Nov 10, 2018

Weekly preview

We saw another higher high as expected, but much stronger and this changes the intermediate term picture a little bit. Such price behavior feels as part of corrective structure.... I know what you will say how could it be so strong and corrective:) That is the problem we do not have "stable" price behavior we have erratic price swings which is common for corrective structures.

Either it is a-b-c or if we see one more high impulse but way too strong for wave i of 5. If I am right than the possible patterns are wave X from a complex correction or wave iii of 5 of ED. The indicators and market breadth just turned up from very oversold levels and it is too early for another reversal lower. I expect something like 50% retracement in the next 2-3 weeks and another leg higher.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - it looks like a-b-c to me... one more high for impulse can not be ruled out, but this will not change much the big picture. After that 50% retracement expected and the pattern will look like inverted H&S.


Intermediate term - retracement and another leg with the same size to the upside... either connecting wave X from complex correction or wave 3 of ED(last chart DJ better visible). ED is more common pattern than such complex combination of corrective patterns... we will see in a few months. For trading the direction for the next 3-4 months is the same so it does not matter.
RSI is respecting the trend lines - testing the upper trend line defining the down trend and it is time to pullback lower to more sustainable trend line.


Long term - a few months to the upside before we can think about a top.


MARKET BREADTH INDICATORS
Market Breadth Indicators - turned up and we have buy signals.
McClellan Oscillator - overbought levels, which is sign for a strength.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal.
Bullish Percentage - buy signal.
Percent of Stocks above MA50 - moved up to the middle of the range .
Fear Indicator VIX - moving lower, expect another higher low for triple divergence.
Advance-Decline Issues - heading higher nearing overbought levels.


HURST CYCLES
Day 9 of the 40 day cycle. Most likely the retracement will mark half cycle low.


Week 2 of the 20 week cycle.


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Despite all this selling we have two failed setups to the downside which was a warning for the bears. In contrast we have finished setup to the upside which means strength.


DJ is stronger than SP500 - it made higher low above the June low and retraced big portion of the decline 76%. One more leg higher with the same size and we will see a new ATH hitting the upper trend line.... and the pattern will scream ED.

Nov 4, 2018

Weekly preview

We saw one more low and really nasty bear trap with reversal in the last 15 minutes. The signs for an intermediate term low were obvious, but of course it is scary to trade such volatility. With overlapping structure this second sell off was doomed to fail and one week later most of it is erased. We have impulse higher so next expect retracement lower and more to the upside.

The big picture - we should see a few months higher. The bearish case wave B to test the two tops from January/September, the bullish case new ATH... I will not be surprise to see ATH with corrective wave B either.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - I wrote that one more lower low is possible with oversized ED.... it though this has lower probability - well it happened.
Now the move higher looks like impulse, which confirms the reversal. I am not sure if this high is 3 or 5... with one more high we will have impulse with better FIbo measurements, testing MA200(hourly and daily), testing the RSI trend lines (daily chart), indexes like RUT and DAX need one more high for impulse, if you look at previous correction we have roughly 2 weeks higher and 2 weeks lower to test the low 3-4 days higher is too short.
I want to say that one more move higher next week Tuesday/Wednesday will look much better.


Intermediate term - it is official we have overlapping and the move lower is only corrective a-b-c. With this final low on Monday the Fibonacci measurements look perfect with a=c(for C) and A=C and for the trend line the shadows are included. The price is nearing resistance and MA200, the low should be tested and the gap closed, but this will be a buying opportunity.
The bulls see 3000 at the end of the year, but I think the index will spent the rest of the year between support/resistance zone for a-b-c->X or 1-2 i-ii.


Long term - the histogram with huge trough like 2011/2015/Jan.2018 it will take months to reset, RSI confirming a-b-c. We have an intermediate term low which will last for months. Now waiting to see how the move up will look like to confirm one of the two scenarios.


