Intermediate term view - intermediate term correction running.
Thrust higher of a triangle for wave 5 and reversal - typical price action. I hope you was not too greedy and took some profits:). We still need to see finished impulse for 100% confirmation, but all signs are pointing to intermediate term top and a correction for a few weeks. The correction has just begun and wave 4 is the most difficult to predict. It is too early to say how it look like, but I think we should see the price at least visiting the 2320-2350 range. Last week I have explained that if we use the EW alternation rule the options are sharp sell off(repeat of the VIX/price action from 2006/2007) or time consuming pattern like triangle. The second option with a low in November for 40 week cycle looks the more logical choice.... or some combination of both scenarios above quick sell off to 2330-2350 and then boring price action for 2-3 months until October-November. TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the price action looks like an impulse, but we need one more lower low for confirmation. We have bearish signs - the price broke below the trend line and the support level so the odds are higher that the impulse will be completed.
Intermediate term - RSI broke below the trend so this move is not part of the rally from the April low. I think wave 4 is running. The market needs to bleed off the greed and the options are to scare the traders(red) or time so that most of them lose interest(green).
Long term - expecting correction wave 4 followed by another rally higher.
MARKET BREADTH INDICATORS
Market Breadth Indicators - are pointing lower with sell signals.
McClellan Oscillator - oversold level. We should see a short term bottom soon.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - sell signal below 70.
Percent of Stocks above MA50 - sell signal below 50.
Fear Indicator VIX - nice spike which is not much of a surprise.
Advance-Decline Issues - plunging lower since FOMC. Lets see if this move lower has the strength to push it in oversold territory. I think the answer is yes - Cumulative A/D turned lower for the first time since March.
HURST CYCLES
Day 26 of the 40 day cycle .
Week 17, another 1-2 weeks lower for 20 week cycle low will look good.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Around the FOMC high we have finished setup and countdown - TDemark sequential did very good job spotting the top. After that we saw twice higher highs but notice the candles - bearish hanging man and shooting star 27.07 and 08.08.
Currently day 4 of setup lower and price flip on the weekly chart.
Hi krasi,
ReplyDeleteExcellent work.
In looking at prior downturn, looks like the down turn ends with the 5 th wave of 3 with no ensuing wave 5. What makes this move different?
Thanks again,
Kali
Two days in a row close below MA50, RSI broke the trend line, RSI weekly divergence, overlap with the previous high...
DeleteThanks krasi.
DeleteKali
This is a very tricky time right now. All of my breadth oscillators are showing "oversold" and the Fear/Greed Sentiment Index is close to "Extreme Fear". We could rally sharply from here with a kick of good news. Tough to call.
ReplyDeleteYes. All my indicators show such extreme oversold levels... yesterday's rally offset the oversold conditions a bit for a leg down but I can't see how much more it can go... yet another leg after that? Seems like it would need to trend up and side before another wave of sell off... but then again, market has never ceased to surprise me.
DeleteKali
Yes but only short term indicators and oscillators. That is why we will see a short term bottom soon and move higher. I am sure the dip buyers will show up:)
DeleteYou do not need lower for days... one day or spike lower and reversal is enough like the top. All this can not offset the big picture which looks bearish.
Once this completes one more leg down, would that be completion of wave 1? Would the next wave be 3 after the retracement?
DeleteIt is too early to say how this wave 4 will develop. So it could be 3 it could be C I do not know.
DeleteHi Krasi, I am dingle, an average investor from Hong Kong, just searched "tom demark" on google, and found this blog. I think your analysis is quite thorough and accurate, can you please help analyze the Hong Kong Hang Seng INDEX, the short term and long term view? I appreciate your analysis very much. Thanks a lot.
ReplyDeleteQuick analysis:
Delete- short term impulse lower is running with target around MA50 after that bounce higher and one more leg lower to finish correction with target the support zone 25500-26000.
- long term I think this is just a correction and one final leg higher will follow which should make important top.
Thanks v much!!
DeleteThank you KRASI for your analysis brilliant as always. What's your view on oil? Do we go lower directly from here or is the wave higher not finished yet? Latest action resembles bull flag which should take us above 50 again...
ReplyDeleteThe only way to count the move from June as finished is running flat in the middle which is extremely rare and given the price action from the last top(looks like wave 4 sideway crap) I do not believe it.
DeleteIt is more likely that this is A-B-C with C=1,618xA or 1-2-3. So I expect one more higher high. Several different Fibo measurements are pointing to 52 if this is A-B-C or 1-2-3.
Aaand wrong, today reversal lower says more to the downside.
DeleteBTW, what do you think of the prediction of this china blogger towards US stocks market index. Many thanks
ReplyDeletehttp://blog.sina.com.cn/s/blog_5485ea430102xm3s.html
DINGLE
If I understand from the google translation which was awful:) it is about the top of grand super cycle or what ever they call this waves. If you rely on EW - Yes, even if the top is of lower degree we should see at least 10-20 years sideway move.
DeleteI do not bother with such counts because they do not have trading value for me. I do not buy and hold 20 years this is history. I will trade what ever comes. Even in sideway market for 20 years we will have moves up/down for 2-3-4 years.
It looks like May 17 with vertical rebound for another wave?? Thanks.
ReplyDeleteNothing to do with May 17... forget about rally for a few months the market is topping.
DeleteIt is a mirror picture:
- correction for a month and a half -> first rally -> sudden sharp sell off
- rally for a few months first move lower -> sudden rally
Thanks for the great analysis like always. What are your thoughts on the NIFTY index ? It will be much appreciated. Thanks for the amazing analysis and sharing your learning with us
ReplyDeleteCorrection has begun there will be one more leg lower, but after that I expect another higher high which should be an important top.
DeleteIs the correction for nasdaq over? broke above 50 dma and broke above the July low.
ReplyDeleteThanks,
Only on hourly time frame. On bigger scale daily/weekly it is not over.
DeleteHi Krasi, thx for your great insights.
ReplyDeleteDoes this sharper-than-expected rebound invalidate your daily projection for the SPX this week? Thx again.
I think so. The low came one day earlier and the move lower is not 100% clear that it is an impulse. I think there is more to the upside and it is possible to see another high for some indexes. They have different patterns and it is difficult....
DeleteOverall the market is topping daily and weekly forecast has not changed only the short term.
Hi Krasi,
ReplyDeleteLooking at the XBI, we have retracements unable to pierce the 50dma. 3 consecutive day close below prior gap lower. The weekly and monthly are very bearish. What is your thought on current move?
Thanks,
Kali
No impulse lower so far.... most likely correction is running, but with complex pattern.
DeleteIt seems like mid-May drop very much, another higher high? The market is so stable and well controlled.
ReplyDeleteHigher high is possible... not for all indexes. Nothing in common May was bottoming now is topping.
DeleteLooking forward to your views this weekend. If you could include your view on QQQ, would really appreciate it.
ReplyDeleteThanks again,
Kali