Jun 2, 2018

Weekly preview

Short term view - higher I think.
Intermediate term view - the indexes are close to intermediate term top.

Volatile week sharp sell off to the support level and bounce higher... at the end more sideway price action.

To sum up all scenarios:
- the bullish case - wave 3 running. I do not see how this mess is a third wave. I do not see neither indicators nor market breadth nor cycles or something else to support this idea.
- the less bullish case diagonal or wave E triangle. From trading perspective they are the same - deep retracement, higher low and strong rally.
- the bearish case - 1-2 i-ii lower. I do not believe it and indexes like RUT/NDX do not support it.
- the less bearish scenario - much bigger corrective pattern is running. I have already mentioned it a few times.
All I see is corrective price action in the last two months, strength is missing. The scenarios which are probable for me are the the less bearish/bullish pattern shown on the daily chart. Maybe RUT looks strong, but if you see NYSE/XLF there is no strength only weakness... even the triangle looks too bullish.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - support tested and a bounce.... only a-b-c so far. Around 2755 wave c=a so probably a few more days higher. Unless we see strong rally above 2760 the pattern is diagonal or D from a triangle and the next move is 100+ points lower.


Intermediate term - just waiting to see which one will play out. If we have a diagonal or triangle(green) MA200 will be tested one more time and finally strong rally begins. Or we have bigger corrective pattern(red) and wave X is running followed by another zig-zag lower.


Long term - nothing new the sideway price action continues which is not bullish. From 9 weeks "rally" we have 5 green and 4 red weeks. For DJI it is 4 green weeks and 5 red weeks and for NYSE 3 green and 6 red weeks. That is why RSI is just flat and testing the broken trend line. That is why the histogram is already close to zero and the price is doing noting. That is why the angle of ascend is small. I do not know how to call this bullish... after 2 months I would call this bearish.
Unless we see 100 points higher in the next 1-2 weeks it is what it is - crap.


MARKET BREADTH INDICATORS
Market Breadth Indicators - are weak, looking at the VIX, Advance-Decline Issues and McClellan Oscillator I see intermediate term top even if we see higher high. I do not see conditions for strong rally wave 3.
McClellan Oscillator - series of lower highs.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal in overbought territory.
Bullish Percentage - in the middle of the range.
Percent of Stocks above MA50 - in the middle of the range .
Fear Indicator VIX - do not expect levels 9-10, I think the VIX is making a low and the indexes a high.
Advance-Decline Issues - series of lower highs.


HURST CYCLES
Day 40+3... 40 day cycle low is possible.


This is the chart with cycles counting top-to-top/bottom-to-bottom(not Hurst cycles), which I have shown once.
We have now 4 consecutive weeks closing above MA10 which means the top-to-top cycle is now rising heading for the next 20 week cycle top. The problem with the bullish case is that the cycle spent most of the time moving lower and it is already 18 weeks old, which is weak cycle. The behavior matches corrective move and not the beginning of a rally(wave 3 rally another 1-2 weeks higher to finish corrective pattern is ok) .


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Week 7 of a sell setup. Maybe it will be finished with a diagonal/triangle... or negated. Both cases are not very bullish

32 comments:

  1. Hi Krasi. What are your thoughts on USD INR? Has the high been set or will it continue further?

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    Replies
    1. So far it is just a-b-c lower. If it reverses it could be wave 4 with one more high. If you see continuation than the high has been set.

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  2. Any thoughts on gld and slv

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    1. Nothing interesting, waste of time. With USDJPY turning up there will be no surprises to the upside.

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  3. krasi im still long spxl how high could we go

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    1. Nothing has changed the same targets 2755-2760

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  4. NQ futures looks like a 9 sequence set up for a sell today. any thoughts?

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    1. I think the markets are close to intermediate term high.
      At the moment there is no sell signal, but I will not be surprised if we see the high today.
      If you ask is it time for short - it is always the same game at a top/bottom. How convinced you are, how much risk you are ready to take, how do you build your position.... because you will seldom nail the top/bottom.

