Jul 22, 2017

Weekly preview

Short term view - waiting for one final high.
Intermediate term view - too many ending patterns I think the indexes are close to an intermediate term top and correction should follow soon.

We saw small pullback and higher as expected.... looking at the charts we should see one more higher high, but too many indexes with finishing patterns suggesting intermediate term top around the corner.

I wrote about VIX when it closed for the first time below 10. So far the indexes follow the scenario from 2006/2007 - VIX around and below 10 for more than two months with the indexes crawling slowly higher. This time is much more extreme the complacency compared to 1994/2007, but if history repeats the next move should be sharp correction for a few weeks.




TECHNICAL PICTURE and ELLIOTT WAVES
Short term - it depends on where you put the bottom of wave 4 the pattern could be finished or one more higher high is needed. Looking at other indexes one more high will look better. As long as SP500 stays above the support zone around 2450 one more high is expected.

DJ - it needs one more higher high for really nice looking ED and top of the move since the April low.


Intermediate term - how I see the two possible counts. If we have iv of 3(green) I want to see any correction above 2320 and support at MA200(the next 18 month cycle running). If we have 4(red) I want to see a move below 2320 to the trend line, support and Fibo 38,2% retracement.


Long term - no change. We should see at least one more higher high for the bull market. RSI looks bad - it is more likely to see a correction before another significant move higher.


MARKET BREADTH INDICATORS
Market Breadth Indicators - showing a little bit more strength....
McClellan Oscillator - above zero.
McClellan Summation Index - buy signal with intermediate term divergence.
Weekly Stochastic of the Summation Index - buy signal.
Bullish Percentage - buy signal with divergence.
Percent of Stocks above MA50 - trying to move above 75... with divergences.
Fear Indicator VIX - extreme complacency much more extreme than 1994 or 2007 .


HURST CYCLES
Day 11 of the 40 day cycle.


Week 14 if this is the next 18 month cycle.


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
On the daily chart we need a few more days to finish setup and a countdown from the last setup... which is in sync with EW short term counts.

Jul 16, 2017

Long term - update

I am very busy in the last few months so a quick long term update with some delay.

From the last update the main ideas were - stocks are in bull market higher, moves in the opposite direction(higher) for PM/Bonds, corrective move lower for Crude/Natgas... only the USD did not follow the plan exactly:)

The current view for the next 6 months:
- Stocks - correction wave 4 and higher
- Bonds - as I wrote last time we saw the major top for the bond bull market. We have now an impulse lower and corrective move higher.
- USD - major top 16 year cycle high behind us. The first wave lower is running in next 1-2 months it should be over and higher for a few months.
- Precious metals/miners - the cycle model points to an important low in Q4 this year.
- Crude Oil - correcting in wave B lower as expected. It should be finished in a few months and wave C higher should follow.

The important event - I think at the end of this year we will see a switch in the long term trends from stocks into commodities. If I am right Crude/PM should make an important low in Q4 2017 a few months ahead of the Stocks which should make an important top in 2018.


- STOCKS
The bull market is not over. According to EW/cycles/market breadth we need at least one more high, so I expect a correction for wave 4 and higher again.




- BONDS
We have now the impulse lower and corrective wave is running. In the next few weeks we should see a 20 week cycle low(stock making the top of their wave 3) and retracement higher(stocks lower for wave 4) After that bonds should move lower again.... corrective waves up and down.



- FOREX
Most of the time I was tracking a triangle... the waves d and e were not so clear and I thought we have an impulse with missing wave 4 and 5. At the end this was wrong and I think we saw a triangle... well hidden, but a triangle.

Long term view cycle top-to-top analysis - the move lower lasts too long and it is too deep so I think we have a major top 16 year cycle top behind us.

Cycles bottom-to-bottom analysis - this are not Hurst cycles, but the USD is showing very consistent 3 year cycle. If it continue to work it is close to 3 year cycle low and we should see at least a few months higher. Another interesting observation is that the USD is moving 7 year lower and 9 years higher

Here is how I see the pattern and the hidden triangle:) Next the wave lower should finish in a few weeks and retracement for several months.

USDJPY - from EW perspective the move lower looks corrective, the move higher looks corrective already week 13... I think it is an a-b-c. If we add cycles several weeks lower to finish the 1 year cycle will look better after that higher to finish the move which begun in 2016.



- GOLD/SILVER/MINERS
We saw a move higher after double zig-zag lower as expected... and since then it is a mess. Gold/Silver/GDX/GDXJ with different patterns which does not make it easy to pick the right one. My preferred scenario is an important low around the end of the year(probably October-November) like every year before a strong rally. I think this will fit better with seasonality/cycles and correlation with other markets.
The alternate scenario is bullish we saw the low with the Silver spike lower and the PM sector should start rallying NOW. I guess we will know in the next few weeks what is going on.
If you are trading the PM sector a trading plan could be to open small position and if it breaks out higher to add more and if the move is weak to get rid of it with small profit.

