Intermediate term view - finished corrective move, probably testing the low one more time and higher.
It was obvious that there is more to the downside, but I can not predict flash crash and the speed of the move was really crazy. After the crash on Monday I thought the patterns are invalidated, but looking at the charts I saw that everything is fine. How can I predict A-B-C to MA200 / 0,382 retracement and reversal from the 2540-2560 area - no I do not know the futures, just the market follows the rules exactly to the letter. This is a good news the market is not running amok and we can continue following the chart analysis.
I see finished zig-zag at MA200 and 0,382 Fibo level. The European markets and SOX just finished impulse lower which was the final wave of an expanded flat for wave IV, EEM and XBI with clear zig-zag. All this seems to confirm that we do not have an impulse lower just a corrective move. The options are wave IV is finished and wave V has begun or this zig-zag is part of a bigger pattern most likely wave A of a triangle. Market breadth and the indicators are still pointing lower no reversal signal, there is a lot of fear so I think we should see a test of the low with a higher low before the indexes really start rallying. V shape move looks unlikely average Joe is scared:) Interesting is we have panic and no flight to safety bonds and gold. The correlation has changed bonds and stocks get hurt by rising yields and sink together. It is possible that TLT is finishing wave B of a flat correction instead of a triangle. If this is the pattern and if the correlation really changed TLT and SPX will have exactly the same path until the summer. P.S. some one asked about TLT targets in this case the target is higher around 117 not 115. TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the price is well below MA50/MA200 and most likely every move up will be met with selling until the dust settles down. Choppy moves in the next 1-2 weeks, but higher lows.... we have already overlapping the only surprise I can see is one more leg lower for leading diagonal.
Intermediate term - Fibo 38,2% retracement/MA200/the trend line hit and strong reversal in 2 weeks, this wave IV is really breathtaking:) A few weeks needed to confirm a bottom and no new lows:) I think this are the two possible patterns a few weeks or a few months to digest the shock.
Long term - this is the expected correction(wave 4) now waiting for confirmed bottom and the final rally higher. RSI looks ugly and the message is one more high and it is over.
MARKET BREADTH INDICATORS
Market Breadth Indicators - are bearish, some oversold, most of them reached levels where you see a bottom for a correction. VIX and McClellan oscillator are showing divergence. No reversal sign so far.
McClellan Oscillator - at oversold levels with divergence.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - around 40 where you expect a bottom for a correction.
Percent of Stocks above MA50 - oversold below 25, where you expect a bottom for a correction.
Fear Indicator VIX - lower high and divergence.
Advance-Decline Issues - reached oversold levels.
HURST CYCLES
Day 28 of the 40 day cycle. Some are counting extended cycle 58 days or you can count shorter cycle, the previous two were 27 and 30 days long. At the end the message is the same this should be 40 day cycle low.
Week 12 of the 20 week cycle. There is two options depending which scenario will play out. They are shown on the daily chart.
The second scenario the 18 month cycle low was in August not in April which means this should be 40 week cycle low. After such sharp sell off if we see another higher high this must be 40 week low. This is my preferred pattern so I switched to this cycle count. If we see the triangle developing I will revert back to shorter 18 month cycle.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Buy setup finished on the daily chart... and reversal.
Hi Krasi, thanks for the analysis, it's been a hell of two weeks! May i ask about your EW opinion on CCJ? I see waves IV and V down still missing so more downside on the horizon, Thank you in advance
ReplyDeleteMily
Ideally it is wave 4 and one more lower low for wave 5 to finish huge A-B-C from the top in 2007.
Deleteciao krasi, il tuo scenario e molto alto che si avveri https://www.tradingview.com/x/OlbOaGoA/
ReplyDeletekrasi questo e' un altro scenario che prende in considerazione l'alternanza delle onde , la 2 ha ritracciato lo , 0,38% la 4 dovrebbe ritracciare lo 0,50% e la 5 dovrebbe formare un doppio massimo https://www.tradingview.com/x/1em7BK4x/
ReplyDeleteDAX https://www.tradingview.com/x/Mm6WKPZ8/
ReplyDeleteHi Krasi, thanks for you analysis. For EEM, i cant see how it is a zig-zag. Could you pls share you count on this? Many thanks
ReplyDeleteLook at the hourly chart two legs lower with the same size each one subdividing as 5 waves.
