Jul 5, 2018

Long term - update

I will be away in the next two weeks so there will be no weekly updates. The next one will be on 28-29.July. If I have time I will post short updates.


It is time for the next long term update... what to expect in the next six months:
- Stocks - corrective pattern to be finished and one more rally... with higher or lower high I do not know at the moment.
- Bonds - multi month zig-zag up.
- Forex - USD correction and one more leg up.
- Precious metals - nothing interesting and another intermediate term low around the end of the year.
- Crude oil - important high is expected and multi month correction lower.




- STOCKS
We have a top and correction as expected, but it is not clear if this is wave 4 or something else.... it is taking way too long. The big picture the 4 year cycle is topping and wee see how it tries to pull the price lower. I think one more move higher is left before the markets start plunging lower, but at the moment I can not say if it will make higher high or not.

The 4 year cycle top is right on schedule. The indexes should turn down soon and move lower until late 2019/early 2020 for 4 year cycle low.



- BONDS
I thought we will see a bigger a-b-c higher with b as a triangle, but I was wrong. At the moment I think we have finished a-b-c and multi month move up is running. Bonds are moving in big a-b-c waves so I do not believe in 1-2 i-ii count and yields going to the moon. It is too early for the CBs to lose control.

Monthly chart with top-to-top cycles. The top came a few months earlier with short cycle, that is why I was expecting some pattern which takes time like triangle. Now we should see a few months higher at least to test MA50 and test of the low. The next important high is Q4 2019 / Q1 2020 when stocks should make 4 year cycle low.


TLT - in the next few months we should see pullback and one more leg higher.


Very long term perspective 30 year treasury yield - We have a top every 9 years. The last one was mid 2009 and it looks like MA100 will be a resistance one more time and we are seeing another 9 year cycle top mid 2018. Most likely yields will spend the time until the next major low 2024 in this range 2,1%-3,1%.



- FOREX
I was expecting EURUSD 2 year cycle high and the USD with important low. DXY finished waves 4 and 5 and reversed higher so no surprises at the FOREX front. Very long term USD made 16 year cycle high and should move lower in the coming years. So this move higher for the USD should be a correction and this is wave a with wave b and c to follow.

It looks like the 2 year cycle high came right on schedule. I think we have an impulse lower so we should see more to the downside for EUR/USD.


JPY the same story - I was expecting 2 year cycle high and reversal lower and that is what happened. The next important low(4 year cycle low) is mid-2019 so in the next one year I do not expect surprises to the upside. That is why I am not really bullish about precious metals.

USD/JPY - I was expecting another leg lower to finish a-b-c of B and another surge higher. I think we have yearly cycle low and finished B wave and now wave C is running.



- GOLD/SILVER/MINERS
The forecast was for intermediate term low around the end of the year and a rally, but nothing really interesting to the upside - and that is what happened. Especially silver - flat line.... boring.
The pattern is a mess, no clue what we have, but with the USD/JPY moving up forget about a rally in the precious metals sector. I expect more mess and another intermediate term low around the end of the year.

GOLD - the forecast was one more rally for 2 year cycle high and it looks like we have it. Now watching how lower it will move and how the pattern will look like. USD/JPY showing strength I do not expect surprises to the upside. More likely the next significant low will be again around the end of the year.


Silver - the 4 year cycle is already two and a half years old and with 2 year cycle high behind us the next major low should come in 12-18 months.


Miners - the rally lasted only a month and then.... nothing mess. Currently watching this pattern huge A-B-C and 4 year cycle low next year.


GDX - another guess....



- CRUDE OIL/NATGAS
I was wrong - I thought we will see a top earlier. I think we have huge A-B-C from the low in 2016 which should be finished soon. It was looking like perfect impulse from the low in June.2017, but with the sudden vertical move the pattern looks to me like triangle and a-b-c from the Aug.2017 low to finish the second leg higher C.

The next important low should come in 12 months. Most of the EW guys count this as the top of wave 4 and final plunge below 26 has begun... I am not sure, it could be corrective pattern in a cyclical bull market lasting for a few years. No need to decide right now. Crude oil should move lower for months. When we see the decline we will know which one it is.


From the low in June.2017 we have 5 waves and perfect Fibo measurements, decline and then sudden surge... it does not work every time:)
I think we have a-b-c higher and currently 5 of C is running.


