Mar 24, 2018

Weekly preview

Short term view - up and down, do not expect bottom next week more likely the first week of April.
Intermediate term view - heading for intermediate term low and higher in April/May.

We have the move lower, bigger than as expected, but this does not change the big picture only the alternate scenario. Even better at intermediate term low you want to see fear.
This is the missing test of the panic low from February... text book price action. I still think we have complex corrective pattern like 2000 which will take months(see the last chart). Now with the deep retracement the alternate scenario changed it is wave IV and after that V follows. The most bearish scenario the plunge continues and this is w1 of 3 looks very unlikely with this indicators and market breadth.

Many were impatient asking if the move is over after every 10 points higher or what pattern we have. You are doing it backwards focusing on the short term charts to give you the direction for the big picture. It is the opposite the longer term charts set the direction and the short term charts are only to precise your entry. Always put the price action in the context of the big picture. The daily chart was clear - lower. The squiggles on the hourly chart do not mean anything until the daily charts says it is time for reversal.(see TomDemark chart for some thoughts)


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - I expect waves 4 and 5 to finish c of B.
Their is discussions about the pattern and with SPX it is easy you count the higher high in March like a-b-c B and now wave C of IV lower this is the consensus. But what do you do with DJ and NYSE which made lower high? If you count a-b-c red it is not C impulse, you have to count 1-2-3 for C and the move must continue much longer and much lower. I do not think this will gone happen. Based on this observations, the European indexes which are done with higher highs and the futures(the last chart) I still think we have corrective pattern which will last for months and not wave IV and V.


Intermediate term - the price is testing MA200 and the trend line again. It looks like the histogram and MACD are building a divergence. For a bottom wait for the histogram to finish it's trough, at the moment it is still heading lower. Alternate I am wrong and this is IV(green) with V to follow. From trading perspective not much different so I do not really care:)


Long term - the index is testing the low and MA50 and a rally should follow.... the last one for the move from Feb.2016. RSI is breaking the trend line which is a sign that this is not 4 and probably the trend from Feb.2016 is over.


MARKET BREADTH INDICATORS
Market Breadth Indicators - turned lower, some are oversold, some need a little bit lower. Watching the VIX There is no much fear. I think the message is the indexes are heading for a low with divergences.
McClellan Oscillator - slightly oversold below 60.
McClellan Summation Index - turned lower sell signal.
Weekly Stochastic of the Summation Index - buy signal.
Bullish Percentage - sell signal, in the middle of the range.
Percent of Stocks above MA50 - oversold with higher low so far.
Fear Indicator VIX - turned up, expect lower high... the option players are not very scared.
Advance-Decline Issues - heading lower after lower high...it will be great to see oversold levels with higher low and divergence.


HURST CYCLES
Day 29, the 40 day cycle is heading for a cycle low probably the first week of April.


Now it counts much better as the low of the 40 week cycle so I have changed it.


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Day 7 of a buy setup. With the plunge last two days the setup will be finished.

Not everything is waves another tools like cycles or indicators can help you discard wrong counts/patterns. In this case the histogram is helpful. After a big tower or trough expect a second one making lower high/higher low which corresponds to a test of the top/bottom. The move up continued longer making two towers, but it was not very strong so it was time for this second trough and not for a rally. That is why my answer was always it is not over despite that we had not strong impulsive action at the beginning. Turning up with the histogram a few bars slightly below zero is typical for trending market and this is not the case.(see the December low)
Now if my "histogram theory" is right we need at least 4-5 trading day the market to calm down, the histogram to make a valley and turn up before this sell off is over.


DJ futures, SPX is not different - I see only a bunch of a-b-c moves and I do not see wave C for a huge zig-zag wave IV.

40 comments:

  1. hi Krasi, Thx for the update!
    is there a level on the upside that would invalidate the 'bottoming over 2 weeks' process? thx!

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    1. I trade patterns rather than levels. If we assume that the move lower is over we will see an impulse higher to test MA50 hourly and followed by correction lower with higher low. At the end it is bottoming too.

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  2. a of 4 done maybe & now look for a retrace to 2612...All happening at breakneck speed -

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  3. & now maybe b of 4 done too ...if so, better if the c up is more of a chop for 2-3 days.

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  4. with these sharp rallies and steep dips , it might end up morphing into a triangle . That would eat up enough time this week & also mean the high for the week may be in . options,options....none of them easy.

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  5. The size was expected, but the speed... I thought this move will take 2-3 days and a low next week.
    Now wondering if we have a reversal or not. The indexes which fit with ED NDX/XBI/RUT will look perfect with one more lower low for double zig-zag. I hope it will play out this will be a nice entry for a long trade.

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  6. Support at 2655 held for the bulls . Above 2680 & the C wave bus may have left without me !



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    1. I think it is an impulse testing MA50 on the hourly and we should see a corrective move lower.
      So I do not think you have missed something the opposite this is the entry point.

