Intermediate term view - I suspect the correction is over.
We have the move up as expected... the confusion is the indexes show huge difference in strength - SPX/DJ/NYSE weaker with SPX testing the last high, RUT/XBI strong higher high this week, technology sector NDX/SOX very strong with new high. Either they have completely different patterns which is unlikely or the same pattern looking differently. That is why I think the correction is over and there is no complex corrective pattern rather an impulse and the indexes are just showing different strength. What are the options - bullish and bearish "extremes" if we have 1-2 and i currently running we will have monster impulse higher 2-3 times bigger than the January parabola or bearish wave B for a huge flat and lower low with an impulse which should cause a lot of fear again. I think we have fear and greed extreme emotions behind us and this scenarios are less likely. The other options are the price turns lower on Monday and we have 2 of V or it continues higher to finish impulse from the March low, but instead of monster impulse we have a-b-c from the February low for 1 of ED explaining the zig-zag look for indexes like RUT and XBI. TECHNICAL PICTURE and ELLIOTT WAVES
Short term - indexes like DJ NYSE EEM look weak and show only zig-zag, SPX looks better challenging the high. If the price turns lower on Monday expect wave c of 2. If the price continue higher and finish an impulse I suspect wave 1 of ED.
Intermediate term - the "extremes" shown green if you use standard measurement we are talking about 700-800 points for 2-3 months and January not even worth mentioning:), red we are talking about flat and wave C should cause most fear and had it already with the first leg lower, the trend line will be broken and so on.
That is why am thinking about something more realistic if we see wave 2 it looks like normal impulse or if we have ED again something like 3000 and weakness for the final wave fits very good too.
Long term - one more rally before the bull market is over.
MARKET BREADTH INDICATORS
Market Breadth Indicators - look positive.
McClellan Oscillator - above zero.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal.
Bullish Percentage - in the middle of the range.
Percent of Stocks above MA50 - in the middle of the range.
Fear Indicator VIX - resseting to the usual normal low range 14.
Advance-Decline Issues - in the middle of the range.
HURST CYCLES
Day 19 of the 40 day cycle.
Week 4 of the 20 week cycle, I assume the correction is over.
Dear Krasi, hello from Rome, what do you think about natural gas? Do you think now the rebound is over and could go to 2,3 or could push up a Little bit before the correction ? Thanks
ReplyDeleteI do not know. I do not follow natgas so closely and such short term forecasts and not very reliable especially with commodities.
DeleteFrom top-to-top we have 31 days which says top should be around the corner. It is more likely that this move up is over confirmation is a close below MA10 on the daily chart.
Hi Krasi
ReplyDeleteI checked all instances of wave 4 of V corrections to 1974 and could not find any example of one finished with one monthly candle low. There was at least one more monthly candle testing that low. If your more optimistic option higher materializes with one month correction only it will be the first time in history of s&p500. So it seems.
Kris
But did those corrections shoe nasdaq making new highs during the correction? Just curious? It seems like all the traders are expecting the drop and are constantly hedging their position. Such hedges are creating this wierd dynamic of large blow up moves. Krasi ‘s explanation of ED makes good sense. Such would exhaust the hedges, bulls, and bears alike
DeleteThat may be true but this does not change the fact that out of all 4 of V corrections this one would be the shortest on record.
DeleteKris
Price rules - if we see higher prices next week most likely we have ED.
DeleteIf it turns lower maybe we have B and C lower.
How many times in history did you have VIX below 10 for a year? We have many such records again price rules.
A low below 2650 for w2 of ED or 200-250 point lower to test MA200 again and there is the missing test of the panic low. This is good enough for me just this time with higher low. It is not always with lower low.
DeleteHi krasi!
ReplyDeleteIf you’re right about ED, and wave 1 of ED reach 2860, what would be the most likely downside target for 2 of ED? Thx a lot!
The theory is every wave is 61,8% of the previous one, but the EDs do not follow really this guideline. A better measurement is to use Fibo ratios in the zig-zag internally for every wave of the ED, but for that you need wave a and b first:)
DeleteFor a real ED look the low for wave 2 should be below the last low 2650. Looking at support levels and MA200 I would say the 2600-2625 area.
nothing too surprising that RUT and NAS/NDX are further ahead in this rally: small cap and tech often lead the early stages of a rally (risk on), the broader indices will simple play catch up: since 1980s in >80% of the time when the NDX made a new ATC, but not the S&P, the latter would do so 10 days later. And how can new ATHs and ATCs on tech be construed as bearish?! Market Breath (McClellan oscillators) gave peak readings on Friday not seen since November and July 2016... We all know what happens after such peak readings. All indices' summation indices are therefore on a buy, (SPX, NYA, NAS, NDX), except DJIA. Weight of the evidence thus favors higher prices not lower.
