Intermediate term view - the correction is not over. I think wave B is running, probably triangle or flat.
Lower as expected, but first we saw one more high and the move could be counted as an impulse. This activated two possible scenarios - the correction is over this is wave 1 and 2 is currently running(I do not believe it) or wave B is finished as expanded flat and wave C lower is running. I still think we should see a pattern which lasts longer and most traders do not expect. I think the indexes finished wave b of B, but I can not show anything to confirm it. I can only wait for the market to confirm or negate this pattern. TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the mainstream view is B(red labels) is over and test of the low here we come.... confirmed with impulse lower.
I have the suspicion we saw the low for wave b of B(white labels). Look at RSI - I think this final high is part of another wave and we have two different a-b-c. MACD trend line is not decisively broken so it is possible that we have only correction for the move which begun on 09.02. or b of B. The index which have the pattern I was expecting is XBI - a-b-c higher, a-b-c correction and sharp reversal higher... and the other indexes made a fake high?
Enough theory - if we see only corrective move up to test MA50/MA200 and the indexes turn lower it is time for shorts(the red scenario) if we see an impulse higher this will confirm my theory. That is why next week is important it should clarify the pattern... at least for the next few weeks.
Intermediate term - waiting to see what happens next week. It should confirm or negate the pattern which I expect.
Long term - correction wave 4 is running, the histogram continue heading lower no signs of a slow down. One more rally before the bull market is over.
MARKET BREADTH INDICATORS
Market Breadth Indicators - turned lower which is normal after a few days selling. I do not have the impression that we will see a plunge, in fact the McClellan indicators look good.
McClellan Oscillator - around zero.
McClellan Summation Index - neutral.
Weekly Stochastic of the Summation Index - trying to turn up.
Bullish Percentage - turned lower in the middle of the range.
Percent of Stocks above MA50 - turned lower, close to oversold level.
Fear Indicator VIX - hit 15 and jumped higher. This are the new(old) normal levels.
Advance-Decline Issues - in the middle of the range.
HURST CYCLES
Day 14 of the 40 day cycle.
Week 12+3 we will know which cycle count is running and where the 20 week low is, when we see the pattern for the correction.
Thanks for the update Krasi.
ReplyDeleteI can understand your bias for a triangle ie the time for the current correction should be longer to correct the more than 1 year's rally. However as you realistically pointed out, a flat could also be the case ie a faster (save the time) correction phase but compensated by a deeper retrcaement.
Translating these into a trading plan, what's the most optimum trading strategy for these possibilities for both short term and long term plays. Hope this is not too much to ask, as im still refining my trading systems, your input is much appreciated. It one thing to forecast charts but totally another thing to trade those forecasts. Many thanks again and cheers!!!
Yes, the trading plan is very important and it is different than analysis. With a good trading plan you can make money even if you are wrong or do not know what is going on. Forecasts only support trading.
DeleteUsually wave 4 should not be traded, but this time is an exception, because the swing are big. The plan is simple sell B wave, buy C wave.
With the trading plan you try to cover almost all possible scenarios and not trying to analyze and predict. So the options:
- first if I am wrong we have impulse higher which is wave 1 or B if we see corrective test of MA50/MA200 it is a sell for possible wave C lower and riding the move for lower lows. If it is wave 1 the move lower will be corrective, but you will have enough time to exit with a profit and you go long.
- wave B higher - if I am right and we see finished pattern it is a sell for wave C. If it is a flat great - bigger and faster profits. If it is a triangle less profits, but it is what it is.
- wave C is a buy. If it is a flat you a trading the bottom of a correction. If it is a triangle the buy point is wave C again first you know wave E usually do not make lower low and you have your stop and second very often wave E ends abruptly and reverses violently so it is add to the position and not starting to build a position.
If you notice it is completely different thinking. The focus is not forecasting the focus is how to cover all possible scenarios so that you can squeeze max profits without getting caught with loosing position.
P.S. my problem with a flat is that according to the rule of alternation wave 2 and 4 a different patterns and wave 2 was a flat... ok expanded flat. If wave 4 is a zig-zag this week we saw the top of wave B. That is why I am leaning towards triangle at the moment, if I am right about more upside for wave B.
Hi Krasi
DeleteFollowing up on your answer to KT Wong why do you lean towards triangle and not zigzag? Is it because zigzag is too fast and the correction should take more time? And triangles tend to be longer? That’s why?
Thank you
Kris
Yes, it is because of the time factor.... we will know soon if zig-zag is running or B is not over.
DeleteHi Krasi, thanks for your generosity for sharing the strategies - not many people are willing to share on this. I have read it many times, i guess it will take me even longer to truly understand it. I enjoy your blog alot!!!! People here are generally constructive as well - keep that up!!!
DeleteWhat if your red abc is only the A of the correction and we get move higher from there to restest the highs then another leg lower in a flat. Would solve the time issue
ReplyDeleteSuch pattern will be way too big and blow up the trend channel. Not really what a wave 4 should do... with a sideway move ok, but such wild swings I doubt it will be so complicated.
DeleteDear Krasi,thank for your update,i write from Rome and evey week i follow your analysis, so i ask you a cooment on Natural Gas: do you think it's time for another down till 2.30 or the correction is over and now could begin the uptrend till 4 ? Thanks for the answer.
ReplyDeleteWith one more lower low the pattern will complete and the 20 week cycle is at week 11 which is too early for a low. So 2,30 looks more likely before the uptrend begins.
DeleteSo now could go to around 3 and the then to 2,30 and finish the cycle?