NATGAS - continued with the corrective pattern as expected. I think we have finished corrective a-b-c for wave B and the first wave up from C is running.
Long term we have leg higher(March-Dec.2016) followed by a correction 14 months(Feb.2018) and we should see one more leg higher with important top in Q3/Q4 2019. Top-to-top cycle analysis looks consistent and NATGAS makes important tops every 2,5-3 years.

The pattern was expected, but the speed for the last two waves up and down was crazy - only 7 weeks instead of a few months. Probably that is why now the first wave is developing so slowly five months and counting...
I think we have finished correction and reversal with the first wave up running. We still need to see at least one more high and corrective move lower for confirmation. With the current speed I will not be surprised if it lasts until October/November.


Jun 30, 2018

Weekly preview

Short term view - short term bottom and higher.
Intermediate term view - a few weeks lower for 20 week cycle low and intermediate term low.

I think the mega bullish count 1-2 i-ii and third wave is dead and the market confirmed what I was explaining for a few weeks. Because of the same reasons(too much strength) I do not see a third wave lower either. At the moment with so many corrective waves there so many possible patterns - we can only guess. To sum up:
- we have a messy corrective pattern and one more higher high is expected(red or green daily chart).
- we saw the top for the move from Feb.2016 and much bigger wave 4 is running with a low late 2019 for a 4 year cycle low(yellow daily chart).

What is tradeable - looking at indicators,cycles and market breadth we should see short term bottom, retracement higher and one more leg lower for 20 week or 18 month low - it depends on how strong the sell off is, then final move higher.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - one more low for a finished impulse and test of the lower trend line will look much better.... then testing resistance/MA200 and closing the gap.


Intermediate term - the current guess:) Bullish patterns - finished diagonal and wave 2 lower(green), A-B-C for wave IV(red) and V begins. Bearish - I do not believe in wave 3 lower, more likely some complex corrective pattern. Maybe complex b(yellow) for a huge B wave.


Long term - One more high before a bigger move lower. I can not say with higher high or not, but we will know when the time has come.
The histogram made a huge trough comparable only with the panic in 2008. It is more likely to see a higher trough with a divergence than a third wave lower. The options are finished correction and a rally higher(red/green above) or a huge correction for the indicator to reset(yellow above).


MARKET BREADTH INDICATORS
Market Breadth Indicators - turned lower, but not close to oversold levels. Probably a few weeks before we see intermediate term low.
McClellan Oscillator - below zero.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - sell signal.
Percent of Stocks above MA50 - in the middle of the range .
Fear Indicator VIX - turned up, usually we have a bottom with VIX in the range 22-24.
Advance-Decline Issues - turned lower in the middle of the range.


HURST CYCLES
Day 23 of the 40 day cycle. I think we should see one more time up and down for a finished 40 day cycle.


Week 12 of the 20 week cycle. It is interesting how this move lower will look like. If we see strong sell off the low could be 18 month cycle low - the alternate count which I follow.


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
We have finished buy setup on the daily chart and price flip lower on the weekly chart. The move lower has strength.

Jun 25, 2018

Update

Impulse should look like this on the chart..... looking at other indexes I think it will be finished, but lets wait for confirmation.

Jun 23, 2018

Weekly preview

Short term view - we should see something to the upside.
Intermediate term view - this is huge corrective move for me. When the momentum trade NDX/RUT is over the major indexes SPX/DJI will turn lower.

More of the same crap... technically all bullish patterns are in tact, but I doubt we have an impulse. It is taking too long and for the DOW only the diagonal for w1 looks possible. DJ looks like impulse lower so more to the downside after a pop up, RUT/NDX should correct lower.... in the mean time SPX rallying higher third wave? I doubt it. Again I do not see indicators/market breadth/cycles supporting iii of 3 around the corner. Next week the bulls deliver one vertical move up above 2800 or it is game over.

I see indexes like NDX/RUT/XBI with finished wave IV(Feb 2016) and now finishing 3 of V while SPX/DJI/NYSE with huge corrective pattern. Non confirmation at important top, why not?


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - so far the trend lines and support is holding. Something to the upside from the trend line/support/MA 200 and mid-cycle low will look better. I can not say if we will see higher high or not.... if we see the price breaking below the trend line and support you can say good bye to the impulse patterns.


Intermediate term - the same like last week. Waiting for the market to confirm one of the scenarios - impulse or corrective wave.


