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.
Hey Krasi,
ReplyDeletelove your analysis!
I would like to ask why you have done away with the potential iii of 3 top for SP-500. If nasdaq is in expanded flat, that could line up really well with the other indices. SP-500 now has the minimum required for a top with the 3 up waves. Nasdaq currently right near the crucial juncture of correction. If the pull back is large, certainly we should entertain the SP-500 with iv before the v for 3?
As a well known bear for the market on this board, I am just reminding everyone of the bearish play ;)
Thanks again,
Kali
Wave iii of 3 is still on my radar, but I think it has lower probability. It counts better like the top of 3, looking at some shares which follow the indexes like BA it is the top of 3 not iii, DJTA very high probability the top of 5 already from Feb.2016... all hints that 3 is more likely.
DeleteOther options like Nasdaq/Europe rallying for v of 3 and SP500 continue to crawl higher for several more weeks to 2500-2520 or even not synchronized major tops at different point in time look more likely to me at the moment.
Two days I am watching the charts and wondering how to synchronize the indexes... and now I am asking myself why? Maybe they should not move in sync any more. The indexes are nearing important top and the normal behavior is to start to diverge. The direction will be the same, but different amplitude and different count.... see DJTA for example it looks finished to the upside already.
Maybe the moment has come to analyze/trade every index independent from the others. Trade short weak indexes like DJTA/RUT and on the long side Nasdaq.
I see what you are saying. I see the signs... I also see the signs of this correction not being quite over. This is not the best time to trade. So much uncertainty. I would certainly go long on a further pullback on nasdaq. That would be either pullback of wave i of 5 or wave b of correction which would be followed by c. That trade would be very compelling.
DeleteThanks again for your invaluable input.
- Kali
How about biotech sector XBI? It looks quite corrective move for a while. Thanks.
DeleteYes it looks corrective. I think we will see one more higher high with divergences.
DeleteJust confirm still upside room to 2480~2520? Which sector would be stronger? It appears that xbi is still reluctant for the final push up while QQQ is going well. How about IWM small cap sector and basic materials sector? Thanks. Given weak usd, materials would be stronger?
ReplyDelete2480 looks better... too many ending patterns across the indexes and different shares. One more higher high looks better, but after that we should see a correction. Technology is the only one showing strength. XBI is ok this expected final high should do the job. IWM is finishing it's huge ending diagonal. I do not know if there is correlation between USD and materials I have not done a research.
DeleteThanks. For XBI, measured from EW gives about 83 for wave 5, is it reasonable? While I don't expect sudden reversal, how long do you expect for the current impulsive move? until July 26 FED meeting or?
DeleteXBI Fibo measurements - twice 82,5-83 and 85 higher target.
DeleteIf the idea is right I think Tuesday-Wednesday next week.