MARKET BREADTH INDICATORS
Market Breadth Indicators - most of the indicators are turning up after divergences. It will take time, I do not see V shape recovery.
McClellan Oscillator - above zero after triple divergence.
McClellan Summation Index - turned up from extremely oversold level.
Weekly Stochastic of the Summation Index - trying to turn up from oversold level.
Bullish Percentage - buy signal.
Percent of Stocks above MA50 - turned up and trying to move above 25 level.
Fear Indicator VIX - moving lower after a divergence.
Advance-Decline Issues - moving higher after a divergence.


HURST CYCLES
40 day cycle was finished which is not a big surprise, now day 4 of the next 40 day cycle is running.


Week 1 of the next 20 week cycle. I think we have 18 month cycle low.

Oct 27, 2018

Weekly preview

I have added charts below - for those who think we have a major top, correction has just begun, it is very bad third wave etc. I have a news for you the correction is not running for a few weeks it is running for 10 months already. Look at the charts below and look at SP500 no difference a-b-c in a channel but masked with higher high. I do no know how many times I have to explain it.....


I thought this b wave will take a few more days... I was fooled by this candle with huge shadow on Tuesday. No wonder this week we saw really crazy things 5-6 reversal 60-80 points each. At the end the pattern is overlapping crap, diagonal comes to my mind - wave c which should be done and we saw a reversal on Friday.

This move lower has all attributes of important intermediate term low. Since 2009(see cycle chart) this is the 8th sell off 10% or more. They all look the same - 5-6 weeks lower and most of the selling is concentrated in two weeks, on four occasions the low was tested one more time (2011/2015/2016/2018). Currently we have week 5 with 2 weeks selling... we will see a bottom soon(probably already done) statistically there is 50/50 chance the bottom will be tested. Looking at the indicators and market breadth which all point lower the probability is higher that we will see a retest. They need time to flatten and reverse.
Market breadth confirms it - we are seeing levels which are common for important intermediate term lows with serious selling pressure. Cycles - 18 month cycle low is expected. The wave pattern starts looking complete on many indexes not only in the US.
For me the signs are that we are at an intermediate term bottom and multi month move higher. Most likely we will see bottoming process first taking a few weeks, V shape bottom is less likely.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - overlapping mess probably diagonal. The important message - it is not an impulse. You can count a-b-c or 1-2-3-4-5(diagonal) it does not matter it smells like intermediate term low.
There is a slight chance to see one more low if you count the high on Tuesday as wave 4 and than a diagonal which needs one final low. The problem with this count is at the same time you count strength fifth wave extension and in the same time weakness diagonal.


Intermediate term - the lower trend line was touched if you ignore the long shadows, this is ok with trend lines. What happens next? There is two options - one more ATH(green) or B(red) to the resistance zone. We will have enough time to decide which one it is... no need to choose now.


Long term - the same on the weekly chart - ATH(green) for the bullish scenario, H&S for the bearish(red).


MARKET BREADTH INDICATORS
Market Breadth Indicators - extreme levels common for important corrections and divergences. Interesting is on Wednesday we saw huge sell off and A/D issues and the McClellan Oscillator barely moved lower.... most likely only a few big names moved the indexes lower.
McClellan Oscillator - after extreme we have triple divergence.
McClellan Summation Index - sell signal, very deep dive since 2009 only in 2016 at 4/8 year cycle low we saw such deep move lower.
Weekly Stochastic of the Summation Index - sell signal, at oversold level, waiting to turn up.
Bullish Percentage - sell signal, only in 2011 and 2015 we saw lower levels.
Percent of Stocks above MA50 - another extreme with divergence.
Fear Indicator VIX - lower high and divergence.
Advance-Decline Issues - did not move lower after such fear and sell off.... strange my only explanation is a few big names dragged the market lower.


HURST CYCLES
Day 35 for the 40 day cycle, the indexes are close to a bottom or it was hit already.


Week 17 for the 20 week cycle.... it looks like 18 month cycle low to me.