Long term - ugly looking indicators. The histogram three positive bars already and no strong rally. RSI with flat angle of ascend testing the broken trend line - normal half of the weekly candles for the "rally" are red. Look at the sell off in February and March two weeks and then we have months trying to retrace... 13 weeks(3 months) trying to retrace the sell off from March, 19 weeks from the February low unsuccessfully so far. I can not see bullish signs only weakness.


MARKET BREADTH INDICATORS
Market Breadth Indicators - turned lower, but too early to say we have strong sell signall.
McClellan Oscillator - below zero.
McClellan Summation Index - turned lower.
Weekly Stochastic of the Summation Index - turned lower.
Bullish Percentage - turned lower.
Percent of Stocks above MA50 - touched the 75 level and turned lower.
Fear Indicator VIX - turned up.
Advance-Decline Issues - several highs, turned lower and broke the trend line connecting the lows.


HURST CYCLES
Day 18 of the 40 day cycle. I am expecting mid-cycle low and final move higher for the top of the 20 week cycle, no guarantee that it will be a higher high.


Week 11 for the 20 week cycle. It should turn lower soon.

Jun 16, 2018

Weekly preview

Short term view - another high then down next week.
Intermediate term view - up and down for several weeks and 20 week cycle low in July.

Boring sideway week... technically nothing has changed and we have the same patterns like last week. The bulls see wave 3 just warming up for strong rally, the bears see finishing 2 and big sell off around the corner. The problem is I do not really like any pattern. Something does not feel right I see a-b-c finished early April. When I look at cycles and market breadth I think it should be something else. This week I am showing different pattern which fits very good - impulse after finished a-b-c for wave IV, cycles are ok with it, it explains the market breadth strength and the expected weakness, it is in sync with NDX/RUT, it explains why the index is sold on strength all the way up(big boys are unloading already). The only problem I see is you have to assume that the move in April is wave 1 and not some corrective crap.

So if this is the pattern what should happen - sideway move for 3-5 weeks with one more high to finish wave 3 then wave 4 with 20 week cycle low second half of July. In the mean time market breadth should deteriorate rapidly(this is the crucial part). Then July-August final rally with poor market breadth and new ATH 2900+ to trap the herd.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - one more wave up to finish impulse from the last low. This will kill the diagonal(see previous week) and we will have only the very bullish or very bearish scenario.... or the alternate one which I am suggesting:)


Intermediate term - the a-b-c is not so obvious masked with higher low, but if you look at NDX/XBI for example it is very well visible as a flat. The caveat is this some ugly wedge for wave 1 in April or is it just some corrective crap.
I am watching now this scenario and alternate is wave B/X and another sell off begins. As long as the index stays above 2740 it is bullish, if price starts overlapping forget about impulses.


Long term - MA 50 tested twice, I think this should be wave 4 and this is the last rally. Waiting to see if this is wave V - it looks good with divergences.


MARKET BREADTH INDICATORS
The previous week I have explained about cycles and now my problem with the bullish/bearish scenario and market breadth.
McClellan Summation index - the usual behavior is after important low we see sharp move to 1000-1200 deep correction then highs in the range 800-900. Currently the indicator reached 750 and the third wave has not even really started... in this case we will see 1000 and above, which does not make sense. This should be the final wave and important top showing weakness not extraordinary strength. On the other hand 750 is sign for a strength, important tops occur usually at lower levels 500-600 with divergences. The bearish case does not make sense either.
So neither very bullish nor very bearish scenario fit very well... the same story with A/D issues.
What could it be? Corrective move not so much visible as price, but market breadth dropping heavily(this will confirm money flow and selling on strength). Then final rally on poor market breadth and divergences. This will be classical top - topping for 6 months, distribution on the way up and final rally with poor market breadth and indicators to trap the herd.

McClellan Oscillator - dropped to the zero line after several lower highs.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal, in overbought territory for several weeks.
Bullish Percentage - buy signal... but not showing much strength so far.
Percent of Stocks above MA50 - touched overbought level.
Fear Indicator VIX - around 12 I doubt wave 3 is just starting.
Advance-Decline Issues - several highs in overbought territory and now turned lower.


HURST CYCLES
Day 13 for the 40 day cycle. Mid cycle low with wave iv of 3 and 20 week cycle low with wave 4?


Week 10 for the 20 week cycle.


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Finished sell setup on the daily and weekly chart, now waiting to see what happens to the downside.

Jun 9, 2018

Weekly preview

Short term view - one more minor high and lower next week.
Intermediate term view - the markets are close to a top and we should see a few weeks lower.