ReplyDelete3 is too much. It should turn lower soon. This move up should be mid-cycle low(or wave 4) and we have already three weeks up another 2-3 weeks up and 3 will be too much.
DeleteHi Krasi, On the 7th we make a High and then on the 8th a little lower. But on the 9th it could be a serious decline http://prognoseus500.simplesite.com/ or look at turn dates on the right of this. Willem
ReplyDeleteYes, I see the indexes higher for a few days too. Important is how the pattern higher will look like.
DeleteI may be too early...but it looks corrective at 15mins time frame
DeleteYes, not convincing one more low is more likely before a retracement.
DeleteOr it is just corrective wave the red scenario
Deletehi Krasi, Does this move appear not convincing to you and makes you tilt towards the red line scenario now? because it does seems strong...
ReplyDeleteNo, just we do not have an impulse so far. We have to wait and see what happens.
DeleteComments are not posted sometimes happens I do not know what the problem is.
ReplyDelete"Anonymous - It’s an impulse my friend" - now it starts looking like impulse, but it is still not completed 1-2-3 so far.
"Kali - Looking at xbi, we have a relative breakout from the 93.30 level. Just wanted to see your take."
From the beginning I was expecting to see double zig-zag for B and XBI is the only index following the pattern. If I am right this is a from the second zig-zag wtih b and c to follow.
Thx Krasi, as helpful as ever!
ReplyDeleteQuick question : is there a way to assess a target for 1 of the impulse? Is the previous high of around 2790 reliable or too optimistic you think?
I find your argument of alternation of wave 2 and 4 very powerful. The whole street has been seeing, or believing should i say, that last week declines was abviosuly the start of wave C, just because wave C shall follow. Was too much expectations for large and violent downside!
On a different note, in terms of market behaviour, bottoms are often marked by a flight to quality from cyclical and market leaders to defensive. Wouldnt it be interesting to compute a defensive vs tech/bank index from the point of view of waves abd technical analysis?
Many thx, and good luck!
If I am right the move up should be a-b-c and this should be wave a with target currently around 2740-2750.
DeleteSo it is revised down compared to your last short term update ? I know it’s only indicative, but i am wondering why you went from around 2780 to 2740-2750, for the sake of understanding. Many thx.
ReplyDeleteStandard Fibo measurements at the moment. If you look at the futures there is pretty clear picture - waves 1-2-3, wave three consisting of five waves the Fibo measurements for 1-2-3 and the third wave internally look very good. This means the probability is high that wave 3 is finishing around 2730. If you take the standard Fibo measurements for wave 4 0,382 retracement and wave 1=5 the target is around 2750 and there is resistance and daily/hourly MAs around this levels.
DeleteOf course wave 4 could retrace less or wave 5=1,618x1 could be longer than the move will finish higher 2760-2770-2780. You need at least the bottom of wave 4 for more precise target.
Now do you think wave 4 is almost finished and another wave 5 short term to 2760? thanks.
DeleteIt was looking this way, but the futures says forget it.
DeleteCorrections.... often you can see sharp rally in opposite direction, just to fail on the next day.
That is why above I was not in a hurry to call an impulse and another reversal.
Now it's even confusing... looks like some index has already finished topping, while some are still wave 4 and expect wave 5 higher?
DeleteYes, just more confusion... one more higher is needed to call it really an impulse.
DeleteThe futures show overlapping moves...
Some indexes like RUT and XBI are ok and follow my pattern, but SPX and DJI are weak...
Typical correction, I am just watching from the sidelines.
So what's high target for XBI and RUT? Thanks.
DeleteTest of the high with double zig-zag if I am right.
DeleteThanks Krasi.
ReplyDeleteLooks like a triangle forming for b today. Will see.
Kali
No idea, but from technical perspective it looks dangerous for the bulls. Reversal at MA50 after 61,8% retracement with a-b-c and the indicators do not look good.... The bulls should step in quickly or we will see at least another 100 points lower.
DeleteKrasi,
ReplyDeleteThanks for your continued help in understanding this market. Can’t tell you how much i appreciate your work.
Kali
Krasi, Doesn't R2K/IWM look like impulse and it's in some kind of wave 3 already? IWM is always the leader, and again, this looks too much like Jan-Feb 2010 or even the Feb2007 fakeouts which soon were followed by ATHs, with larger correction to come April to late summer.... if R2K can make ATH then so will SPX.... fact that we closed near the highs even after last night's news seems like most bullish scenario to me....but wondering what you think IWM is doing? maybe I'm questioning my short position at the top as I always do :)
ReplyDeleteTheoretically you can count finished correction and impulse 1-2-i higher, but I do not see any other index at the moment to confirm such pattern. I think B wave is more likely. No more time for other corrections the next high is the top.
DeleteHi Krasi! Now that the bulls stepped up, do you keep your target of 2750ish for this c of B? Thx!
ReplyDeleteThis target was if an impulse is running. I do not think this is the case. At the moment the indexes look weak and the move up corrective. Waiting for the ECB and some volatility... I do not know if 2750 will be hit or not, but the next bigger move should be lower.
DeleteWhat is your view on qqq? Looks to break new high?
ReplyDeleteKali
Either wave 2 is running with one more leg lower or this B of a triangle.
DeleteWhat is your view on soxx and xbi? Does soxx look complete? Xbi still on C wave up?
ReplyDeleteThey could squeeze one more high today, but I think all indexes will turn lower and could be really nasty - the final leg of the correction.
Delete