Weekly preview

The price action this week is not surprising, say bye bye melt up and SPX at 3200. It was so obvious even for a newbie just looking at the RSI... of course most of the traders for in love and did not want to see it for what it is. Relentless melt up is the third wave this is in the past 2017 now it is 2018.

Apart from that nothing new to add the same analysis wave 3 or B. I can not say for sure which one until I see how the move lower develops. The odds are higher that we saw the top of wave 3 and 4 is running. Why? - because this "plunge" occurs above MA50 and because of market breadth and especially the McClellan indicators. They are in corrective mode since the beginning of September 5-6 weeks already and price is following at the late stages when we should start looking for a bottom. Such price action is typical for a correction. The 20 week cycle is already at week 14 and a low is expected in the next few weeks. The market is narrow only a few shares holding it up and this shares will look better with a correction and one more high example - BA , UNH , AAPL for DJ and AAPL,AMZN,MSFT for the tech stocks.
Reversal and wave B is of course possible, but it has lower probability and I need to see a confirmation first - the price moving fast lower with impulse below 2800 in the next 2-3 weeks when a low is expected.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - DJ hit its target the trend line, SP500 did not... I do not know do we have finished ED or some choppy corrective pattern... it is not important.
At the moment I think we will see a bounce higher above 2900 to test MA50 and another leg lower with the same size to hit the lower trend line. For something more bearish(wave B running) the price has to move decisively below the trend line and support.

Intermediate term - all indicators look bearish, so I do not think it will just reverse higher... we should see continuation next week to finish at least corrective zig-zag. RSI was signaling very clear what is happening, the trend lines working perfect as usual... if you do not want to listen or do not know how to listen... well it is your problem the market was sending clear message.

Long term - bearish indicators with divergences too, but one more high could not be excluded... just waiting to see what the market will do.

MARKET BREADTH INDICATORS
The Market Breadth Indicators - price is following now.... usually when market breadth is in a sell mode for a while and price follows in later stages this is only a correction. More interesting is the big picture - AD cumulative is reacting very strong lower to a simple pullback. Only Brexit and the January sell off showed such weakness. I think we will see the missing AD divergence which usually signals an important top.
McClellan Oscillator - below zero since the beginning of September and mildly oversold, expect a move higher.
McClellan Summation Index - sell signal nearing the zero line.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - sell signal.
Percent of Stocks above MA50 - in the middle of the range, move to the oversold level 25 would be nice for a finished correction.
Fear Indicator VIX - not a surprise divergences and higher. I expect to see one more higher low before important top.
Advance-Decline Issues - plunging lower heading for the oversold zone.


HURST CYCLES
Day 37, but as I wrote the last two weeks three shorter cycles and day 19(yellow) will look better. It does not matter, in both cases we should see at least one more week lower for a correction.

Week 14 for the 20 week cycle, it is not a surprise that price turned lower instead of "melting up". It is time for 20 week cycle high(check) and a few weeks lower.