I showed NYSE chart and explained why we have big correction and it is wave B up. Below the updated chart - I am "shocked" what happened. The worst what we can see is the expected test of the low in November to be a lower low, after that it is multi month rally up.


DAX exactly the same the indexes are synchronized at important highs an lows and at the end the pattern is the same.


Market breadth percent of stocks above MA50 - in a bull market it moves in overbought territory stays there for months and correction pushes back briefly to oversold level followed by quick move to overbought, in a bear market it is the opposite. What we have in January - April oversold for a few months push to the upper boundary failed despite the "strong rally" and plunged to oversold again. Classical indicator behavior.
What we have? - a-b-c Do you get it why I was explaining correction no 3200? Do you think I was wrong? I will dear to say I was right, than will some one explain me why this is not just wave C and it is something else?

Oct 20, 2018

Weekly preview

We have the bounce higher, but it feels more like b wave and not 4. You can count impulse with perfect Fibo measurements, the move higher retraced 50%, Demark setup lower has not been finished... for me this is not 4 but b is running already.
Whether b or 4 it does not matter for the big picture - expect one more low in a few weeks and higher for a few months.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - I think wave b is running and it will test resistance and the broken trend line around 2850.


Intermediate term - I expect 1-2 weeks bounce between MA50 and MA200 for wave b and one more sell off. For something really bearish(red) we should see a move below the trend line and new lows around 2500.


Long term - I can not see major top(V red), I think something more complicated is running either 4 of III or complex IV.


MARKET BREADTH INDICATORS
Market Breadth Indicators - trying to move up from oversold levels. I think we will see a small divergence and up (wave b) followed by a bigger divergence a few weeks later for an intermediate term low lasting a few months.
McClellan Oscillator - resetting after very oversold levels.
McClellan Summation Index - sell signal, heading for values below -500 which is typical for important intermediate term lows.
Weekly Stochastic of the Summation Index - sell signal, in oversold territory.
Bullish Percentage - sell signal, but strong so far, around levels for an intermediate term low.
Percent of Stocks above MA50 - bounce higher from very oversold level.
Fear Indicator VIX - pulling back after high levels close to 30. I expect another lower high followed by another higher low for multiple divergence.
Advance-Decline Issues - bounce higher from oversold level. I expect to see divergence before the indexes hit a low.


HURST CYCLES
Longer 20 week cycle expected, so most likely two longer 40 day cycles and the second one at day 29 with four 20 day cycles.


Week 16 of the 20 week cycle. I think we will see a few more weeks for 18 month cycle low, average length is 64-66 currently week 61.


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Interesting is we do not have finished setup despite the sell off, which makes me think we have wave b and not 4 running.

Oct 14, 2018

Weekly preview

The price was not responding to market breadth and US indexes looking like decoupled from the rest of the world.... and then for two days they caught up and price is at levels at which it is expected to be at the right time. My primary scenario was wave C lower and 18 month cycle low in October, but we saw continuation higher in September and I have started to doubt and consider the possibility of one more high.... then boom two day mini crash. I do not know how to predict them, but at least the tools tell me which is the right direction.

Now what to expect:
- short term the usual behavior when we see so much fear - strong bounce and test of the low. The pattern looks like an impulse so I expect lower low with divergences.
- intermediate term - we have a lot of fear Fear&Greed at 5(levels lower than February 2016 and 2018), market breadth is telling me to expect intermediate term low, RSI at 17, cycles at least 40 week low.... all this are signs to expect intermediate term low and multi month move higher.

What are the possible scenarios:
- the top is in, we have reversal and this is the first wave lower. In this case I expect to see corrective move higher in November... more likely until Christmas, the traders should forget the pain before continuation lower. This is the minimum which I expect, but I give it lower probability because bear markets usually start slowly and not with max fear to scare everybody for two days. This is typical for a bull market to purge greed after the traders getting too greedy.... do you remember the comments DJ 30k in 2017 and now?
- corrective structure a flat is finishing and one final high before a big correction - at the moment this is what I see from the charts. EW I have explained that I see corrective structure and you do not have a major top with wave B, cycles I think this is 18 month cycle low(more below), market breadth pointing to intermediate term low of higher magnitude, which will last for a while(months).