DeleteHello Krasi! hope you had a good weekend!
ReplyDeletedo you think the indexes will have enough strength to reach around 2680? are you holding you 2552 long or playing this zig zag, and if yes what are your levels? thank a lot!!!
I do not know if SPX will hit exactly 2680, but the usual behavior is to test M50 when it moves too far from it. The first target is MA50 hourly which is at 2680 almost reached. The move up looks like an impulse so I expect next a pullback and another leg higher to test MA50 daily.
DeleteI will hold until MA50 daily is tested , then I will decide to close half or the whole position.
Hi Krasi,
DeleteGreat work.
I guess i was wondering why you would not simply exit at 50hr and buy back once b is done? Or is the retracement very short lived and hard to predict?
Thanks,
Kali
It is hard to predict and you need to stick to the computer.... I have tried it for years it is waste of time.
DeleteHello krasi! Kudos for the analysis, as interesting as ever!
ReplyDeleteQuick question : what is the market break the 50ma meaningfully to the upside , what are the targets then, and likely path for the next days/ weeks ? Thx a lot, and good luck!!
JD
If the price breaks above MA50 hourly the next target is MA50 daily - I think we will see this.
DeleteIf the price breaks out meaningfully above MA50 daily impulse higher is running target above 2900 - I doubt this.
Market breadth is still weak. I expect the low to be tested one more time. There is no enough price action at the moment to confirm neither reversal(higher low for the test) nor wave B(lower low with divergence for the end of the correction).
I am just waiting to see what happens this and next week which should be up.
It seems QQQ and XBI are stronger than SPX that they have already been above MA50 daily. So what's the next target? There should be some pullback/corrections? Thanks. Also GDX looks like beginning another leg up? So quickly because last 5 wave down appears missing?
DeleteXBI never closed below MA50 daily so nothing to test. It jumped from MA50 which is the usual behavior. And the same question - is the correction over or is this wave B and finished correction with one more leg lower to test MA200. It starts looking more and more like B wave....
DeleteGDX overall miners are trading more like shares and are getting sold because of the panic. It is in a range it reached the lower range and bounced. So far it is an a-b-c... which I suspect for the stock indexes too.
Hi Krasi!
ReplyDeletei agree, looking more and more like wave B, this move since yesterday looks increasingly technical, with both VIX and Feb18 expiry... is this the case, how high do you think this wave B can go? and what about wave C, how much do you think it's going to retrace ?
Hope you're having a great time! Thank you
JD
2720-2750 area is interesting resistance/Fibo levels/MA200 hourly/MA50 daily.
DeleteWave C slightly lower something around 2500.
What about xbi?
DeleteThe same pattern - wondering if it is B or not.... it looks too much like a-b-c at the moment.
DeleteTwo more highs needed for decent impulse, the problem is it will be oo long for wave i of 5 and too short for wave 5. I do not like the speed of this move it is too fast and I do not see indicators/market breadth to support such reversal.
Agree if you look only at SPX. However, if you looked at the SP500 future hour chart, clear double bottom and testing W shape formation.
ReplyDeleteWhy not a-b-c for B? I do not know if it is B or not... but I do not like the speed of this move I do not think it is sustainable and the pattern is not clear.
DeleteI knew test of MA200 then test of MA50 and traded what I know, now just watching to see what comes to the downside.
As a trader I prey for lower low because it will be huge opportunity now... in no mans land.
QQQ seems so strong that not even any pullback... is it B? Thanks.
DeleteNo one can tell you at the moment.... everybody is counting wave B and I am just waiting to see the next move lower.
DeleteSo is this the beginning of the next leg lower??
DeleteThanks
I suspect this is an impulse and more highs are needed.
DeleteKrasi, but we are spit shy of all time high again. How much higher can wave b go?
DeleteIt depends on the pattern wave b can even make a higher high.
Delete68% Fibo retracement and test of MA50 is normal behavior. Look at other indexes a lot of weakness.
Was 17.50 a short term bottom for the TLT? If yes, what do you see as the target for the bounce?
ReplyDeleteI think there will be one more low before a bigger move higher.
DeleteWave b can be a new high...it is the most effective because it draws everyone back in...
ReplyDelete