteIt feels like wave 4 so far...
DeleteAnd today silver also hit EMA50... is it finished pattern or?
ReplyDeleteYes, Silver has 5 waves lower the move lower should be finishing... worst case bottoming 1-2 days up and down.
DeleteHello Krasi, hope you are well.
ReplyDeleteRegarding to the SPX, despite a market that is slightly weak and with less pronounced up move, i understand that we still can't say if it's wave iv or if the reversal after wave v has started? What level would invalidate the the reversal from here? What are your opinion?
Thx a lot. Jd
Hello, only higher high will invalidate it. If this is wave 1 , wave 2 can stretch all the way to the beginning of wave 1.
DeleteThe count is not clear, RUT very weak the majors not so much. With the McClellan Oscillator at 60 do not expect much to the downside first something to the upside.
Thx Krasi. By wave 1 you mean on the downside if it is actually the start of the reversal? If that's the case, do you have any ideas about the lentgh of wave 1 and the start of wave 2? Thx again.
ReplyDeleteYes, if it is wave 1 from a move lower. With McClellan Oscillator at 60 wave 2 should start any moment or in worst case one final push lower to scary the weak hands and reversal for wave 2 or wave v.
DeleteHi Krasi
DeleteI thought the invalidation could be confirmed when Spx breaks the first support of about 2350. If it goes lower then we can be more certain the correction started. What do you think? Thank you
Krisarnold
Yes, break below 2350 should be a confirmation that a correction is running.
DeleteThe question about the invalidation above was about when is invalidated that this move lower is not the correction.
Krasi
ReplyDeleteSo you believe SPX has one final push higher before the reversal? Ultimately you see price moving to a new high before the reversal/move lower begins. I am short and the position has been successful so far. Was going to hold it but now I am considering taking profit and waiting to short until price is higher.
I do not know if there will be one more higher high or not. Something lower was expected, but there is still no confirmation that it is the reversal.
DeleteSee the first chart it is still open if it is iv green or not.
You can not nail the top it could be just a spike higher or it can come with a gap lower over the weekend or it ha already reversed and it will make a lower high or suddenly it drops lower.
Around the top open smaller position 1/3 or 1/2 and add later.
Currently if the position is too big and you are worried you can sell half of it for example.
Krasi
DeleteAgain your quick response and clarification is appreciated.
I have a small enough position that I decided to keep it open. If this is truly the reversal than I will look to add to it once we get some confirmation. If not then I will take a small loss.
As you have said in the past the tops are extremely hard to call especially in this trading environment since the election.
Best
Hi Krasi: I see GDX made a new intraday low today while GDXJ so has not. The STO can't get off the bottom but I wonder whether this looks like bottoming action to you. If so, I wonder whether we get a weak move up into the FED decision and then that second move down you've been discussing.
ReplyDeleteYes, it looks like a bottom. I can not say if the FED decision will be the trigger. I just watch the pattern. If we have a zig-zag higher around this date then yes.
DeleteThanks again!
DeleteKrasi, Wow you're getting popular, so many questions this week! :) Just wanted to point out how weak your market breadth indicators got today! if this is a wave iv than this is a very cruel market! crude oil move looked impulsive to me today and way overdue after weeks of XOP weakness...hopefully this is it. Thanks for all your work
ReplyDeleteI do not want to be popular:) I do not like attention. With this tempo soon I will not have the time to answer all of them.
DeleteYes, market breadth turned lower and McClellan Oscillator close to 80. Such levels appear when a reversal is already running or after a strong sell off. Market breadth hints that we have a reversal. My short SOX looks easier to count and shows reversal - impulse lower to MA200 on the hourly chart and huge sideward zig-zag running. The odds are now higher that this is not wave iv.
Crude oil - yes it is impulse, but I think this is the end of the correction and not the beginning.
So this is the beginning of the correction rather than wave iv and final wave v? Thanks.
DeleteJudging by market breadth behavior it is more likely the beginning of the correction rather than wave iv.
DeleteBecause market breadth is getting worse rather than rebound or? Just would like to learn. I thought yesterday when MYMO is 60, you mentioned this might be the wave iv. Thanks.
DeleteThe McClellan Oscillator has very good track record. To the downside there is two important levels around -60 and below -80.
DeleteMost of the time when the price moves lower it reaches -50/-60 and bounce higher follows. My assumption was without clear impulse lower and level -60 we could see a move higher.