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - I see 1-2-3 lower, now strong bounce from oversold levels and one final move lower to finish impulse. If we see continuation to 2800 we will have a-b-c hitting resistance with c=a and 50% retracement. 2800 is very strong resistance(see the chart below) the price has nothing to do above this level if we have more to the downside.


Intermediate term - RSI with extreme so expect bounce higher and lower low with divergence. After that I expect minimum the price to visit the 2800-2850 resistance area and RSI testing the trend lines. In November the indexes should move higher and we will see if the move is weak or strong and we will know what is going on if we have a reversal(red count V->1-2) or to expect new ATH(green A-B-C->V).


Long term - preferred scenarios is C wave for a flat correction(green). This is what my tools are telling me.


MARKET BREADTH INDICATORS
Market Breadth Indicators - oversold but need some time for bottoming and divergences. The levels and behavior are pointing to intermediate term low which should last for a while... months.
McClellan Oscillator - very oversold bounce and higher low expected.
McClellan Summation Index - it will reach -500 soon, expect important intermediate term low.
Weekly Stochastic of the Summation Index - in oversold territory, it should bottom in the next 1-2 weeks and turn higher.
Bullish Percentage - sell signal.
Percent of Stocks above MA50 - very oversold levels, bounce higher and higher low with divergences expected.
Fear Indicator VIX - too fast too high roughly 29, levels asociated with corrections of higher degree. Now it should make lower high and move lower making another higher low for multiple divergence.
Advance-Decline Issues - in oversold level.... it should stay there for a while and we should see at least one more low.


HURST CYCLES
I was following a cycle model for a long time which was expecting 18 month cycle low in October, but price was refusing to move lower. In September the market continued higher when it should have been topping and heading lower.... and I threw the towel:) switching to alternate model.
With the current price action the price is where it should be at the expected time.... how two days can make a difference.
I switched back to my cyclical model with 18 month cycle low in October expected in the next 1-2 weeks. At the moment it looks like we will see a bottom above the Feb-April lows which means low above the previous 40 week and 18 month cycle lows and according to the cycle theory the next 18 month cycle should make higher high.
The longer term cycle 4 year are influencing the shorter cycle 18 month cycle. Here is how the cycles with different length interact - the first cycle very strong, the second one starting strong and the second half sideway move, the third one should make higher high(the previous one making higher lows) in the first 1/3 of the cycle and then it should drop below the January low.


Day 24 or 42 depending how you count 2 or 3 daily cycles. In both cases we should see a low in the next 1-2 weeks.


Week 15 for the 20 week cycle, it is already mature and in the time window for a low.


SOX something to think about (BA from DJI index has the same chart) - why I am considering the possibility that we have only wave III from 2009 and the current pattern(2018) some kind of correction.
You can count finished impulse 1-2-3-4-5 from 2009 and in this case for a reversal you need impulse lower for confirmation. This means another two months lower to finish 3-4-5 at the moment it is only a-b-c....
I see long sideway move and the indicators resetting - MACD back from the moon to Earth(zero). I think it counts better as 4 and 5 to finish III and it fits perfect with cycles 4 year cycle highs and lows.

Oct 6, 2018

Weekly preview

The price action this week is not surprising, say bye bye melt up and SPX at 3200. It was so obvious even for a newbie just looking at the RSI... of course most of the traders for in love and did not want to see it for what it is. Relentless melt up is the third wave this is in the past 2017 now it is 2018.

