Apr 7, 2018

Weekly preview

Short term view - choppy move up.
Intermediate term view - intermediate term low, a few weeks before the market really start to rally.

Very volatile week - bang lower, strong rally all this expected and then another huge red bar. Second indecision weekly candle, no confirmation for a reversal with impulse in the opposite direction, three waves up and down.
The weekly histogram and the Weekly Stochastic of the Summation Index hint that a strong rally will not start immediately. This is a good news, we will have enough opportunities to add to a long position.

Short term - two options burning time to absorb all sellers, with only three waves up and down the options are leading diagonal or ED, LD looks better. Alternate final flush lower for a capitulation and test of the low later(the W-X-Y chart which I have shown yesterday).

TECHNICAL PICTURE and ELLIOTT WAVES
Short term - suggested by Mily. At the end it is what I want to see a few week time before a strong rally begins. The move lower is corrective so far too and the ED does not fit with all indexes so I think this is a better option - leading diagonal and test of the low. Alternate scenario sharp plunge and test of the low a few weeks later.


Intermediate term - we have sideway move for two weeks with very volatile swings up and down 70 points are the new normal. The bulls are still defending MA200. I see a lot of obsession with MA200 in Internet.... like if the price moves below it it's game over. There is no such thing. The indicators RSI/histogram - I expect to see divergences.
Another lower low and the preferred scenario is wave IV/V(green). The other option is the top is in and multi month correction is running(red).


Long term - one final rally higher. The indicators are showing serious technical damage so this should be intermediate term low lasting for months and the subsequent rally should be the last one from the Feb.2016 low.
The histogram with huge trough only in 2008 it was bigger. Notice the similarities - 3 acceleration bars lower then flattening for a few weeks and the rally begins. Now the flattening phase should begin and price with bottoming pattern a low and test of the low.
One option is quick flush lower which will be bought(weekly candle with a tail) and test of the low with higher low or LD/ED up and down for 2-3 weeks flattening and a rally higher.


MARKET BREADTH INDICATORS
Market Breadth Indicators - I think they are building divergences and pointing to intermediate term low. Percent of Stocks above MA50 several times with oversold readings and staying around this levels for two months - this happens usually in a down trend... big red flag.
McClellan Oscillator - around zero, another higher low for double divergence expected.
McClellan Summation Index - higher low so far, divergence expected .
Weekly Stochastic of the Summation Index - sell signal, this one was bothering me seriously now I know why.
Bullish Percentage - turned up, no buy signal so far.
Percent of Stocks above MA50 - several oversold readings, more divergences expected.
Fear Indicator VIX - lower highs and divergences expected.
Advance-Decline Issues - one more flush lower to oversold level with divergence will look great.


HURST CYCLES
Day 34+4... waiting to see one more low or not to pinpoint the 40 day cycle.


Week 20, this should be 40 week cycle low.


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Some price flips trough the week and now setup at day 4. Still no price flip to the downside, but the indexes should rally Monday/Tuesday and close above 2645 for the setup to continue.
The histogram with small divergence before the rally, now it will be great if we see a bigger divergence to confirm a low.

37 comments:

  1. What about leading diagonal? Would be a perfect fit if IHS is forming.

    Regards

    Mily

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    Replies
    1. Yes, this could do the job too - a few weeks up an down with deep retracement test of the low before strong rally.
      This will satisfy the missing few weeks - the weekly histogram flattening before rally and Weekly Stochastic of the Summation Index bottoming.
      This will be a hell of a whipsaws again:)

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    2. I have posted your scenario. I think it fits much better. ED was not ok for all indexes and the move lower on Friday despite the strength is only 3 waves so far.
      Four eyes see more than two:)

      Thanks!

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  2. Hello krasi! Thx for the update. How far down the market need to go for a. Leading diagonal and a complete IHS? Thx!

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    Replies
    1. For a leading diagonal the indexes will not make a lower low any more, just choppy overlapping up move with deep retracement lower the right shoulder of the IHS.