Higher as expected, but not convincing despite the "strength". On the hourly/daily charts are shown all possible scenarios which I see so you can pick your favorite. I think the triangle is dead it takes too long and diagonal has the same trading pattern anyway so I removed it.

Why I am not bullish - because when I look at cycles,indicators and market breadth I do not see a move which is beginning I see a move which is finishing. It took two weeks for a sell off and 17 weeks so far to retrace half of it.... very bullish. When an index is strong it will just make a new high RUT/NDX made it already twice.
Cycles and indicators are pointing to important low early April and one move which begun early April not three different waves(wave E, w1 and w2). Because of this and the mature cycles the scenario with third wave has very low probability and in the bullish case we have diagonal for wave 1 of V or in the bearish case wave 2/B/X or what ever it is.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - one more high is needed for a finished impulse from the last low. RSI is showing the typical pattern for a finishing wave - trend line break/test/divergence. All scenarios so wee can build our trading plan.
- very bullish 1-2 i-ii green labels. For me low probability. The price should pullback for 2-3 days and blast higher above 2900.
- bullish the top of a diagonal yellow labels. The price should drop with a corrective wave to the lower trend line of the channel
- bearish case - big bearish flag for wave B/X/2. We should see impulsive decline at least to the lower trend line of the channel.


Intermediate term - the same on the daily chart. For me RSI says we have one wave from the April low and not three distinct waves.


Long term - I think there is a danger that we are seeing the last rally higher, which I am talking about all the time. Again RSI is not behaving like broken trend line and retest with the final high, it behaves so far like the trend is over.


MARKET BREADTH INDICATORS
Market Breadth Indicators - nothing new Advance-Decline Issues and McClellan Oscillator with several lower highs, VIX below 12 a lot of complacency again.... I do not see how this is the beginning of wave 3, this is the end of a move.
McClellan Oscillator - several lower highs with divergence.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal in overbought territory.
Bullish Percentage - in the middle of the range.
Percent of Stocks above MA50 - heading higher nearing the overbought level.
Fear Indicator VIX - readings below 12 and a lot of complacency again, it does not looks like the indexes just starting the strongest wave higher.
Advance-Decline Issues - several lower highs with divergence.


HURST CYCLES
Day 8 of the next 40 day cycle.


Week 9 of the 20 week cycle. I think the important low was in April(40 week cycle with average length 33 weeks) that is why we have 9 weeks "rally". It is consistent with the daily chart above. One 20 week cycle consist of two 40 day cycle and second one is running now.
Cycles are the main reason because I am not bullish. It will be very unusual if we see suddenly the price shooting up vertically at the end of a cycle after months doing nothing at the beginning of the cycle.
- the top-to-top 20 weeks cycle which I have shown last week is 19 weeks old nearing the top. We have 2 weeks lower and 17 weeks trying to retrace. This is not a bullish behavior.
- we have the current 20 week Hurst cycle at week 9. The average length is 14-18 weeks so 2/3 to 1/2 is already behind us. The strongest part of a cycle is the first half of it and not the second half or the last 1/3.


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Week 8 of a sell setup. Probably it will be finished it is important what happens after that, how deep the decline will be.

Jun 2, 2018

Weekly preview

Short term view - higher I think.
Intermediate term view - the indexes are close to intermediate term top.

Volatile week sharp sell off to the support level and bounce higher... at the end more sideway price action.

To sum up all scenarios:
- the bullish case - wave 3 running. I do not see how this mess is a third wave. I do not see neither indicators nor market breadth nor cycles or something else to support this idea.
- the less bullish case diagonal or wave E triangle. From trading perspective they are the same - deep retracement, higher low and strong rally.
- the bearish case - 1-2 i-ii lower. I do not believe it and indexes like RUT/NDX do not support it.
- the less bearish scenario - much bigger corrective pattern is running. I have already mentioned it a few times.
All I see is corrective price action in the last two months, strength is missing. The scenarios which are probable for me are the the less bearish/bullish pattern shown on the daily chart. Maybe RUT looks strong, but if you see NYSE/XLF there is no strength only weakness... even the triangle looks too bullish.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - support tested and a bounce.... only a-b-c so far. Around 2755 wave c=a so probably a few more days higher. Unless we see strong rally above 2760 the pattern is diagonal or D from a triangle and the next move is 100+ points lower.