Apart from that nothing new to add the same analysis wave 3 or B. I can not say for sure which one until I see how the move lower develops. The odds are higher that we saw the top of wave 3 and 4 is running. Why? - because this "plunge" occurs above MA50 and because of market breadth and especially the McClellan indicators. They are in corrective mode since the beginning of September 5-6 weeks already and price is following at the late stages when we should start looking for a bottom. Such price action is typical for a correction. The 20 week cycle is already at week 14 and a low is expected in the next few weeks. The market is narrow only a few shares holding it up and this shares will look better with a correction and one more high example - BA , UNH , AAPL for DJ and AAPL,AMZN,MSFT for the tech stocks.
Reversal and wave B is of course possible, but it has lower probability and I need to see a confirmation first - the price moving fast lower with impulse below 2800 in the next 2-3 weeks when a low is expected.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - DJ hit its target the trend line, SP500 did not... I do not know do we have finished ED or some choppy corrective pattern... it is not important.
At the moment I think we will see a bounce higher above 2900 to test MA50 and another leg lower with the same size to hit the lower trend line. For something more bearish(wave B running) the price has to move decisively below the trend line and support.


Intermediate term - all indicators look bearish, so I do not think it will just reverse higher... we should see continuation next week to finish at least corrective zig-zag. RSI was signaling very clear what is happening, the trend lines working perfect as usual... if you do not want to listen or do not know how to listen... well it is your problem the market was sending clear message.


Long term - bearish indicators with divergences too, but one more high could not be excluded... just waiting to see what the market will do.


MARKET BREADTH INDICATORS
The Market Breadth Indicators - price is following now.... usually when market breadth is in a sell mode for a while and price follows in later stages this is only a correction. More interesting is the big picture - AD cumulative is reacting very strong lower to a simple pullback. Only Brexit and the January sell off showed such weakness. I think we will see the missing AD divergence which usually signals an important top.
McClellan Oscillator - below zero since the beginning of September and mildly oversold, expect a move higher.
McClellan Summation Index - sell signal nearing the zero line.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - sell signal.
Percent of Stocks above MA50 - in the middle of the range, move to the oversold level 25 would be nice for a finished correction.
Fear Indicator VIX - not a surprise divergences and higher. I expect to see one more higher low before important top.
Advance-Decline Issues - plunging lower heading for the oversold zone.


HURST CYCLES
Day 37, but as I wrote the last two weeks three shorter cycles and day 19(yellow) will look better. It does not matter, in both cases we should see at least one more week lower for a correction.

Week 14 for the 20 week cycle, it is not a surprise that price turned lower instead of "melting up". It is time for 20 week cycle high(check) and a few weeks lower.

Sep 29, 2018

Weekly preview

Small move lower as expected, the analysis has not changed. Next few weeks should be interesting, the pattern should reveal itself - w4 or B or melt up. Next week bulls should pray the price to blast vertically higher or the melt up fantasy is gone.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - so far another zig-zag which is consistent with the ED, which I am showing for a few weeks. Move below 2886 will negate it and wave4 is already running. I think we will see a small bounce higher, but I can not say if it will make new high or not.


Intermediate term - again preferred pattern waves 4 and 5, but B could not be excluded. We will wait and see how a move lower looks like - impulse or correction.


Long term - looking at the histogram(turned lower with small divergence) the move looks mature and ready to roll over. We still could see one more high(wave v of 5) and lower high the histogram with bigger divergence, but rally for a few months is very unlikely.


MARKET BREADTH INDICATORS
Market Breadth Indicators - turned lower, but price is not following so far. This means it is more likely to see just a correction wave4 and one final high than reversal and wave B.... unless price plunge heavily.
McClellan Oscillator - spending a lot of time below zero.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - another high and turn lower.
Percent of Stocks above MA50 - turned lower, around the middle of the range .
Fear Indicator VIX - turned up, expect multiple divergences before reversal.
Advance-Decline Issues - tested the broken trend line and turned down again, interesting is cumulative A/D is showing weakness for the first time.


