Jun 3, 2017

Weekly preview

Short term view - decision time, I think the direction will be lower.
Intermediate term view - I expect a top and correction for a few weeks.

The analysis has not changed - we saw the small moves down and up this week and reached a crossroad. Either bearish scenario (top for iii of 3 or B) with a move below 2320 or bullish continuation higher for another 2-3 weeks to finish wave 3 to around 2475-2500. All tools I use favor the bearish scenario. Now waiting for the market to show its cards and we trade accordingly.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the same like last week just reached the point where the scenarios should start move in different directions. Bearish below 2320 or bullish continuation towards 2500.


Intermediate term - I think it is more likely to see MACD/RSI divergences than the price breaking out above the trend line,going vertically higher and erasing the divergences.


Long term - the oscillators a showing divergence so I expect intermediate term correction. This is not the top of the bull market.


MARKET BREADTH INDICATORS
Market Breadth Indicators - are hanging somewhere in the middle without clear signal. They could move to overbought territory confirming bullish move or to oversold territory confirming bearish move. They look weak to me.... that is why I think the next move is lower.
McClellan Oscillator - slightly 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 - below 70.
Percent of Stocks above MA50 - in the middle of the range.
Fear Indicator VIX - again below 10... this is high risk for longs.
Advance-Decline Issues - trying to reach overbought level.


HURST CYCLES
Day 11 of the 40 day cycle.


Week 9 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.
Now we have 13 on the weekly chart for a finished combo/countdown and waiting for a price flip.

18 comments:

  1. Thank you Krasi for your weekly posts and guidance! Very useful.
    Can you please please provide some updates on teh RUT? counts maybe a chart? the pattern is so confusing and hard to see where we can go from here

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    1. The most obvious is wave D of a triangle. It does not fit with bigger decline for the major indexes, but anything else at the moment is just a speculation.

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  2. I'm thinking Gold miners would go up if SPX goes down from now? It seems last week GDXJ is bottoming. What do you think? Thanks.

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    1. Not very clear pattern. I would say one more time below 31 and then higher.

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    2. I see. I thought the May bottom has passed? Not sure of cycle bottom has reached?

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    3. It depends on which cycle. The 20 week is up currently week 5. The 20 day cycle probably needs one more low below the 24.05 low(not the 04.05 low).... the move up does not look convincing.

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    4. SPX seems to be very bullish? When is 20 day cycle? Thanks.

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    5. I do not think that it looks bullish. Today is day 15 probably next week FOMC we will see the top of the 20 day cycle.

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    6. Thank you. So by next week, we expect gold miner would reach the final top for the 20 day cycle? Because the correction of gold miner yesterday and today, I'm worried the top has been pasted. For 20 days cycle, does it mean up trend for 20 days and down trend for another 15 days or so?

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    7. GDXJ will look like finished pattern after one more higher high probably next week. Every time is different in depends on the trend. In a strong up trend the down part is only 2-3 sideway days. The current one do not show much strength and looks like a-b-c.

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    8. Yes, I agree. Maybe better to start short until higher high next week around FOMC? SPX looks like some top forming... But VIX is still very low :(

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  3. Hi Krasi,

    I need to emphasize your earlier wisdom. You know another rise is coming. We are in a bull market. The big picture is to keep rising the market as long as possible until the market shows us the price break. Then short. I am still long...

    cheers,

    Kali

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  4. so, where's the correction ? You've been predicting a correction for months now and the market is still making new highs. I guess you will eventually be right, a broken clock is right twice a day...

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    1. I can not predict how a correction will look like before it has begun. For me the pattern is flat correction - it is a bull market. Technically if this is the pattern I will be right for trading not worth the call... until the last wave lower which is coming.
      On the March top I said lower... we saw a move lower. The move was not an impulse I covered my shorts in April(said that in comments) and said higher. Then in May I said lower again and we saw impulse lower(this one day plunge). Then I was wrong I thought the final wave lower has begun.
      Now the indexes are on a crossroad either rally higher and I am wrong or turn lower and the flat correction plays out.

      I can ask the question the other way around - when the market is so bullish where is the advance? Three months and 10 days later and VIX one month below 10 all the bulls can show is SPX 30 points higher, DJIA,DJTA,RUT,NYSE flat (technology sector is on its own trip).

      I do not know where your frustration comes from - if you are bullish than this above should ring a bell for you that something is not alright and if you were short because of my call - in early March at the beginning I warned this is a bull market and wave iii of 3 if you are not experienced trader which is ready to risk for small profit a few percent do no touch shorts.

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    2. Krasi,

      You needn't respond to naive comments of people who do not understand the trade. We all make the most educated guess and have proper rational stop loss for smallest loss possible when we are wrong and largest possible gain when we are right. We are wrong just as often as we are right but when we are right we make up for all the small losses.

      No one expects you to nail your call everytime. That is an impossibility. But you do a great job providing an excellent rational explanation and show great discipline.

      Your blog is excellent.

      - Kali

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  5. Thank you for Update Krasi

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  6. @anonymous.. saw a correction in tech today, i think... maybe the beginning of it.. or just a slight dip..

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    1. Finished impulse from the March low with multiple RSI divergence - more likely the beginning of a correction than a slight dip.

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