Jun 9, 2018

Weekly preview

Short term view - one more minor high and lower next week.
Intermediate term view - the markets are close to a top and we should see a few weeks lower.

Higher as expected, but not convincing despite the "strength". On the hourly/daily charts are shown all possible scenarios which I see so you can pick your favorite. I think the triangle is dead it takes too long and diagonal has the same trading pattern anyway so I removed it.

Why I am not bullish - because when I look at cycles,indicators and market breadth I do not see a move which is beginning I see a move which is finishing. It took two weeks for a sell off and 17 weeks so far to retrace half of it.... very bullish. When an index is strong it will just make a new high RUT/NDX made it already twice.
Cycles and indicators are pointing to important low early April and one move which begun early April not three different waves(wave E, w1 and w2). Because of this and the mature cycles the scenario with third wave has very low probability and in the bullish case we have diagonal for wave 1 of V or in the bearish case wave 2/B/X or what ever it is.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - one more high is needed for a finished impulse from the last low. RSI is showing the typical pattern for a finishing wave - trend line break/test/divergence. All scenarios so wee can build our trading plan.
- very bullish 1-2 i-ii green labels. For me low probability. The price should pullback for 2-3 days and blast higher above 2900.
- bullish the top of a diagonal yellow labels. The price should drop with a corrective wave to the lower trend line of the channel
- bearish case - big bearish flag for wave B/X/2. We should see impulsive decline at least to the lower trend line of the channel.


Intermediate term - the same on the daily chart. For me RSI says we have one wave from the April low and not three distinct waves.


Long term - I think there is a danger that we are seeing the last rally higher, which I am talking about all the time. Again RSI is not behaving like broken trend line and retest with the final high, it behaves so far like the trend is over.


MARKET BREADTH INDICATORS
Market Breadth Indicators - nothing new Advance-Decline Issues and McClellan Oscillator with several lower highs, VIX below 12 a lot of complacency again.... I do not see how this is the beginning of wave 3, this is the end of a move.
McClellan Oscillator - several lower highs with divergence.
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 - heading higher nearing the overbought level.
Fear Indicator VIX - readings below 12 and a lot of complacency again, it does not looks like the indexes just starting the strongest wave higher.
Advance-Decline Issues - several lower highs with divergence.


HURST CYCLES
Day 8 of the next 40 day cycle.


Week 9 of the 20 week cycle. I think the important low was in April(40 week cycle with average length 33 weeks) that is why we have 9 weeks "rally". It is consistent with the daily chart above. One 20 week cycle consist of two 40 day cycle and second one is running now.
Cycles are the main reason because I am not bullish. It will be very unusual if we see suddenly the price shooting up vertically at the end of a cycle after months doing nothing at the beginning of the cycle.
- the top-to-top 20 weeks cycle which I have shown last week is 19 weeks old nearing the top. We have 2 weeks lower and 17 weeks trying to retrace. This is not a bullish behavior.
- we have the current 20 week Hurst cycle at week 9. The average length is 14-18 weeks so 2/3 to 1/2 is already behind us. The strongest part of a cycle is the first half of it and not the second half or the last 1/3.


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Week 8 of a sell setup. Probably it will be finished it is important what happens after that, how deep the decline will be.

22 comments:

  1. Hi Krasi, are you saying that the uptrend is already over and we are in the early stage of the turn? What is your view on HSI and SHCOMP?

    As always, thanks Krasi for sharing. H

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    1. What I am saying is the indexes are not in a third wave and up to the moon as many think.
      It is possible that the uptrend is over, but this is not my main scenario.
      HSI is very good example for what I am saying - 2 weeks lower and 4 months sideway move. There is not third wave up running - the most likely scenario is this is wave B/X with one more leg lower before turning up for the final rally.
      SHCOMP is the same on much larger scale - one leg lower and sideway move for years. I do not know what pattern we have, but more likely outcome is another leg lower.

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  2. Krasi, have you seen these cycles on the swingcycles website?
    They believe it is already wave 5

    ReplyDelete
    Replies
    1. Yes, I have seen them. They correspond to my non-Hurst cycles which I have shown a few times in last two months. From trading perspective this 20 week cycles are better because often the Hurst cycle makes just short sideway move around week 13-16.
      For longer term cycles 18m/4y Hurst cycles are better because SP500 is running with shorter cycles and full length 9m/18m does not work.
      The only way for 5 to be running is diagonal. I do not buy this third wave.

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  3. do you favor the green ii or yellow 2 at this point? thanks

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    Replies
    1. I favor the red scenario:) The best looking pattern is another sharp sell off for a few weeks to finish A-B-C and 18 month cycle low.

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    2. krasi when you say sharp sell off are you meaning 2700? and thanks for your input

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    3. I mean 2500 below the February low.

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    4. and what would be the time frame because i was thinking 2650

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    5. Something like 5-6 weeks.

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  4. This is so incredible, S&P is at the inflection point, right at the resistance. It seems like the Feds will move this market one way or the other at their meeting tomorrow. It feels though that the market wants to power up higher and the only dilemma I have is your short term bearish prediction, Krasi. I don’t see this scenario on your chart above but at this point it seems like 50/50 either way. I guess if the index hits 2820-2830 tomorrow it should test the highs in no time. Would you agree Krasi? Thanks so much for all your work.
    Kris

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    Replies
    1. I do not see anything to suggest 50/50 rather 100% lower.
      The only question is if 2820-2830 will be tested to trap the bulls or it will just reverse.

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  5. The answer to that we’ll have very soon, most likely today. Thanks Krasi
    Kris

    ReplyDelete
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    1. On this page you can see money flow - selling on strength and buying on weakness.
      It is not a timing tool, it gives you info if the big boys are selling the rally or buying the plunge. In June every single green day was sold. The smart money is unloading the whole way up from the last low.
      It does not make sense if this is the third wave.
      http://www.wsj.com/mdc/public/page/2_3022-mflppg-moneyflow.html

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  6. Hi Krasi. Do you look at gaps? Could SPX get back to 2851 to fill the gap of Jan 29? Thanks for your input.

    ReplyDelete
    Replies
    1. Not really, the indexes do not have a lot of gaps.
      I think all this "the gap must be filled" overrated. My answer is what is the point if this happens in 2-3-5 years.
      It depends on the gap. There is three types of gaps and some do not get filled.

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  7. Hi Krasi.. does it look to you that s&p has peaked and is ready to fall now? Any update on the path? Are you still favouring the red line version?
    Thanks
    Kris

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    Replies
    1. To be honest I do not like any of the patterns. This weekend I will show another one - third wave but iii of 3 already finishing.

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    2. Then what is the target for the low after iii of 3 finished?

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    3. Up to 2810 to finish iii and lower to 2755 fo iv of 3.

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  8. Hi Krasi ... I may have an answer for your "does not feel right" sentiment.
    Is there a way for me to send you a chart with an alternative count?
    Please ping me at pietertvl at yahoo dot com.

    ReplyDelete
    Replies
    1. Maybe not needed. This is a link to imageshack with the count (not mine)
      If its not a hyperlink, just cut and paste

      http://imageshack.com/i/plqNsTLVj

      PS ... thanks for your posts, and your direct style!

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