HURST CYCLES
Day 32 for the 40 day cycle, alternate we have 3 shorter cycles and this is day 14(yellow).


Week 13 of the 20 week cycle.

Sep 22, 2018

Weekly preview

DJI catching up with SP500 and gives the impression that stocks will go to the moon. The bulls cheering seeing of course 3 of 3 of 3 melt up for months... nice fantasy. The character of the market has not changed - neither the pattern nor market breadth nor the indicators nor cycles suggest that something changed.
So far SP500 is testing the trend line one more time with divergence nothing more. Short term I see corrective waves most likely the ED which I am showing in the last few weeks. Again no melt up before move lower.
More interesting is the big picture - either wave 3 is finishing or wave B so no change either. I think wave 4 and 5 to complete the move from 2016 will look better, but wave B could not be excluded as a possibility at the moment.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - RSI shows series of zig-zag moves... I can not see the impulse. Probably the ED which I am showing for a while with shorter wave ii. If this is the pattern expect lower until FOMC next week and one more high. Alternate this is wave b and decline for wave c will follow.


Intermediate term - MACD,RSI,histogram are saying toping not the beginning of multi month rally. Topping should continue the last week of September and in October at least MA50 will be tested. This move lower should clarify the big picture which pattern is running - impulse with 4 and 5 to be finished or wave C lower for 6-9 months.


Long term - no change waiting to see how the big picture will look like... one more high or not before a bigger decline. Again looking at the RSI and the histogram multi month melt up is a fantasy.


MARKET BREADTH INDICATORS
Market Breadth Indicators - the same turned up, but no run higher or overbought levels etc. to show strength.
McClellan Oscillator - around the zero line, most likely one more high with divergences.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - turned up, another high below overbought level.
Percent of Stocks above MA50 - turned up, another high below overbought level.
Fear Indicator VIX - divergences, I hear again VIX 9 and staying there - clear fantasy. Expect multiple divergences when we hit the top.
Advance-Decline Issues - turned up, around the middle area.


HURST CYCLES
Day 27 of the 40 day cycle.... sometimes the 20 week cycle consists of three shorter daily cycles instead of two 40 day cycles. This one feels like we have three daily cycles - the yellow count.


Week 12 of the 20 week cycle. It is time for a pause not a rally.

Sep 15, 2018

Weekly preview

Nothing new retracement higher as expected. I think we are seeing a high and correction should follow with intermediate term low in October. Looking at cycles and market breadth I do not see how this is the beginning of iii of 3 and multi month rally. We will see a rally into year end, but first a correction to kill the dip buyers.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the most bullish pattern I see is ED(yellow) if we have a shallow pullback. Looking at cycles and different indexes/shares a bigger correction for a few weeks will look much better.


Intermediate term - even if SP500 makes a new high this will be just another touch of the trend line with MACD/RSI divergences. I do not see the beginning of a strong rally. Market breadth and the indicators are topping and not resetting for a run higher.


Long term - the same story... the histogram and slow stochastic are topping and not preparing for a run higher.


MARKET BREADTH INDICATORS
Market Breadth Indicators - no change I see topping indicators with some already flashing red.
McClellan Oscillator - resetting higher after plunge lower.
McClellan Summation Index - sell signal with divergences.
Weekly Stochastic of the Summation Index - sell signal, turned lower with double top.
Bullish Percentage - hanging below overbought level after another top.
Percent of Stocks above MA50 - hanging below overbought level after another top.
Fear Indicator VIX - expect series of higher lows and multiple divergences.
Advance-Decline Issues - broke the trend line and made a lower low after holding the trend line for months.


HURST CYCLES
Day 22 for the 40 day cycle. I think me have mid-cycle low at day 17 and after this high the indexes should turn lower for a few weeks.


Week 11 for the 20 week cycle. The average length is 14-18 weeks. At week 11 the cycle is mature we have 3 sideway weeks and I think the 20 week cycle is topping and it will turn lower.