Seldom 2-3 times per year it moves around -80 or below. When I look back the chart I see this happening in two situations - strong sell off or after a long move higher the price is moving slowly lower for a while, no signs for a correction, but it has already began.
Now the assumption is that the correction is already running and the next high will be lower high.
It's interesting to see the NYMO hits -88 where market still hang around. I agree the market should correct
DeleteTotally understandable and thank you for the thoughts on crude...such a high net spec position so think it will be easy to cause much pain fast. I am short SOXX too...I will study the wave count to try to learn what you see :)
ReplyDeleteIndeed Krasi, thank you for offering prompt and detailed answers the way you do. It is really appreciated, and pls don't feel obliged to answer when you feel like it is disrupting your day to day activities! Many thx. Jd
ReplyDeletex amnistratore blog
ReplyDeleteciao, potresti inserire il gadget che traduce il blog in tutte le lingue .... non conosco l'inglese e ho difficolta a capire , grazie
complimenti per le tue analisi , sei molto preparato
Aggiunto tradurre gadget:)
DeleteGDXJ is still slowly sinking where PM like gold hit 1200. Do you think it's going to break again without bounce? Thanks.
ReplyDeleteAt the moment I think there will be a bounce until FOMC for wave 4 and one more lower low for wave 5 around 32, then expect a bigger move higher - around 36-38 which is the 38%-50% Fibo retracement and the congestion zone.
DeleteGold/Silver instead of making a low extended much lower and the impulse have changed to a bigger one. This is the problem with counting waves, some times they change. That is why I avoid shorter time frames, because the success rate drops rapidly.
Oh my god, poor Krasi... Guys not trying to be a jerk here but there are >70 questions/comments on GDXJ this week alone! What I’m seeing is the same question being asked 5 times a day. This is ridiculous, if Krasi's view changes on GDXJ, he'll clearly let everyone know... Out of love for Krasi’s blog and respect for his time I’m going to try to answer this how I think he would answer it (based on reading his comments this week/and what reading his blog/comments over the last year has taught me) so that he does not freak out as I would at this point. A) GDXJ is not ‘still slowly sinking’, the low from Tuesday has held as of today [March 9th] so it ‘seems’ like there is an equilibrium of supply and demand forming (and remember GDXJ started selling off days before gold peaked so GDXJ will likely near-term bottom before gold); B) we have two lower lows with RSI divergence on the hourly chart...but is another lower low possible for triple divergence? Yes!!!; C) Especially given the fact that there are 70 questions on GDXJ alone on a blog which was meant to be about S&P :) / IMO this most likely explains why we have not bounced higher, everyone is waiting for a bounce and in a lot of pain with positions way too big. So my suggestions: a) either sell half or sell everything now because the intermediate term low is definitely not in, and you already can’t handle the pain, if not b) you’ll probably end up selling everything at the near-term low (how I normally do it). So to Krasi’s previous comments, is the low in? possibly...can you handle another low? probably not based on the stress I’m sensing from the questions... No one knows what the low is going to be, impossible to nail, but it’s an impulse lower so we’re supposed to be trying to find a good pt to short. The fact that we haven’t had a clearly rejected low on the daily or hourly or any meaningful bounce yet for that matter COULD be A) a signal that there is a lot more to the downside after this upcoming near-term bounce; or B) one more dive lower near-term because there is a lot of pain and clearly the path of least resistance to get weak hands out. Having said that, if you look at how GDXJ has acted in the last two years on the day of U.S. payrolls data & on FOMC day/week, you’ll see that it’s ‘normally’ a good week, sometimes we see a big failure low on FOMC day, or as I like to call it: the massive puke out failure candle...
ReplyDeleteExcellent observations about sentiment. Obviously there is a lot of pain, but not enough so that most of the traders give up. This fits perfect with the EW picture at the moment which I have posted above.
DeleteI would bet on the low is not in and "big failure low on FOMC day, or as I like to call it: the massive puke out failure candle"
I understand the guys probably holding longs... if you ask me at this stage I would wait and hold for a bigger bounce after FOMC or sell half of the position after a small bounce higher before FOMC. The question is can you cope with the pain because most likely there will be one more puke lower.
Hi krasi,
DeleteAppears that many people are trying to time the top, but at this point it looks pointless. In fact with the retracement of 32.8% from the top to bottom of wave 1, you would be profitable to short right here. You won't get the absolute every penny, but you will be profitable within a couple of months.
Cheers,
Kali