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    2. agreed i think we go down but the bulls have the tendency to push envelope

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  5. Hi Krasi
    I noticed that you haven’t mentioned anything about Nasdaq and Russell. They both have gone higher and passed previous highs. Are they in wave 3 or is it something else.
    Thank you
    Kris

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    Replies
    1. Diagonals all corrective waves. I have mentioned RUT a few times and it was always diagonal the pattern.

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  6. Hi Krasi!
    I am in a big fix, I have shorted a considerable amount in Bank Nifty (Indian index) at 26200, despite the rate hike stocks have rallied hard today. What wave are we in and what do you see? Thank you for all your work.

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    1. It looks to me like impulse from the 2016 low and this should be wave 5 or i of 5.
      Intermediate term I would say in wave (ii) from ending diagonal to finish this 5 or i of 5.
      Short term one more lower low below 26080 to finish zig-zag for wave (ii) of the ED will look much better, because the decline from the last top looks impulsive.

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  7. So assuming that we don't push past the 2,760 level, this should be the top. Any room for overshoot on that 2,760 level?

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    1. If an impulse is developing than after wave 4 the fifth will push higher 2780...

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  8. So now it's wave 3 running??

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    Replies
    1. No, intermediate term there is no third wave.
      Short term most likely.

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  9. Hi, what is the situation now? Does everything have to change now? It looks like we overshot too much. Besides, how do you use the Mijin voorpagina website(it is the link of "Turn Date" in your blog). It made totally wrong prediction this week.

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    1. Nothing changed. It is not about how much it overshot it is about price behavior.
      The price should continue vertically for another two weeks for the situation to change.
      I do not think this will happen.
      I do not follow this site. I do not know what he has predicted.

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    2. Thought you mentioned target 2755-2760, then 2780. What do you think is the next high before E.

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    3. I am starting to doubt seriously in the triangle pattern it takes too long....
      I do not have other targets. If I am right the indexes should start topping.
      If I am wrong the have to continue vertically higher above 2900.

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    4. Yes, from weekly chart, it seems spx should continue higher, that means impulsive wave up...What's the wave count in this way?

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    5. Is it topping or only some wave 4? unless we see real crash down tomorrow, the weekly chart would be very bullish?

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    6. Small 4 and 5 and then lower. The charts are bearish not bullish.

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  10. Krasi,
    As a longtime follower of your blog. I wanted to say thanks for continuing to publish, and for your patience in answering questions.

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    1. I second this. I've learned a lot and appreciate your insight. Thank you!

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  11. Hi Krasi,

    As always thank you for your patience. Just going through indexes and noticed nasdaq weekly chart looks horrible, triple RSI divergence and bearish candle, the move from beginning of April looks like ending diagonal (for wave 5) and V or would you see it as leading diagonal (i of 5) ?

    Regards,

    Mily

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    1. To be sure we need to see the next decline. At the moment there is a lot of room for speculation. I do not think the move has just begun some wave 1 I would rather say it is mature something like wave 3 ED from the February low or wave 3 from the late April low after finished triangle or wave 3 from the early April low finished huge A-B-C/IV.... you get the idea one more decline and a high.
      As I said we need the next decline to know which pattern it is.

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    2. In fact there is option that this is wave 1 - this messy up move from the early April low could be wave 1 of ED. In this case if SPX has a diagonal as wave 1 the counts will be in sync with 2-3-4-5 to follow for NDX and SPX.
      The other option is some wave 3 as explained above. Again it depends how deep the next move lower will be.

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  12. hi Krasi
    is there a likelihood that ndx is now already in wave 5 of the ED ie for final wave 5? is ED within an ED permitted under elliott wave rules?tx

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    1. I think there will be at least one more pullback and high. It does not look like finished pattern.
      ED consist of series of corrective three waves another ED is five waves impulse so it is not allowed.

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