Intermediate term view - after the high intermediate term top and correction for a few weeks.
One big nothing this week... but nothing is information too. The signs are pointing to one more high - long sideway move favors wave 4 which means to expect one more high, cycles - it looks like mid cycle low around day 20 for the 40 day cycle and one more higher high. Overall the indexes look different - DJ strong, Nasdaq/SP500 sideway move(>15 days in this 10 point range), Europe,RUT,DJT weak correcting already.
I think they will synchronize DJ/SP500 making one more high and the weak indexes retracing higher then all sell off for a few weeks. TECHNICAL PICTURE and ELLIOTT WAVES
Short term - this sideway move starts looking like a triangle and favors the bullish pattern from last week so I expect bullish outcome.
Alternate it still can test MA200, but as long as the price stays above 2450 the price action is bullish.
Intermediate term - wave iv of 3 does not make much sense anymore so I removed it. I think this is the top of wave 3.
When the top of wave 3 is behind us I see two options for wave 4 - wave 2 was a flat so wave 4 should be something different(the rule of alternation).
- If history repeats (VIX/Price behavior from 2006/2007) we should see a zig-zag (red).
- the other option is a pattern which will consume time - triangle or complex correction.
Long term - no change. We should see at least one more higher high for the bull market. RSI/MACD look bad - it is more likely to see a correction before another significant move higher.
MARKET BREADTH INDICATORS
Market Breadth Indicators - most of them turned lower and showing signs of weakness....
McClellan Oscillator - below zero. One move above zero and divergence for the final high will look great.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - buy signal, reached overbought level.
Bullish Percentage - turned lower and now below 70.
Percent of Stocks above MA50 - turned lower after second failed attempt to move above 75.... sign for a weakness. And long term divergences.
Fear Indicator VIX - around 10 with very tight BB again.
HURST CYCLES
Day 21... we have have something like a bottom in the middle of the 40 day cycle around day 20. This 20 day cycle was strong right translated so the next 20 day cycle is expected to make a higher high.
Week 16 - it is getting more and more likely that the 18 month cycle low was in April.
HI Krasi,
ReplyDeletewould love to hear your input on XBI.
Applying what I have learned here, looks like a wave 1 down with current retracement. On 10 min chart, the retracement looks like a-b-c up which suggest finished A or finished pattern up. But given what you have mentioned with overall market, A B C sounds more likely.
Any input would be greatly appreciated,
Kali
It will be much better to see one more low.... because now the move lower could be just A-B-C. I would say either a-b-c for wave 4 for or a of X wave.
DeleteHey Krasi,
ReplyDeleteEver considered that the Brexit down spike should be invalidated as an EW count? So instead of the brexit downmove being 2, the US election low would be 2. Obviously,this would have huge implications....
This possibility has been bugging me for months. I was just curious for your thoughts. Thanks !!
It is not a spike the market closed at his levels and stayed there two days. You can not simply ignore closing prices.
DeleteSpike which could be ignored is XLF in August 2015 huge shadow which does not make sense, but Brexit is completely different price action.
Long before Brexit I was talking about flat correction and this move finished it perfectly, no chance to ignore it.