Intermediate term view - not very clear, waiting to see next week.
SP500 squeezed 2 points above the March high and turned lower, but I do not see an impulse for confirmation. All indicators are pointing lower and I think next week should be lower. The short term picture is messy. Since Brexit we have 4-5 weeks higher and 2-3 months sideway move, this is is repeating for the third time now. We have flat pattern for 11 weeks since 1-th of March. We have a few zig-zags and one impulse from the April low... accordingly many combinations - c of B for flat correction, final high for iii of 3 and iv just beginning, v of 3 running and this impulse is just the first wave higher, not forgetting and B of a triangle. Intermediate term - I think we are in some kind of 4-th wave. I have changed 10 times my mind which is the most likely scenario and at the end I do not know exactly which pattern we have. This is typical with waves 4, more price action is necessary and we will know the pattern when it is mature. Overall I do not think we saw the top of wave 3 and VIX historical behavior(see previous post) says this should be just iv of 3. TECHNICAL PICTURE and ELLIOTT WAVES
Short term - this impulse can be counted different ways... interesting is all counts are pointing lower for the next week, indicators are pointing lower, the daily cycle is mature. I will be really surprised if we see a rally next week.
I am waiting to see the decline how deep it will be and if it is a impulse or corrective to negate some of the options.
Intermediate term - the histogram is pointing lower, RSI/MACD with lower high... so far the signs are for a move lower.
Preferred scenario is green wave iv of 3... just I do not know where to put it's low at the moment.
Long term - no change, waiting for the wave from Feb.2016 to be finished.
MARKET BREADTH INDICATORS
Market Breadth Indicators - are pointing lower.
McClellan Oscillator - below zero.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - sell signal but still strong above 70.
Percent of Stocks above MA50 - turned lower, in the middle of the range.
Fear Indicator VIX - historical low values. I think it will rise and test the level one more time.
Advance-Decline Issues - turned lower, in the middle of the range.
HURST CYCLES
Day 33 of the 40 day cycle. It is mature and it is more likely to see a move lower.
Week 16 for the 20 week cycle. The picture is not 100% clear... if this is not wave C for iv of 3 the cycle count should be adjusted.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
If you follow the rules the count is still 11 for combo/countdown. For the last bars it is allowed to make only higher high to count them so this week could be 12 for combo/countdown. This tool allows "flexibility" too... like EW and cycles there is room for adjustment.
your charting is really good. this is very helpful. i agree it seems divergence is indicating a move lower for the week or two.
ReplyDeleteOT but related, I know VIX itself is impossible to count, but take a look at XIV (inverse VIX 1m&2m futures, high contango in low vol environment) and it looks like next two weeks could see ABC correction, and potentially first impulse lower (matching final S&P vertical wave, when VIX usually raises with the index)
ReplyDeleteRegards,
Mily
If I count XIV this should be the top of wave 3 and for stocks iii of 3.
DeleteAccording to VIX historical behavior(previous post) there should be a move higher and one more low around or below 10 which translates in waves 4 and 5 for XIV.
According to the chart below(XIV simulated) XIV made it's final top in Jan/Feb 2007 when VIX visited for the second time the 10th level and stocks made a top later.
This supports again the count that we should see 4 and 5 for XIV and iii of 3 for stocks.
Overall I think historical VIX behavior confirms the current counts.
https://sixfigureinvesting.com/wp-content/uploads/2014/05/XIV-hist-Mar2016.jpg
Potential evening star on XIV, waiting for confirmation (VIX is up ~10% premarket). let's see if BTFD-ers can lift up indexes a little bit before open
DeleteRegards,
Mily
XIV looks bad indicators and EW pattern... it should visit the 60-62 level.
DeleteAnd yes, we are moving down this week
ReplyDeleteVery good job Krasi! I hope for major correction, deeper than you predicted. Really appreciate your work.
ReplyDeleteKrisarnold
It should last a few weeks then we will see how it looks like. I am skeptical that this move will be 10% or bigger.
DeletePM again rebounded very strong, Is it possible to reach short term top? Thanks. Today they are inverse move to spx. How about next few days?
ReplyDeleteImpulse should be finishing, which means pullback and another leg higher should follow.
DeleteI see. Does it mean SPX follow the same thing? Pullback and another leg lower? I thought PM could make another low by the end of May? Thanks.
DeleteYes, the indexes are moving with an impulse lower which means the same pullback and another leg lower.
DeleteFor the PM this could be only a-b-c higher so another low is possible. The important low should be in June/July. The current 20 week cycle would be short if the low is behind us and USDJPY should have one more leg higher.
Just wait to see the move higher and then we will think about what should follow.