Intermediate term view - intermediate term top expected, topping for a few weeks and a bigger decline in January.
The indexes made new highs as expected, we saw the last waves iv and v from the chart on Wednesday, NDX made finally higher high.... the price action looks like intermediate term top to me. I am out of bullish counts and patterns... the indicators look bad, cycles pointing to a high, market breadth is ok probably because we will see topping and the profitable sell opportunity will be later in January. For those who trade PM/miners - a low was expected around the end of the year when the stocks make an intermediate term top. I think we have an intermediate term low this week. The next long term update is in two weeks, but a thought it is better to post a chart timely:) See the last chart HUI. TECHNICAL PICTURE and ELLIOTT WAVES
Short term - when this move makes final high I do not know how to count more impulses. I do not have more bullish counts and patterns.
This is 15min CFD chart - I will be surprised if we do not see one more high on Monday. I am not sure if the cash index will follow or not, but keep it in mind. Personally I trade CFD on the indexes.
Intermediate term - quick drop to support and MA50 around 2600 then test of the high, which should last several weeks. RSI does not look good with intermediate term and short term divergences.
Primary scenario at the moment is the top of wave 3 from Feb.2016.
Long term - one more correction and a rally before turning very bearish. The next wave lower will show us if the move from the Feb.2016 is over or not.
MARKET BREADTH INDICATORS
Market Breadth Indicators - look tired, but not signaling an intermediate plunge lower. I suppose the sell signal with really big profits and low risk will come in a few weeks.
McClellan Oscillator - slightly above zero with divergences.
McClellan Summation Index - neutral.
Weekly Stochastic of the Summation Index - buy signal.
Bullish Percentage - still strong buy signal.
Percent of Stocks above MA50 - short term divergences and below 75.
Fear Indicator VIX - small divergence and it looks like rounding bottom.
Advance-Decline Issues - turned sharply lower and currently in the middle of the range. A/D cumulative is struggling and look like it is topping.
HURST CYCLES
Day 21 of the 40 day cycle.... time for mid cycle low next week.
Week 4 of the 20 week cycle.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
We have finished combo 13 on the weekly chart. Waiting for sell signal - a price flip.
HUI Chart
Right on time as cycles said we are seeing intermediate term low around the end of the year. I think this is not a major low, I see a rally for a few months, but the pattern is just huge sideway W-X-Y.
Hi Krasi, Thank you for the update! I was looking at the monthly charts today and used a regression analysis which showed SPX touching the upper bound for the first time since at least 2008...To your point, top is a topping process and we keep making new highs there is no visible sign of a top and no formation to be bearish yet. Is there any chance we are still in a minor wave 3 of a super cycle and that Feb2016 was just a blip/wave 4 of a cycle of lower degree? I know we are in ridiculous territory, but I see no sign of a top yet. Wouldn't it be wiser to stay long and once we get a confirmed strong reversal to cover on wave 2? It seems like it will be obvious when it happens considering recent history (e.g., no more than a 3% drawdown in 2017). I.E., what I'm trying to say is, if cryptocurrencies can explode higher like they are doing, why should there be logic in SPX or anything else? If tops are tested, then what is the upside of guessing the end of a wave 3, especially when you witness this madness of a bubble everywhere else? Thank you for your work, just trying to make sense of it all.
ReplyDeleteBest,
Matt
Hi, of course there is such scenarios. Some are counting the move from Feb.2016 as wave v of 3(from 2009) which means another wave 4 and 5 before we see a major top.
DeleteHow to trade it depends on the time frame you trade. I trade intermediate term which is the daily chart. For me it does not matter much if this is the of the bull market or wave 4 of some degree. I see lower I will trade it and when I see how the move looks like I will decide which scenario is running. I do not marry to any scenario I just follow the market step by step.
In your case long term trading weekly/monthly charts is a little bit more complicated... you have to decide to take some profits or not. As you wrote there is no signs of a top so you can book part of the profits and on wave 2 the rest of it, or when there is no reversal you can add to the position again.
For me analysis is not trading, a trader should not fall in love with any scenario and a trader should have a trading plan which to mitigate the risks of loses/missed profits etc.
p.s. I want to clarify, I love when you estimate tops because I think you're incredibly good at it, so please don't stop :) I'm just trying to figure out the best strategy for longer term for myself :) Thank you for all your work and all the best to you and your family in 2018! You are great!!
ReplyDeleteMatt
The trading plan is very important. Every trade has different approach to trading and risk. From long term perspective I would take profits something like 25% of the position.
DeleteIf we see weak correction you add this 25% again at a little lower prices.
If we see a-b or 1-2 I would take another 25% profits at b/2 because bigger correction is expected somewhere between 5%-10%.
If the move develops as a correction you add the 50% to your position at 5%-10% lower prices.
If it is an impulse and it looks like reversal at wave 2 you close the rest of the position 50%.
To sum it up it up - in two cases small and big correction you have your position and add to it at lower prices, which is more profits. In the third case reversal you sold 50% of it close to the top and 50% at test of the top, which is average not worse than 5% lower of the top - not so bad.
Thanks Krasi, that makes sense.
DeleteHi. Did you see that SPX is showing the 13-count DeMark countdown and combo sell signals on the *monthly* chart? See
ReplyDeletehttps://twitter.com/TommyThornton/status/941041980028674049
Fits good with the analysis and weekly/monthly charts are now aligned.... this should mean something.
DeleteCiao Krasi, grazie per l'analisi del mercato,veramente molto impressionanti gl'indici americani , sembra una conta delle onde all'infinito, la cosa impressionante sono i ritracciamenti che sono quasi nulli
ReplyDeleteIt looks like the current impulsive move up would continue until Christmas to be the so called Christmas Rally? Thanks.
ReplyDeleteYes, this is the Christmas rally. I expect some grind higher and topping, I doubt we will see the indexes much higher.
DeleteAnd gold miners should have another down wave to test the bottom from daily/hourly chart in the next few days?
ReplyDeleteYes, it looks like time for a pullback in the next few days.
DeleteHi Krasi, what’s your view on USD? Will it start falling as PM and miners rally for few months?
ReplyDeleteThanks
Neel
I think USD should make one more lower low before we see an intermediate term low.
DeleteShould yesterday high be tested again by the end of this week to finish this rally? :)
ReplyDeleteGiven the holidays is more likely the price to stay around this levels for the week.
DeleteMaybe a b wave in progress today with c down to come to finish another 4th wave next week?Then your final lift into early Jan......
ReplyDeleteIt is possible, but difficult to say at this moment. If you dig deeper something like 10min chart there is 3 waves higher with strong third wave. I can not say if it is just a-b-c (your b) with strong c or 1-2-3 is running. On such short time frames the indicators are not reliable, no cycles etc for reference so I can only wait to see the next move.
DeleteDo you think GOLD miners has already begin the impulsive up or still one more low to test the bottom in daily/short term chart? Thanks. It looks so strong...
ReplyDeleteI think we saw a bottom already. It looks like an impulse with extended fifth wave. Looking at GDX/GDXJ probably pullback from MA200 daily to MA200 hourly and up again.
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