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  7. Thanks Krasi - I saw the hrly ma50 is at 2676 and the 61% retrace at 2680 - hence my comment . Below 2655 and we should see 2630. Tech leading , which I guess is exactly want you want to see for your ED.

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  8. Hi Krasi,
    This corrective move should be a higher low then, but what kind of level are talking about... higher than 2580 at around 2610, or higher low than 2530 at around 2552? Are there levels you are thinking about going long? Thx a lot for your help, and good luck!

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    1. At the moment there is still slight chance that this is w4, but I think higher low around 2630 is more likely. For a confirmation I want to see one more higher high 2690-2700 for a finished impulse from the low.

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    2. No confirmation just extreme volatility and the plan stays the same.

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  9. & no doubt much more volatility into the long weekend . If your plan sticks , we could see 2550 or a 2532 double bottom for the long entry...

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    1. If my count is right the Fibo targets are 2579 and 2542. The internal structure for the decline from yesterdays says 2579 is more likely - there is already 1-2-3 and we should see a low today or tomorrow.
      Alternate this is only w1 from something much bigger, but than the low should be much lower 2460 area.
      Probably we will see up and down today to finish the move lower. Pop up tomorrow morning selling before the long weekend with higher low and up after the holidays.

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  10. Krasi, I am a little confused. Are you saying that the bull is already dead (From your Long Term Chart, S&P wave V already peaked at 2872)?

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    1. I think indexes like NDX/EEM should make higher high, but for Europe and NYSE/DJ/SPX I doubt that we will see a higher high.
      Of course I could be wrong, but for now this is just my alternate scenario. We will know when we see the next move higher.

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    2. Hi Krasi
      Are you assuming that the European market ( looking at stoxx 50 futures) made a truncated 5th wave of the whole cycle which ended in November 2017?
      Kris

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    3. Stoxx 50 two weeks sharp decline and spending two months below MA200.... retracing nothing. For me this is not wave 4. Most likely the top was in November with normal impulse for w5. Before that you have nice corrective decline 4 months to test MA200 this is w4 behavior.

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    4. That makes perfect sense. However, what about the possibility of the November peak being the top of wave 1 of V? Why would you reject this idea? Or what precludes us from jumping to this conclusion first? Thank you, Krasi.
      Kris

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    5. The current move made a lower low so it can not be wave 2 of V.

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    6. Yes, that’s right! .. how about the toppping alone? I remember your estimates before. It may take a few months to conclude and there might even be a higher high during the process. By that time American indexes could be in a bubble mania frenzy and much higher than the recent highs.

      Kris

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  11. 2632 is the new 2655 ...resistance and a short entry with a tight stop. Good for 10 pts in 5 minutes - lol

    Don't want to be short above

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    1. Yes enough volatility paradise for day traders:)

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  12. Does it look like short term bottom? Still feel confused because neither impulsive up nor down. What do you expect? Thanks.

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    1. A low below 2580 is needed for a finished pattern. There is no impulsive reversal so there is no reason to believe that it is over.

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  13. Doesn’t the Nasdaq 100 look to go higher now?

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    1. Yes, the indexes should start bottoming soon. SPX need one more lower low, NDX probably will finish today small ED for a low.

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  14. Very much pointing to that indeed! It’s always a bit stressful to wait for that entry point when you feel like everybody feels the same, but no way to guess what the masses actually expect!
    What do you mean by ‘small ED for a low for the ndx’?
    Thx a lot a wish a good trading day to everybody!

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    1. The masses are scared CNN fear index at 5-6-7. SPX need one more low, NDX have it already but very choppy move so maybe small ED for a final wave when the major indexes make a lower low.

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  15. Looks like they might keep us waiting for a spike bottom until early next week. Europe looks to have put in a low and will be worth buying on a retest....bit annoying it looks like falling over a holiday weekend .

    Cheers for the input this week Krasi..

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    1. Yes, it is annoying, the pattern is not 100% clear you do not want to risk against the trend and get caught with a big gap. You can only gamble.
      I watch this game with tops/bottoms over a weekend/holidays all the time.

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  16. 2632 failed to resist this time .....will close my remaining shorts above 2646.

    Everyone looking for a bottom , so it was probably inevitable today

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  17. Now it seems finally reversal? Thanks. QQQ/IWM/XBI are very strong...

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    1. Still not very convincing. the low will be tested.

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  18. Wanted to say thx for your efforts Krasi! What a suspense :-)
    Do you plan to publish an update today or over the weekend? If not, wish you a happy easter! (And to everybody my here)

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  19. Happy Easter !!!
    The usual update on Saturday. It is tricky:) as always around top/bottom.

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  20. Hi Krasi,

    I follow you with great interest.
    I think you are doing a tremendous job
    for everyone learning from your analysis. Thank you and I wish you a Happy Easter! Best regards

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    1. Thanks!
      That was the idea of the blog to learn. I am glad it is working.
      Have a great Easter.

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  21. Thank you! Have a great Easter.

    Would you buy into weakness next week?

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    1. I have started building my position and bought this week so weakness next week is welcome:) I need to add to my position.
      Happy Easter!

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