ReplyDeleteED is not a bearish pattern. I have explained my opinion which is simple - extreme fear and greed are behind us.
DeleteAbove statistics no way the indexes should test the low. Now statistics there is no way the price to decline.
I have chosen the way in the middle which answers all my open questions.
Or the market is topping that is why the indexes show different strength. For example I think Europe will not make a higher high. Did you thought about non-confirmation?
DeleteThe strongest index SOX did you saw the daily and weekly indicators? The only way to safe the day is the index to go parabolic to the moon.
Hi Krasi,
DeleteAny target for qqq?
Kali
Probably 4 and 5 of c 176-177.
DeleteBy the way I have looked at the FANG stocks the indicators look bad.... so much for the NDX strength.
Now it's the confusing moment. Not weak enough to plunge or reversal, but not strong enough to be impulsive? Highly appreciate your update. Thanks.
ReplyDeleteNothing new ideally we will see one more high for a finished impulse which will finish a-b-c from the February low.
DeleteThan it is either B or 1 of ED. The obvious choice is B and I am talking about ED because the strongest index(NDX with higher high) should lose the most(for expanded flat) it does not make sense... who knows.
However, one can assume a scenario of dichotomy here: nasdaq will turn down for the wave 2 and the other indexes will fall in C wave to test new lows. Isn’t it plausible outcome?
ReplyDeleteThanks
Kris
In this case after the low the other indexes should be stronger than nasdaq which should be in ED and all the others rallying with an impulse. I do not know if this makes sense.
DeleteI am only wondering if all indexes, even the US ones, have to be in sync in terms of EW wave count... I think not necessarily.
DeleteKris
Yes, but at least in the same direction. With three waves for NDX this should not be the top and in the bearish scenario top is in SPX/DOW will make corrective wave lasting months. For example in 2000 it took 5 months. What I want to say is again it does not look likely to see a turn and plunge with new lows.
DeleteHi there,
ReplyDeleteFor Nasdaq, does it not look complete or are you saying one more higher high looks better? I take it you are saying we are in wave 4 of C?
In terms of xbi, do you find this complete?
Thanks.
The decline from yesterday is so far corrective probably 4 of C. Yes one more high will look better.
DeleteXBI the same story.
This drop looking scary like we are skipping that 5 and moving onto c down. What do u think?
ReplyDeleteNothing convincing to the downside so far. Higher high with three waves is not a top either....
DeleteNo clue just watching. The next bigger move is lower, but as I wrote I am not convinced we will see a lower low.
I believe the market is going up I'm looking for 2830 to 2850 by next week the pattern is still bullish we have old pets coming on Friday this is labeled x y z B wave bull flag
ReplyDeleteYes, the bears are not convincing so far. If we do not see continuation lower today I expect another higher high at least 2820.
DeleteI meant to say Opex it's coming on Friday not old pets LOL
ReplyDeleteIt's now looking like one giant triangle , with the apex & hence breakout by Monday. The only problem with that is that the measured move out of the triangle would imply significant new lows ( or I guess new highs if the break is up).
ReplyDeleteIf it is a triangle I would say the top is in, the third wave c of the triangle is running which itself is wave B of 2 and the break out is higher for C of 2.
DeleteYou certain this is not the c wave down which began two days ago?
ReplyDeleteThere is nothing certain with this pattern. I do not like this count wave C lower. So far there is no impulse lower so reversal is not confirmed.
ReplyDeleteIf the market falls again today there may be some complicated ED zigzag forming for s&p and Dow and possibly flat for Nasdaq with higher low.. what do you think Krasi?
ReplyDeleteThanks
Kris
I think this move up takes way too long so I am starting to think that SPX/DJI will not make higher high any more. Currently wave a up with b down and c up to finish wave 2 which will last a few months. Similar pattern like 2000 and 2015. NDX with w1 of ED.
DeleteI will post charts this weekend. Interesting is this 2000/2015 charts match the path for an ED pattern down/up/down/up so NDX can finish ED and the indexes will move in sync.
So short term which wave we are now? It seems current both XBI/QQQ/IWM are very weak and the next move can be down. Thanks.
DeleteShort term it should be w2 of ED. So far the declines look corrective. I can not see an impulse so far.
DeleteIf that's the case, wave 3 is going to be worth catching , to hopefully coincide with a 2 in spx...just the small matter of timing !
DeleteHi Krasi, I don't understand what you mean by wave 2, wave 2 of big wave 5? Also why no patience? I see only healthy correction on MACD and RSI short term...no? interested in your answer on the latter.
ReplyDeleteI feel like the corrections are getting shorter and shorter and that that is the trend of the last decade, perhaps what happens when quants are in control...
Wave 2 like it is over the top is behind us. I am patient I do no call for a plunge lower and I repeat that short term the move this week does not look like a reversal.
DeleteThank you
ReplyDelete