Intermediate term view - topping in January and lower in February
In the last two posts I have shown that something more bullish is going on - the counts are changed accordingly. I see five waves for the week and five waves from the low in the end December with divergences on the hourly chart. So I expect something lower next week, but I think this will be a correction with another higher high with divergences on the daily chart. This top late January should be the top of the 20 week cycle and bigger correction for a few weeks should follow in February. Worst case this is the intermediate term top with a deep retracement, but I do not expect sudden plunge before the end of January(FOMC 31.01). Last week market breadth indicators were positive, but this week Bullish Percentage and Percent of Stocks above MA50 turned lower, VIX is higher since last week, A/D issues with more divergences. Of course this is early warning and there is no sell signal, but the last positive sign is turning negative. Maybe we will see a divergences developing in the next 2-3 weeks. TECHNICAL PICTURE and ELLIOTT WAVES
Short term - now I think the count should be started from the November low(see the previous post). In this case we should see one more correction and a high for an intermediate term top.
Intermediate term - this is the count from the previous post. Alternate this is the top of wave III with extended fifth wave. Interesting is both follow the same path until the 18 month cycle low in the summer. This is good for trading:) just follow the market and in summer the market will show it's cards.
The RSI erased the divergence and shows strength so the probability is higher that this is a third wave with 4 and 5 to follow before an intermediate term top (yellow 3 late January).
The next important lows are late Feb/March and late June/July 18 month cycle low.
This is the alternate scenario with the top of wave III. Put aside EW what we have is weekly RSI close to 90 which is crazy, price extremely stretch far from MA200 daily(MA50 weekly) so in the first half of 2018 we should see reverse to the mean - the price will drop lower to the MAs.
Long term - one more correction and a rally before turning very bearish. I am not sure if the indexes are heading higher for the final top or just the third wave. The wave into the June/July low will invalidate one of the both scenarios.
MARKET BREADTH INDICATORS
Market Breadth Indicators - now most indicators are not following the rally. Some toping is needed no sell signals so far.
McClellan Oscillator - above zero and more divergences.
McClellan Summation Index - buy signal, but clear intermediate term divergence.
Weekly Stochastic of the Summation Index - buy signal, in overbought territory.
Bullish Percentage - turned lower, but still buy signal.
Percent of Stocks above MA50 - turned lower, but still buy signal.
Fear Indicator VIX - is not following the indexes with lower lows, 6 green candles in the last 7 trading sessions.
Advance-Decline Issues - intermediate term and short term divergence now.
HURST CYCLES
Day 39 of the 40 day cycle. A pullback next week should be the low of this daily cycle.
Week 8 of the 20 week cycle, in the middle of the cycle.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
If we see the final high around FOMC 31.01 we will have finished countdown on the weekly too.
So this is the top? How high do you expect uvxy? And it seems gold goes up if SPX goes down. That means GOLD still need some time for topping? Thanks.
ReplyDeleteThis should be only a short term top.
DeleteUVXY should test the low and rise at least 50%.
Gold has noting to do with SPX daily moves. PM should correct now and then move higher again.
Thanks. About "UVXY should test the low and rise at least 50%", what's the time framework? During the short term wave 4 in the above chart? or Until wave 5 is finished? I'm not sure whether only the above wave 4 can cause uvxy blow up to 50%?
DeleteThe small move lower without label on the first daily chart should be the current move up then test of the low (3 yellow on the chart) up 50% or more 4 yellow on the chart.
DeletePlease you can do an analysis about the Coffee Futures and the Eurostoxx Banks Index? Thanks
ReplyDeleteThis is just a quick review I do not follow them:
DeleteCoffee - every 4 years there is important low 4 year cycle low, now it is in the time window for such low. EW not so clear I suspect a triangle is running either from the 2013 low and one more leg to around 160 is missing E or from the 2014 and wave D to the same level. Deeper analysis is needed to say which one.
Eurostoxx Banks - no enough history for cycles, EW look like the final fifth wave from the Jul.2016 low is running so up to the 121-125 area.
Thank you very much.
ReplyDeleteHi Krasi,
ReplyDeleteWas that the brief top? Move up very aggressive this morning.
Kali
Yes, this should be the brief top, but one more leg lower for a-b-c will look nice. If the correction is over and we see a higher high today/tomorrow it should be short living some nested version iv-v 4-5. The indicators do not look so good anymore.
DeleteSo current small wave 4 should be below 2750 or closer to daily chart EMA50? Then it should be another wave down and UVXY should be continue higher to reach EMA50, i.e. about 11~12? Thanks.
DeleteSPX more like 2750. UVXY I do not know 10,50... it depends on how much fear we have. This first move was sharp sell off so "c" wave could generate less fear.
DeleteYou can not compare such short term moves. For example the indexes melting up and VIX/UVXY higher in the blow off phase. I was really surprised.
Thanks. Now it looks interesting because SPX higher high.... so the move was iv->v and another level of wave 4 expected? I mean the white 4 in the above first chart to 2750...
DeleteEven the small wave 4 is still missing... next week is possible? Because only 9 trading days left for this month. Is there enough time for a wave 4 and 5?
ReplyDeleteI think the price action develops as expected - either a top or a correction wave 4 before the top.
DeleteYou do not try to short the blow off top we have RSI showing a lot of strength - you try to short higher high with divergences or confirmation impulse lower and lower high. It is just beginning and will take time 1-2 weeks. FOMC on 31.01 and often we see a top/bottom around FOMC. This fits as a time window that is why I said the end of the month. It is not a precise science it could be a few days earlier or later.
Btw I think RUT and EEM made a top so the top could be in and you do not need wave 4.
Krasi, thanks for your nice work. By the way, I remember you once answered a question from another reader that the HSI shall drop to 27,500 before making new high. However, HSI rose like a rocket to now 32,900 already which is around 2,000 points more since you last answered. So can I have your updated view on HSI now? Thx thx.
ReplyDeleteI do not follow HSI. I think I was expecting a-b-c correction, but instead of b it has just continued higher. The same crap like EEM and SOX impulse lower and instead of a correction waves b-c continuation higher.... I was expecting a little bit below 28k.
DeleteThe wave from the 28k looks mature, short term like the US markets one small 4-5 possible(I do not have hourly charts). Long term this should be the top of wave 3 from the Feb.2016 low.
Thanks a lot Krasi!
Delete