Short term - the most bullish pattern I see is ED(yellow) if we have a shallow pullback. Looking at cycles and different indexes/shares a bigger correction for a few weeks will look much better.
Intermediate term - even if SP500 makes a new high this will be just another touch of the trend line with MACD/RSI divergences. I do not see the beginning of a strong rally. Market breadth and the indicators are topping and not resetting for a run higher.
Long term - the same story... the histogram and slow stochastic are topping and not preparing for a run higher.
MARKET BREADTH INDICATORS
Market Breadth Indicators - no change I see topping indicators with some already flashing red.
McClellan Oscillator - resetting higher after plunge lower.
McClellan Summation Index - sell signal with divergences.
Weekly Stochastic of the Summation Index - sell signal, turned lower with double top.
Bullish Percentage - hanging below overbought level after another top.
Percent of Stocks above MA50 - hanging below overbought level after another top.
Fear Indicator VIX - expect series of higher lows and multiple divergences.
Advance-Decline Issues - broke the trend line and made a lower low after holding the trend line for months.
HURST CYCLES
Day 22 for the 40 day cycle. I think me have mid-cycle low at day 17 and after this high the indexes should turn lower for a few weeks.
Week 11 for the 20 week cycle. The average length is 14-18 weeks. At week 11 the cycle is mature we have 3 sideway weeks and I think the 20 week cycle is topping and it will turn lower.
Hi Krasi.. after today’s drop the futures weakened after Trump announced the details on Chinese tariffs. So I guess we have the confirmation of the next leg. My question is what pattern do you think it will follow? From the first chart: yellow or red? Thanks. Kris
ReplyDeleteIt should be the red one deeper correction. This should be a 20 week cycle low.
DeleteHi Krasi..Monthly and weekly RSI in S&p shows very clear and strong divergence. In theory at least, this should produce a significant reset in the value of the index... and I mean a drop to February lows. The only problem is timing, those are long term charts, after all. Another question is how this is going to unfold. I appreciate your feedback on on these. Thanks
ReplyDeleteWhen I asked how this will unfold I mean very quickly like with January drop or slowly and gradually.
ReplyDeleteI expect decline for 6 to 9 months and 20% to 30% lower.
DeleteLooks like vol sellers will be slapped in the face again
ReplyDeletehttps://postimg.cc/Z0rFYKZt
Regards,
Mily
Hi Krasi,
ReplyDeleteAre you now thinking the iv pullback was much shallower than envisaged & we are finishing off B here - maybe up another 20/30 pts - before a bigger sell-off for C . Just don't see how this ties in with the cycles , unless C is as sharp as A? - which seems highly unlikely
Thanks
Looking at the pattern, market breadth and the indicators I do not see signs to suggest that something has changed.
DeleteI see zig-zags, I can not see impulses so either b wave or the ED from the first chart with shallow wave 2 and now 3.
Sometimes a 20 week cycles consists of three shorter daily cycles instead of 2 - this will fit with ED.
At this point it is difficult to say we will have to wait a few more days to see what happens.
Hi Krasi, May be the answer to my question is 'greed' but if most indicators suggest a decline in the medium/long term, why don't the big guys start taking profit? I am probably asking a very basic questions because I am still learning how markets work but since there are such strong divergences and indicators show topping, I wonder what keeps driving the markets up and up? Why would buying continue at the top?
ReplyDeleteHi Krasi, I found the answer to my question in the first two comments posted below. :-)
DeleteGood to hear that everybody are sure there is only one direction and this is up for ever.
DeleteSorry, I meant to say was that the there are people who believe that market will continue to go up (based on the comments below) and hence buying continues which answers my question.
DeleteI think market had the correction back in Jan. Next 5 to 10% correction won't be happening until market reaches 3210 to 3220.
ReplyDeleteI am talking about a correction of lower degree and that the linear thinking extrapolating melt up 3000 than 3100 now 3200 is wrong.... it will not happen.
DeleteSee dow jones Krasi... Say me no sub3 of 3.
ReplyDeleteS&p estructure lie.
When you take another index to fit your thinking why do not you take NDX or RUT?
DeleteCan't see us changing direction on expiry day . More likely we have a squeeze into the close , with better odds of a gap down on Monday that doesn't close.
ReplyDeleteI do not expect reversal, I see a diagonal(one more pullback and high) finishing wave 3 or B in contrast to bulls which see a multi month melt up... it was 3000 now I hear 3200 even 3600.
DeleteI agree market going up 3200 to 3400 any small sell off should bought
DeleteWrong the market will correct first.
DeleteAny correction will be very very small correction I doubt it very highly we break 2900 that's my opinion
DeleteVix is way too low indicating that topping is still far away. At least one can say that by looking at another epic bull of the 90s. Vix was elevated ( 14 and higher) for about 4 years before the market topped out. At the moment it’s still below 12. Is that the norm to be replicated with this bull? Hard to say but it’s quite possible. I am hoping that we get this pullback shortly now because with the divergence we have at the moment it’s hard to make a decision to get long.
ReplyDeleteThat is why in market breadth section I am writing to expect multiple VIX divergences and I like more wave 4 and 5 than B.
DeleteI believe by November 1st will be trading over 3000 that's just my opinion
DeleteVix has not confirmed the new highs...it should have gone to the 10ns level...but it did not...it only closed the gap at 11.31(made on August 10th). But it need to rally hard fast if not it will go below it...and confirm the bull move.
ReplyDeleteLook at previous tops. VIX is making a low much earlier followed by multiple divergences.
DeleteElliott wave is it getting their teeth kicked in on this move up just remember this an election year this Market is not going to drop hard I'm not saying we can't hit 2900 or 2876 I doubt it highly we break 2900 that's just my opinion good luck in trading I sold my long position yesterday at the top of the channel I just believe we're going to bang out 2950 before we drop 2960 and it's not going to be a massive drop in my opinion
ReplyDeleteYes, all this perma bullish EW gurus with 3 of 3 of 3 melt up will be kicked in the teeth.
DeleteMy forecast is based on market breadth and cycles not EW.
So what are you saying down into October 8th or so and how far down is it going to go or you're not looking that short-term you looking at a longer-term a picture are you short the market
DeleteDown for several weeks at least 2850 I will not be surprised to see 2800 either.
DeleteWhen we see the decline we will know if there is one more high left or not.