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  3. What does IHS stand for?
    sorry just trying to figure out all this stock market lingo

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    Replies
    1. Inverted head and shoulders.
      Such price action up and down is normal for topping/bottoming.

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  4. Hi Krasi, I am hopeful that this support level holds. But is there is a level we could breach lower that would make you sell? or where would you stop buying and start worrying :)
    Thanks

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  5. The pattern makes better sense now . Still the risk of a test of 2585 again in the next few days , but thereafter a choppy move to 2670-90 would look a decent entry for a low around the end of April & the start of a bigger rally . Be interesting to see what the pattern looks like by then.

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    1. Yes, this one satisfy all conditions - waves,cycles,indicators. On top of this the retracement should be deep which means very good long entry with low risk and not so wide stop.
      I hope it plays out too:)

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  6. Let’s hope so! How deep do you see the retracement? Back to 2600 or lower?

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    1. 62%-78% retracement from 2700 this is 2620-2585. There is support several lows and MA200 in this area.

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  7. Can somebody please tell me what is IHS refers to?

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  8. Thank you very much Krasi

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  9. How to explain monday sudden jump down and Tuesday sudden jump up? Thanks.

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    Replies
    1. Corrective crap as expected.

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    2. So we should expect SPX reaches around 2700 for some leading diagonal pattern in short term? How about gold/miners? it has bounced up and down and converged. So what's the next bigger move do you expect? Another wave down in the next days/weeks? Thanks.

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    3. If it is leading diagonal yes something around 2690-2700, but this is is not 100% sure it could be just a-b-c and tomorrow to be a high and one last sell off.
      Gold miners lower for 20 week cycle low.

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  10. Trade wars aside, I can't imagine the market heading lower this week. Earnings for financials will begin Thursday and analysts are anticipating a stellar quarter. I really can't imagine too many investors who would want to be on the sidelines going into this earnings season, especially if there's a strong start.

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    Replies
    1. I do not follow news. I do not even know that it is time to report earnings. I do not think they have any influence except for a day or two volatility.
      Yes the indexes should move higher in the next two weeks, but so far I can not see the strength.

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  11. On a 10 min chart , you can see an ending diagonal which could have ended y'day at 2665 or might have a marginal new high today.Can't see the gap from 2613 lasting long either ,so not sure I'm looking for much more immediate upside .



    More

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    1. I would not rely on such short term frames for the direction.
      The chart looks ok for a zig-zag up to 2680 for w3 of a diagonal or just an a-b-c from the low on 2.April. The histogram is moving up and the top-top cycle is at day 20. The probability is higher to see 2680 than a reversal.

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    2. Also breadth is improving, close to buy signal across all indicators

      Regards

      Mily

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  12. We'll see , but that's 40pts down from 2665 .Hopefully this big gap down fills today , but we're only 13 pts away from filling yesterdays's ...chop chop.

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  13. Both cases are true - indicators/market breadth is improving, the price action is crap.
    Usually this means choppy price action to the upside. Short term is bullish, long term.... not really an important low and strong rally for wave V.

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  14. If she fills the gap , crap will be fine with me ...!

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  15. Gap filled ...I still think the gap below will fill quickly , so any move back to y'days high or above is a short for me .

    Going to be very dull when we get back to the +7/-7 handle days ...

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  16. Do you still hold bullish view near term on qqq?

    Kali

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    1. It looks like a-b-c higher and c like diagonal. The bullish case is 1-2 i-ii... but strength is missing so far.

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  17. I agree Krasi, one more high above 2675 hopefully...

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  18. Is the ending diag invalidated above 2710 - not eager to short a wave 3..!

    Thanks

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    1. So far is the diagonal on track. Yes, above 2710 is w3 and not a diagonal any more, but it does not look likely.

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  19. Thanks Krasi. Wanted one more high, now want another!

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  20. Now do you think the short term top is there? Thanks. Gold miner could give down too? Thanks.

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    Replies
    1. Wave 4 of the diagonal should be running.
      Miners short term I do not know. Intermediate term I do not see a long lasting move up.

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