Intermediate term view - close to the top of wave 3 from the Feb.2016 low.
SP500 working on fifth wave as expected.... I am not sure if this is the top or we will see one more high. You can count the price action from the August low as finished, but another count with one more high is possible. Every index looks different so it is not easy to use other indexes as a reference. It is always the same around tops/bottoms you never know if you will see one final push or not. TECHNICAL PICTURE and ELLIOTT WAVES
Short term - SP500 looks toppy. I expect the index to turn lower on Monday or Tuesday. I do not know if this is the top or not, first I want to see how a move lower looks like.
Intermediate term - close to the top of wave 3.... waiting for reversal signature. RSI broke the trend line and now working on a divergence.
Long term - no change, waiting for the top of the current leg higher then one more correction and a rally.
I have some suspicions that this could be the top of the move from the Feb.2016 low. No need to get bearish now, the top will be tested.
MARKET BREADTH INDICATORS
Market Breadth Indicators - look very bad. The indicators do not follow the market higher any more. A/D issues and NH-NL are heading lower when the market is heading higher - big red flag.
McClellan Oscillator - spending a lot of time below zero already.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - sell signal with small divergence and below MA10, but still above 70.
Percent of Stocks above MA50 - very weak, below 75 heading lower while the indexes are making higher highs.
Fear Indicator VIX - extreme complacency again, double bottom?
Advance-Decline Issues - below zero. For the first time in 2017 Advance-Decline Issues cumulative is pointing lower while the indexes are moving higher.
HURST CYCLES
Day 7 of the 40 day cycle. As expected after strong rigth translated cycle another higher high follows.
Week 11 of the 20 week cycle.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
We a have a finished sell setup on the weekly chart, but no price flip so far. For the next week price flip is a close below 2553.
What is your retracement targets for xbi?
ReplyDeleteXBI retraced already 62% with a-b-c so it should turn lower in the next 1-2 days. If this does not happen it will move higher.
DeleteHi Krasi,
DeleteI am having trouble figuring out when to sell. What is your general approach?
Thanks again,
Kali
Generally no trade against the trend. There is several entry points:
Delete1. the top/bottom when you think there is finished pattern - watch for weakness RSI divergences etc. It is not easy to nail tops/bottom often there is one more wave left or you are too late. A little bit better will be if you watch for an impulse in the opposite direction on lower time frame.
2. reversal pattern - impulse in the opposite direction, broken trend line/support/resistance - the odds are much higher and you miss some price action.
3. retracement after impulse or test of broken trend line/support/resistance previous high/low - with a strong trend the retracement could be small and you can miss a lot of price action.
The best approach is to split the entry and build a position. Max 30% point 1(if you are wrong close with small loss), add to the position point 2 and squeeze the trend with another entry point 3.
Thanks for taking the time out Krasi. So after you are in, when do you sell?
DeleteKali
It is the same three points. When you think the pattern is finished (1) take profit 50%. When you see trouble(2) close the rest of the position.
DeleteIf you are riding a bigger trend and only a correction is expected (it could be big 5-10%) you can reduce the position 50% for example and load up again when it is over.
Obviously all this is suitable for a trades lasting several weeks to several months or longer.
Day trading or swing trading is more like hit and run. There is other rules... it did not work so good for me:) Rules like trade only in the direction of the trend, when you see pullback to MA50/support/resistance (1h time frame or shorter) entry in the direction of the trend and when you see the indicators oversold/overbought take profits.
Thanks Krasi. Always appreciate your advice.
DeleteKali
Hi Krasi, Do you have a view on oil price? thanks.
ReplyDeleteMy cycle model is either wrong or this was an exception we saw a bottom much earlier then expect.
DeleteEW - there is way too many options because the waves are corrective.
So at the moment I do not have favorable pattern. I expect a pullback to around 51 and long term there is more to the upside. This is all I know.....
Hello Krasi and many thanx for updates.... One question, do you know how we can connect TLT with stock rally or drop? some people I see consider that for trading Sp500 or ... but I could not figure out really how to correlate it.
ReplyDeleteLook at the turns dates for TLT/SP500 and you will see pretty good corelation. The catch is if bond make strong rally it does not mean SP500 will crash and the opposite, the moves do not look proportional. It is about the turn dates. I am comparing bond/stocks cycles too, especially the important cycle lows/tops.
DeleteThanks
DeleteHow about XBI now? It seems hourly chart bottom. That means spx also reach some short bottom? Thanks.
ReplyDeleteXBI looks like a bottom but just the first wave lower from a C or 3
DeleteKrasi , are we looking for first support around 2555 ? Then 2544 and ultimately 2520 if it gets that far ?
ReplyDeleteThe support levels I see are around 2545/MA50 and 2490-2510. The lower one looks more likely.
DeleteThanks. 2544/5 tomorrow wouldn't surprise
ReplyDeleteI agree. And how about gold miner if spx plunges tomorrow? It seems GOLD can be either up or down... but no major move?
DeleteGDXJ this move up looks very weak like a bear flag. I would wait for one more low with divergence.
DeleteI do not see important low for PM. Intermediate term trades for several weeks, but no major moves.
Today SPX is consolidating and continue down or up? Thanks. Looks not that bearish...
DeleteThere is no confirmation for reversal so far(no impulse), but the signs are bearish and I think we will see more to the downside.
DeleteThanks. And XBI may have another wave 5 next week along with SPX down move?
DeleteFor XBI the oscillators do not look bad short term and we have buying two candles with tails... I would say test of MA50 or even above 86 is possible.
Delete