Gold hit resistance again, the second 40 week cycle hanging somewhere in the middle(move lower will look better) and with the USD at 3 year cycle.... that is why my preferred scenario is lower. If I am wrong gold should start rallying now and bust trough MA50/the trend line/resistance making higher high above 1300.

Silver adds more to the confusion. With this spike we have move lower from the 2016 top which looks like A-B-C and with 82 weeks we have the minimum for 18 month cycle low....

GDXJ looks bearish - from the low we have 10 weeks "higher" I really struggle to see impulsive bullish price action.... but it is a choppy mess. One more zig-zag lower for C to make a two year cycle low will look much better.

GDX looks bullish and adds more to the confusion:) the move lower from the Feb.2017 top looks like a triangle and imminent rally.... to see it as a bearish pattern this should be some very complex wave b and one more leg lower fo finish c of C(red).



- CRUDE OIL/NATGAS
I was waiting to see a top for wave A and corrective wave B lower. I think this forecast works fine so no need to change it.

Trough-to-trough cycle analysis - we should see a low in a few months.

One more 24 week cycle for important 2 year cycle low and the low of wave B expected.

Natgas did not disappoint - after an important cycle high we saw sharp decline. Currently the pattern is not very clear. I think we have a corrective move lower which is not over. I expect a move higher after 20 week cycle low and continuation lower.

Jul 15, 2017

Weekly preview

Short term view - small pullback and one more higher high.
Intermediate term view - waiting for the current move to finish and the high of it should be intermediate term top.

The price bounced one more time between the two trend lines, but broke up as expected. This should be the final wave higher from the April low. Fibonacci measurements for an impulse are pointing to 2480/2482/2525 and the target for wave 3 from the Feb.2016 low is 2478. So before a reversal we need to see first finished pattern and I am watching what happens around 2480.

I think this move lasts too long and there is high probability that the April low was an 18 month cycle low - even shorter than I have expected with I higher low in April(that is why I was wrong big time:)))). The tech sector and the European indexes - the move looks like impulse from the low, but not making new highs. This means two options at least one more leg higher for a zig-zag or this is just wave 1 and the move will continue higher in August (because the next 18 month cycle is running). What I want to say is do not hurry to jump on the short side... I would wait at lest until FOMC 26.07. See the last two charts Nasdaq/SOX for this idea.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - this time technical analysis worked so beautiful - trend lines/Fibo/support/MA50 daily:)
If the target is around 2480 than SP500 should be somewhere in wave 3 of this last move(white) so small pullback expected and one more higher high.
With the higher target 2525 this is just wave 1(green)


Intermediate term - the move from the April low takes too long and the probability is higher that this is wave 3 and not iii of 3. The usual target for wave 3 is 1,618x1 which is 2478 very close to other two measurements for the wave since April.


Long term - no change. We should see at least one more higher high for the bull market, but MACD/RSI do not look very bullish. It is more likely to see a correction before another significant move higher.


MARKET BREADTH INDICATORS
Market Breadth Indicators - are showing weakening move, but no reversal sign.
McClellan Oscillator - again above zero and again lower highs.
McClellan Summation Index - turned up, but lower high.
Weekly Stochastic of the Summation Index - sell signal in the middle of the range.
Bullish Percentage - above 70, but lower high.
Percent of Stocks above MA50 - weak with lower high.
Fear Indicator VIX - very tight BB and another lower high.... there is no room for another lower high:) next time it will be a higher high.


HURST CYCLES
Day 6, I think the next 40 day cycle is running.


Here it is how the cycles should look like if the 18 month cycle low was in April.


Here is the technology sector - NASDAQ and SOX (in Europe the DAX has similar chart - count/Fibo measurements/trend lines/MA200).
If the idea with the important cycle low in April is right this is just wave i of 5 of III and the move up should continue in July and August. Some pretty accurate Fibo measurements, decent count so I would not just discard this idea and start shorting.

SOX - well visible zig-zag lower and impulse higher. So minimum one more leg higher for a flat(red) and if the next 18 month cycle is running higher high(green). Again decent count and pretty good looking Fibo measurements.

Jul 9, 2017

Update

Quick update because I am busy and there is nothing new anyway.

We have a sideway move for five weeks. The same pattern - it is more likely to be a wave 4. I hope it is wave 4 and we will see one more higher high, then we will have clean pattern instead of looking for some ugly count.
The price tested one more time the Fibo levels / support levels / MA50 / the lower trend line and bounced higher. Now waiting to see what we have - continuation or just weak bounce from support. At least it is clear from the chart when something is wrong and move lower has begun.

The same daily chart updated again.


And RUT for example - one more zig-zag higher to finish an ED will look much better instead of looking for... I do not know for what, some expanded flat.