Intermediate term view - I do not believe in a strong rally, just waiting for the top and decline into the 18 month cycle bottom.
I was wrong this week... the signals were ok only short squeeze was missing on my watch list. I though the correction begun after a plunge with an impulse - obviously not. The expected "bounce" mutated in V-shape parabolic move with ever decreasing volume - this is the missing short squeeze. The short term pattern has changed, but everything stays the same. For me this is still the top of iii of 3 or 3, the only question is how the pattern will look like. With so many up and down there is a lot of room for interpretation. Currently it looks like a diagonal to me, and I have added bearish/bullish option to watch. Intermediate term it is the same - week market breadth, divergences on the daily chart, next bigger move is lower into 18 month cycle low, TomDemark finished sequential on the weekly chart, Nasdaq with 5 waves from the March low and divergences.... difficult to spot something bullish. VIX is again below 10. I think it moves similar to 1993/94 - below 10 -> short living pullback(the plunge)/VIX spike higher -> the indexes higher for a few weeks/VIX below 10 again -> bigger correction. TECHNICAL PICTURE and ELLIOTT WAVES
Short term - with such moves in the last 3 months you can not be sure which count is right, EW has it's limitations. Currently it looks like diagonal to me.
- bullish option - starting from the April low we have 1-2(green) and now in wave 3. A pause 2-3 days and another vertical move should follow.... I do not see anything to support such price action. All my tools are saying the opposite.
- bearish option - the expanded flat is much bigger than expected, the plunge was b/B and this rally is finishing a-b-c for B(red). It is possible, but we need confirmation for a reversal.
On the chart is shown another option - diagonal. I do not think the price will reverse and plunge, I do not believe that the rally will continue, so I am just waiting for a setup with low risk.
Intermediate term - for a bullish picture the price should continue vertically higher to erase the MACD/RSI divergences. I do not believe it. My preferred scenario is top of iii of 3(green).
Long term - if the move higher continue longer than expected and the RSI moves again in overbought territory, we will see divergences on the weekly charts, which means important top, which means this is wave 3 not iii of 3.
MARKET BREADTH INDICATORS
Market Breadth Indicators - if the market is so bullish and after such vertical move I would expect much more from market breadth. The indicators do not even think of moving into overbought territory... not even turning bullish.
McClellan Oscillator - barely above zero with long term divergence lower tops since late 2016.
McClellan Summation Index - buy signal, but with double divergence since March.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - sell signal, below 70.
Percent of Stocks above MA50 - in the middle of the range.
Fear Indicator VIX - again below 10... not very bullish.
Advance-Decline Issues - in the middle of the range, strange it could not move to overbought territory since last year.
HURST CYCLES
Day 7 of the 40 day cycle.
Week 8 of the last 20 week cycle, waiting for the top of the 18 month cycle.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Bar 12 for combo/countdown without using minimum requirements(only higher high). Another higher high or higher close next week and we will have 13.
HI Krasi,
ReplyDeleteInteresting Market for sure. On your update few weeks ago, you wisely stated that the bigger picture is for the move upward. I have to say that I took the advice to heart and have been buying on every dip for the continued move higher on the general index.
The biotech looks weak but looks like it may look to join the rest and break out soon as well. We will know in a few days.
Thanks for the timely updates,
Kali
thx Krasi! I know the RUT is obviously charting its own course. Your thoughts? still favoring an expanding flat or triangle? thx
ReplyDeleteSo far it looks like triangle three a-b-c moves. For expanded flat this should be the scary part of the correction, but it is again just up and down so not likely.
DeleteAlternate it could be some combination double corrective pattern with the current move up as wave X.
thx Krasi! im favoring the triangle given all the overlapping waves.
DeleteIf triangle, D can be higher high correct? in which case E will have to be higher than the May low. am i correct? D can be a higher high (New time high?)
Thanks
D should be lower high or around the same level and E should be higher low.
Deletethank ya
DeleteJust rediscovering your site. Some really excellent stuff. Thanks for the effort.
ReplyDeleteIt seems SPX is very strong and no reversal sign. Any idea about the next step? Thanks. Is it possible to have plunge or exhaustion? Thanks.
ReplyDeleteNo change, this are the small moves down and up from the first chart. I still think the next bigger move is lower.
DeleteThanks. Do you think last move looks exhausted? Should we expect some bigger correction?
DeleteYes, this is a top for me and correction below 2320.
DeleteHi Krasi, So looks like your bullish option iii of 3 today if I'm not mistaken? in which case retrace to 2400 next then 2475 or so for all of 3?
ReplyDeleteThanks for all the great work and effort!
This are the small moves on the first chart which were expected... so all options are still valid. Now it is decision time which one will play out. The bearish options top of iii of 3 or B(expanded flat) and a move below 2320, the bullish v of 3 is running.
DeleteThe Bullish option does not look right... it should continue to rally vertically for at least 2 weeks. I do not see something to support such price action.
Nasdaq is so strong... how about biotech sector?
ReplyDeleteCorrective move higher since 2016. When the markets make their top, begins the next leg lower for biotech.
DeleteFrom hourly chart, SPX/nasdaq is so strong to see some reversal at least until next Tuesday or Wednesday? Thanks. Maybe we should wait until then to start short...
ReplyDeleteClearly some more upside move for SPX, is there any potential target? Thanks.
ReplyDeleteThe move from the low looks finished. SP500 is making a top for me.
ReplyDeleteUsually it will still drift some percentage to build the top and show some weakness? In this sense, at least a few days and 1% more left to reach the top? The reversal cannot be sudden jump down, right?
DeleteYes, it is possible... even more likely. No need to short. Usually when the price is above MA50(hourly) there is no sudden plunge. Worst case we will see an initial impulse lower and at least 50% retracement. It is far more profitable to deploy more capital with less risk(possible reversal after an impulse in the opposite direction) and defined stop(the last top) than trying to nail the top with high risk trying to squeeze 0,5% more.
Delete