Intermediate term view - the move from the August low is topping. When it is over a few weeks lower for 40 week cycle low.
SP500 moved lower as expected, but I can not see an impulse and I warned about the short term low. The pattern which makes sense at the moment is wave 5 from the August low. I looked at different indexes they all have different patterns, but the common is more to the upside no matter corrective move or higher highs. The bigger picture has not changed the market is topping and correction for a few weeks is expected. TECHNICAL PICTURE and ELLIOTT WAVES
Short term - I do not see a way to twist this move lower as an impulse. The most likely scenario is wave 5 from the August low. The Fibo measurements are ok - wave 3 with max extension and wave 4 with 0,236 retracement which is expected when you have extended wave 3. In the update I have shown this area around 2565 - it was tested 4 times and we have false break lower... as long as this level holds and we do not see a clear move lower and close below it, close below the trend line and MA200, expect more to the upside. RSI broke the trend line higher which means the move lower is over. In a bearish scenario it is wave 2(red) or x double zig-zag. Even in this case the support level should hold and the top should be tested.
Intermediate term - the indicators plunged lower, but the price has not followed. The histogram is below zero for a month... this is not the way a reversal and a sell off begins. I think it is more likely to see the indexes at least for a few days higher, RSI testing the trend line, the histogram around zero or above, before another move lower.
Long term - no change, one more correction and a rally. For now the plan is that this is the high of wave 3 from the Feb.2016 low. When we see the move lower we will know if this is the right pattern.
MARKET BREADTH INDICATORS
Market Breadth Indicators - look bearish, pointing lower for weeks. The price is not following so far which fits with the cycle picture - any correction should be short living 2-3 weeks.
McClellan Oscillator - spending a lot of time below zero already and now trying to move into positive territory.
McClellan Summation Index - sell signal .
Weekly Stochastic of the Summation Index - sell signal, reached oversold levels.
Bullish Percentage - flat for a long time right above 70.
Percent of Stocks above MA50 - tested the middle of the range, one more high with divergence?
Fear Indicator VIX - jumped to 14 now I expect a higher low.
Advance-Decline Issues - I think it is topping.
HURST CYCLES
Day 17... confusing, if the indexes make higher high relabel will be necessary.
Week 13 of the 20 week cycle. It should turn lower for 2-4 weeks soon.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
We a have a finished sell setup on the weekly chart and four weeks sideway move. For the next week price flip is a close below 2581.
Thanks for the analysis Krasi.
ReplyDeleteWhat's your view on USDJPY? It looks like triangle to me where we are in the middle of an E wave (gold, miners roughly the same). When this breaks out to the upside it means stocks higher again (as your analysis suggests) and bye bye to metals.
It is also well visible on the $XJY which you mentioned earlier.
Maybe it is wave X as expanded flat(from April.2017 until now), but the outcome will be same as a triangle - break lower(USDJPY).
DeleteIf you look at XJY you will see zig-zag higher(W) Jan-April.2017, probably flat correction(X) April-Nov(it does not matter sideway move) and another leg higher wave Y for a finished pattern and 2 year cycle high.
USDJPY should make 2 year cycle low in 2018 and the next important low for stocks should be mid 2018, so the correlation seems to work.
P.S. I expect stocks to move lower see the weekly chart... and metals should move higher.
Hi Krasi, I need your help on HSI. You previously mentioned that there may be one more important high. I am a bit uncertain. One of the rules of EW is that wave 3 cannot be the shortest. Now if we look at the whole 5-wave move since Oct 2008, assuming that I am correct on wave count, magnitude of wave 1 (Oct08 - Nov10) was around 14300, that of wave 3 (Oct11-Apr15) was ard 12400. That means wave 5 (since Feb16) cannot go higher than 30678 (18278+12400). If we see HSI go beyond, we may need to recount the whole wave structure, and we are very likely to be in a huge global bull market. I also observe that there are similar patterns in several major Asian markets. Is there a possibility that we have already entered wave 5 and close to the top of wave 5 (another 3%-5% upside is possilbe, but looks difficult to go beyond). If not, the days of global market uptrend are numbered.
ReplyDeleteIt does not look like an impulse from the 2008 low. I would count is at wave 1 or A from (Oct08 - Nov10) wave B or 2 2010-2016 and now either wave C is running or wave i of 3.
DeleteThere is different views about the US indexes which in fact reflect this two different counts for HSI. Some are mega bearish than we have A-B-C from the 2008 low which means test of the low 10k-12k.
Some are mega bullish and say the mega bull is running and it has a lot more to go - than since 2016 wave i of 3 is running and the next low is ii of 3 probably around 24k.
I am rather in the bullish camp, but I analyze step by step no need to marry some idea. If we see corrective move lower in 2019-2020 it is the bullish scenario if it is impulse big red flag for a problems ahead.
great analysis krasi.
ReplyDeleteappreciate your work.
- Kali
great work Krasi! Hows the family, the kiddos....?
ReplyDeleteThe kid:) it is more and more fun. She still can not speak, but it is a little person with opinion already:)
DeleteNice weekly call Krasi ....thanks for the heads-up.
ReplyDeleteTime for a higher high tomorrow ? - and the least likely timing to pull the rug after thanksgiving - despite that being the most bullish day of the year .
Dax is a good tell and leading - more up to finish off the "2" by tomorrow's close would be perfect.
Something lower is coming, Europe and US look like a-b-c higher... but something does not fit for a reversal and sell off. I think this move higher will continue longer than a few days... rather 2-3 weeks.
DeleteFirst this weekend I have mentioned that cycle do not add up with the pattern. Now I think we have a 40 week cycle low with length 31 weeks which is a normal length and we saw indicators and market breadth resetting as expected, just the price has not followed. The new 40 week cycle is causing the trend and it needs a few weeks to play out before turning lower.
DAX is above MA50 and the histogram made a deep trough.... this are not the conditions to expect two days bounce for wave 2 and sharp reversal for wave 3. I want to see the histogram close to zero or above zero before the index turning lower gain.
I am not convinced for the short side although we have an a-b-c so far.....
Hi Krasi.. thanks for update. looking at long Term, after reaching wave "V" and drop, how low that could go?
ReplyDeleteI think around 2000.
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