Intermediate term view - the correction to continue for 3-5 weeks.
We saw the price higher until Wednesday as expected, now it is more complicated.... most of the indexes have different patterns which makes me crazy:) and difficult to forecast the short term: - Nasdaq finished wave iii of 3 and we have impulse lower followed by a-b-c (Thursday-Friday)... difficult to see some rally higher. - XLF looks like flat b of B so next week should be higher to finish the correction(last chart). - SP500/NYSE look more like XLF, DJ more like Nasdaq... - Europe is strange three waves down and up but different picture - DAX with lower high/CAC with higher high/EUROSTOXX50 is testing the high.... We have short trading week and Easter. How can the big boys make more money? I think we will see pump before the long weekend(to scare shorts) and dump after the holidays(the correction taking it's course). Such scenario fits much better with cycles than the start of a sell off next week. Overall typical behavior for a correction at this stage of the pattern - long sideway move and sudden sell off(expected) for two weeks to finish the correction. TECHNICAL PICTURE and ELLIOTT WAVES
Short term - SP500 looks better like wave b of B.... nothing lower after the plunge from Wednesday. Alternate scenario is the red one - lower on Monday, but retracing higher for the rest of the week.
Intermediate term - the index finds support at MA50, the oscillators are resetting... waiting for a few days higher.
Long term - no change, waiting for the wave from Feb.2016 to be finished.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - pointing higher, this is just shore term move the signal for a bottom should come later in a few weeks.
McClellan Oscillator - making lower high, we should see another big red trough.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal.
Bullish Percentage - still above 70.
Percent of Stocks above MA50 - in the middle of the range.
Fear Indicator VIX - continue making higher lows, it looks like it wants to explode higher.
HURST CYCLES
Day 9 of the last 40 day cycle. Almost 1/4 is behind us it is obviously weaker than the previous daily cycles.
Week 11 of the last 20 week cycle. Expecting to see 18 month cycle low in the first half of May.
XLF looks like flat for b of B.... one more push higher to the trend line and MA200 will look great.
Hi krasi,
ReplyDeleteI am reading that with impulse lower, we should see 3 waves (1-5) but I am trying to align that with abc move. Does the down move conform to the same rule as impulse up? Or does waves 1-5 apply to the downside only in bear market?
Thanks,
Kali
I am not sure I understand the question.... impulse always consist of 5 waves, corrections are 3 waves the direction does not matter.
ReplyDeleteIf you look at XLF, there are 5 waves labeled to the downside for the A wave. My question is whether this is normally the case for ABC. Should we look for the 5 wave patterns again on the C wave ?
ReplyDeleteSorry for the confusing question
Kali
So if C is broken down to abc, 5 waves lower for a of C and another 5 waves lower for c of C. Counting all these including A wave would be 3 waves. Would these waves behave under the same rule as move upward?
DeleteCorrections are difficult - various shapes and combinations, there is no normal case...
DeleteA is 5 waves in a zig-zag and three waves in a triangle and flat.
C is 5 waves in a zig-zag and flat and three waves in a triangle.
See short summary http://www.elliottwave.net/educational/basictenets/basics3.htm
There is no difference counting waves up or down. There is rules for an impulse and correction the direction does not matter.
Thank you.
DeleteAlways appreciate your insight
Kali
Hi Krasi, Our frustrating friend SOXX looks like it's finally rolling over... I can argue for another MACD positive cross soon based on trend line from June, but can also argue RSI trendline from June crossed/tested and failed.... RSI calculator says it goes to 128 at an RSI of 30 tomorrow (that's just assuming one day flush tomorrow...which isn't that exciting)...trendline from Feb gets us to 200 day MA. Don't want to trade around it, but wondering if you believe it needs to consolidate higher before a bigger move lower.
ReplyDeleteIt looks like one push lower and retracement higher then one more move lower.
DeleteThe major indexes are showing similar picture. Closing short
still closing short? are we running the red line in the short term picture? Thanks.
DeleteI wanted to write something then deleted it and forgotten only closing short:)
DeleteI think this b of B is much more complex... at the moment I see 2330 for the low of b 2380-90 for the top B and then lower again for C to finish the correction.
So I am thinking maybe it is better to close shorts today/tomorrow and enter short later.. if the setup is still valid.
Thanks. How high do you expect the high of c of B? And how about PM/GDXJ? Now I see kind of divergence that PM rush much higher but gold miner is weak, don't know how long it takes to see real impulsive lower
Delete2385 plus minus a few points. I hope I am right, at the moment it looks like I have sold at the bottom:) This short term corrective patterns are always very tricky.
DeleteGold starts looking more and more like a triangle... it should spend somehow time until Q3 this year. Miners something else... I have one idea we will see. Next we should see move lower for the miners until late May early June.
On that move lower on GDXJ to May/June, below the March low? Looking strong here on GDXJ but still has a whiff of a fake out especially if the conventional markets move up from here and threaten new highs. Yet some miners look strong with volume like AG.
Delete