Intermediate term - just waiting to see which one will play out. If we have a diagonal or triangle(green) MA200 will be tested one more time and finally strong rally begins. Or we have bigger corrective pattern(red) and wave X is running followed by another zig-zag lower.


Long term - nothing new the sideway price action continues which is not bullish. From 9 weeks "rally" we have 5 green and 4 red weeks. For DJI it is 4 green weeks and 5 red weeks and for NYSE 3 green and 6 red weeks. That is why RSI is just flat and testing the broken trend line. That is why the histogram is already close to zero and the price is doing noting. That is why the angle of ascend is small. I do not know how to call this bullish... after 2 months I would call this bearish.
Unless we see 100 points higher in the next 1-2 weeks it is what it is - crap.


MARKET BREADTH INDICATORS
Market Breadth Indicators - are weak, looking at the VIX, Advance-Decline Issues and McClellan Oscillator I see intermediate term top even if we see higher high. I do not see conditions for strong rally wave 3.
McClellan Oscillator - series of lower highs.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal in overbought territory.
Bullish Percentage - in the middle of the range.
Percent of Stocks above MA50 - in the middle of the range .
Fear Indicator VIX - do not expect levels 9-10, I think the VIX is making a low and the indexes a high.
Advance-Decline Issues - series of lower highs.


HURST CYCLES
Day 40+3... 40 day cycle low is possible.


This is the chart with cycles counting top-to-top/bottom-to-bottom(not Hurst cycles), which I have shown once.
We have now 4 consecutive weeks closing above MA10 which means the top-to-top cycle is now rising heading for the next 20 week cycle top. The problem with the bullish case is that the cycle spent most of the time moving lower and it is already 18 weeks old, which is weak cycle. The behavior matches corrective move and not the beginning of a rally(wave 3 rally another 1-2 weeks higher to finish corrective pattern is ok) .


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Week 7 of a sell setup. Maybe it will be finished with a diagonal/triangle... or negated. Both cases are not very bullish

May 26, 2018

Weekly preview

Short term view - more of the same then final push higher and reversal.
Intermediate term view - too many options the best for me is a triangle.

Another sideway week... the pattern looks like some b wave. I do not think it is small degree wave iv from an impulse lasting two weeks is way too long.
I doubt it is wave 2 market breadth and the indicators do not support wave 3. So sticking to the plan wave D of a triangle or alternate if we see deeper push lower to support it is possible that this is wave 4 of a diagonal.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - shallow pullback lasting for so long is most of the time some connecting wave x/b. The first leg up from the April low consists of two zig-zags. The leg lower consists again of two zig-zags. From the May low we have one zig-zag up and connecting wave running now - the odds are higher that we will see another zig-zag up for a double zig-zag like the previous two legs.
So as long as the price stays above MA200 the 2690-2700 area I expect another zig-zag to finish wave D of a triangle - main scenario.
If we see deeper retracement to support 2670-2680 area it is possible that we have a diagonal - alternate scenario.
If the price breaks below support wave E is running already - low probability at the moment because reversal pattern is missing.


Intermediate term - I just can not see impulses all corrective waves and too many options to trade with conviction. Just waiting and preferred scenarios is wave D from a triangle.


Long term - nothing new waiting for he market to reveal it's intentions. I do not see imminent reversal and sell off.
So far the move up is very disappointing - look at the angle of ascend for the price and RSI.... the histogram is resetting close to zero and price is doing nothing. This is not bullish price action.


MARKET BREADTH INDICATORS
Market Breadth Indicators - nothing impressive, in the middle of the range.... nothing bullish, nothing bearish.
McClellan Oscillator - series of lower highs and moving lower close to the zero line.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal in overbought territory.
Bullish Percentage - in the middle of the range.
Percent of Stocks above MA50 - in the middle of the range.
Fear Indicator VIX - complacency again I doubt that the indexes will rally higher.
Advance-Decline Issues - series of lower highs.


HURST CYCLES
Day 39 of the 40 day cycle - I think it made a top and now we are waiting for the low.


Week 15 from the last important low in February. If we have a triangle expect 20w/40w/18 month cycle low when it is finished and I will revert to my initial count.


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
The setup could not be finished, it was negated at day 8. This is another signs for weakness and I doubt we have an impulse.
The histogram on the daily is resetting lower, but the price moves sideways - not a bearish price action. Most likely we will see a few more days to finish corrective pattern and a move higher.