Jul 28, 2018

Weekly preview

Three weeks later the pattern continue as expected - intermediate term low and higher, most likely 20 week cycle low. The only "surprise" is I thought the move lower will last another week or two before turning up.

From the low in April the move is corrective - the options are ED or wave B. SPX looks stronger because of the tech stocks and most analysis I see are ED, but this just masks the real pattern. Looking at the DAX/DJI and the indicators I think this is just wave B.
It does not matter in both cases the path is the same - pullback, another leg higher and 10% lower for 18 month cycle low in October /November.

Short term - the upper trend line was hit one more time with MACD/RSI divergences and SPX turned lower. I think the next move is pullback to the previous high and MA50 daily around 2770-2790.

Intermediate term - most analysis I read are talking about a diagonal. There is a few variations of it and I am showing the one if you count a triangle. I do not believe it, but again the path is the same even if this is B wave so I do not care much. I think it is wave B(see the chart below).

This is DJ line chart which shows more clear what is going on. The indicators confirm this pattern.
The chart shows clear a-b-c/A from the January top and RSI/MACD confirm it - two legs lower. Then you have two zig-zags higher for a/B again the indicators are saying you have one leg higher from the early April low - no interruption in the middle for triangle. Sharp sell off b/B most likely 20 week cycle low which explains the strength higher. Now we need one more zig-zag c=a/B for complete pattern.
For the SP500 tech stocks strength is masking it, but it is the same.... even for NDX I will not be surprised to see a pullback and another high for finished B wave to surprise most traders which are counting flat wave IV and now finished impulse wave V with major top.

Long term - we are seeing "at least one more high" which I am talking about for months.... if we are lucky this is wave B with C and 5/V to follow. For traders this will be the perfect scenario - great moves to trades much better than diagonal.

Market Breadth Indicators - do not show a lot of strength, rather we have some divergences despite the strong rally.
McClellan Oscillator - below zero.
McClellan Summation Index - second top with divergence so far.
Weekly Stochastic of the Summation Index - heading higher for an intermediate term high in several weeks.
Bullish Percentage - second top at the same level despite 150 points rally.
Percent of Stocks above MA50 - second top divergence so far.
Fear Indicator VIX - divergences are building.
Advance-Decline Issues - in the middle of the range.

Day 19 from the 40 day cycle. Pullback for mid-cycle low expected. I have adjusted the daily cycles because of the shorter 20 week cycle.

Week 4 of the next 20 week cycle. I think we have 20 week cycle low at the end of June.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Finished setup and countdown running at 7.

Jul 5, 2018

Long term - update

I will be away in the next two weeks so there will be no weekly updates. The next one will be on 28-29.July. If I have time I will post short updates.

It is time for the next long term update... what to expect in the next six months:
- Stocks - corrective pattern to be finished and one more rally... with higher or lower high I do not know at the moment.
- Bonds - multi month zig-zag up.
- Forex - USD correction and one more leg up.
- Precious metals - nothing interesting and another intermediate term low around the end of the year.
- Crude oil - important high is expected and multi month correction lower.

We have a top and correction as expected, but it is not clear if this is wave 4 or something else.... it is taking way too long. The big picture the 4 year cycle is topping and wee see how it tries to pull the price lower. I think one more move higher is left before the markets start plunging lower, but at the moment I can not say if it will make higher high or not.

The 4 year cycle top is right on schedule. The indexes should turn down soon and move lower until late 2019/early 2020 for 4 year cycle low.

I thought we will see a bigger a-b-c higher with b as a triangle, but I was wrong. At the moment I think we have finished a-b-c and multi month move up is running. Bonds are moving in big a-b-c waves so I do not believe in 1-2 i-ii count and yields going to the moon. It is too early for the CBs to lose control.

Monthly chart with top-to-top cycles. The top came a few months earlier with short cycle, that is why I was expecting some pattern which takes time like triangle. Now we should see a few months higher at least to test MA50 and test of the low. The next important high is Q4 2019 / Q1 2020 when stocks should make 4 year cycle low.

TLT - in the next few months we should see pullback and one more leg higher.

Very long term perspective 30 year treasury yield - We have a top every 9 years. The last one was mid 2009 and it looks like MA100 will be a resistance one more time and we are seeing another 9 year cycle top mid 2018. Most likely yields will spend the time until the next major low 2024 in this range 2,1%-3,1%.

I was expecting EURUSD 2 year cycle high and the USD with important low. DXY finished waves 4 and 5 and reversed higher so no surprises at the FOREX front. Very long term USD made 16 year cycle high and should move lower in the coming years. So this move higher for the USD should be a correction and this is wave a with wave b and c to follow.

It looks like the 2 year cycle high came right on schedule. I think we have an impulse lower so we should see more to the downside for EUR/USD.

JPY the same story - I was expecting 2 year cycle high and reversal lower and that is what happened. The next important low(4 year cycle low) is mid-2019 so in the next one year I do not expect surprises to the upside. That is why I am not really bullish about precious metals.

USD/JPY - I was expecting another leg lower to finish a-b-c of B and another surge higher. I think we have yearly cycle low and finished B wave and now wave C is running.

The forecast was for intermediate term low around the end of the year and a rally, but nothing really interesting to the upside - and that is what happened. Especially silver - flat line.... boring.
The pattern is a mess, no clue what we have, but with the USD/JPY moving up forget about a rally in the precious metals sector. I expect more mess and another intermediate term low around the end of the year.

GOLD - the forecast was one more rally for 2 year cycle high and it looks like we have it. Now watching how lower it will move and how the pattern will look like. USD/JPY showing strength I do not expect surprises to the upside. More likely the next significant low will be again around the end of the year.

Silver - the 4 year cycle is already two and a half years old and with 2 year cycle high behind us the next major low should come in 12-18 months.

Miners - the rally lasted only a month and then.... nothing mess. Currently watching this pattern huge A-B-C and 4 year cycle low next year.

GDX - another guess....

I was wrong - I thought we will see a top earlier. I think we have huge A-B-C from the low in 2016 which should be finished soon. It was looking like perfect impulse from the low in June.2017, but with the sudden vertical move the pattern looks to me like triangle and a-b-c from the Aug.2017 low to finish the second leg higher C.

The next important low should come in 12 months. Most of the EW guys count this as the top of wave 4 and final plunge below 26 has begun... I am not sure, it could be corrective pattern in a cyclical bull market lasting for a few years. No need to decide right now. Crude oil should move lower for months. When we see the decline we will know which one it is.

From the low in June.2017 we have 5 waves and perfect Fibo measurements, decline and then sudden surge... it does not work every time:)
I think we have a-b-c higher and currently 5 of C is running.

NATGAS - continued with the corrective pattern as expected. I think we have finished corrective a-b-c for wave B and the first wave up from C is running.
Long term we have leg higher(March-Dec.2016) followed by a correction 14 months(Feb.2018) and we should see one more leg higher with important top in Q3/Q4 2019. Top-to-top cycle analysis looks consistent and NATGAS makes important tops every 2,5-3 years.

The pattern was expected, but the speed for the last two waves up and down was crazy - only 7 weeks instead of a few months. Probably that is why now the first wave is developing so slowly five months and counting...
I think we have finished correction and reversal with the first wave up running. We still need to see at least one more high and corrective move lower for confirmation. With the current speed I will not be surprised if it lasts until October/November.