Oct 20, 2018

Weekly preview

We have the bounce higher, but it feels more like b wave and not 4. You can count impulse with perfect Fibo measurements, the move higher retraced 50%, Demark setup lower has not been finished... for me this is not 4 but b is running already.
Whether b or 4 it does not matter for the big picture - expect one more low in a few weeks and higher for a few months.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - I think wave b is running and it will test resistance and the broken trend line around 2850.


Intermediate term - I expect 1-2 weeks bounce between MA50 and MA200 for wave b and one more sell off. For something really bearish(red) we should see a move below the trend line and new lows around 2500.


Long term - I can not see major top(V red), I think something more complicated is running either 4 of III or complex IV.


MARKET BREADTH INDICATORS
Market Breadth Indicators - trying to move up from oversold levels. I think we will see a small divergence and up (wave b) followed by a bigger divergence a few weeks later for an intermediate term low lasting a few months.
McClellan Oscillator - resetting after very oversold levels.
McClellan Summation Index - sell signal, heading for values below -500 which is typical for important intermediate term lows.
Weekly Stochastic of the Summation Index - sell signal, in oversold territory.
Bullish Percentage - sell signal, but strong so far, around levels for an intermediate term low.
Percent of Stocks above MA50 - bounce higher from very oversold level.
Fear Indicator VIX - pulling back after high levels close to 30. I expect another lower high followed by another higher low for multiple divergence.
Advance-Decline Issues - bounce higher from oversold level. I expect to see divergence before the indexes hit a low.


HURST CYCLES
Longer 20 week cycle expected, so most likely two longer 40 day cycles and the second one at day 29 with four 20 day cycles.


Week 16 of the 20 week cycle. I think we will see a few more weeks for 18 month cycle low, average length is 64-66 currently week 61.


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Interesting is we do not have finished setup despite the sell off, which makes me think we have wave b and not 4 running.

57 comments:

  1. Krasi,
    Can you email me direct? i would like to talk - We are looking to add traders-
    thanks
    Dan
    Dpavilonis@rjobrien.com

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  2. Hi, Krasi now indexes look like crash again with wave 5 or? And gold is continuing up... Appreciate your ideas. Thanks.

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    1. Some shares and indexes like XLF,SOX,RUT are finishing wave 5 for DJ and SP500 is more likely just a test of the low. For me this is a buying opportunity.

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  3. At the moment it looks like b is finished and because we see the market selling off again only after a few days retracement, I expect c=0,618xa.

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    1. For begineers like me, can you provide approx SPX value of c=0,618xa so I can draw the accurate fib and learn from it? Thank you for you time Krasi.

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    2. It is simple "a" is long 230 points which is 100%, c is 61,8% or 230x0,618.
      Every charting program hat Fibo measurement, so you do not even need to do the math:)
      See the chart below.

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    3. Thanks Krasi! I learnt to use the tools in the up direction. Until now that worked in the bull market. Now the direction reversed and I was confused. Thank you very much, I learnt something today. :-) The latest chart you posted is very useful as well.

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  4. I think I'm giving this a little more time and room to run, but could consider a solid bounce off of 2700 as an entry point. This volatility around the blackout period seems to becoming more common.

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  5. Looks like we'll bounce up the 2762 2780 just my opinion I'm long spxl here at the bottom

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  6. I see this at the moment one more move lower to finish an impulse and nice Fibo relation for c=0,618xa

    https://imgur.com/a/coy3gID

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    1. It seems reversal rebound is strong. Do you still think another wave down to finish the impulsive? Thanks.

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    2. Not any more. Now it looks like perfect expanded flat. We saw the low of wave b for the expanded flat and now c running impulse to 2865 and this is wave 1.

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    3. Thank you for the prompt update. Such a expected day! How about Gold miners/Gold? Hopefully this is the final wave up and it should go impulsive down from now...

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    4. Krasi, Looking at your 6:48pm post. The SPX only went 10pts above your forecast for iv (it closed today's gap and = 50% retracement). So what made you change your mind that the low is in now? I feel like IWM would be leading up if it was over and so far it lags. But forget IWM, I'm just curious what factor/indicator made you change your mind? Thank you!

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    5. The overall behavior of the market... the daily candle for example.
      Instead of weakness slowly drifting lower bearish daily candle and another sell off on the next day for 5 we have strong reversal and closing with bullish candle.

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    6. Gold today we have finished impulse and pattern looking like a-b-c with c=a.... now waiting to see if the market will confirm it or not.

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    7. Thank you Krasi...what you're saying makes sense and it looks as it should for abc. For me it is interesting that we close below 50 WMA for first time (not on weekly basis just daily) and debatedly below trend line from Feb low (using low to daily closing low)...we still have until Thursday for GOOGL,AMZN,INTC,MSFT to report, ECB, and then the US midterms in two weeks, so too much risk either way for me for big move from here...we shall see, maybe you're right it's a bear set up. I guess I prefer a break of 60min chart downtrend first or 50MA on hourly at least before getting bullish from here. It would make more sense from a risk reward perspective at this pt. Thank you as always.

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    8. i would prefer a flush tomorrow morning for v then reversal, but it's only 10pts from last low so who cares.

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  7. Hi Krasi.

    Go to 2800-2820 in B wave... Fake down.

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    1. Yes, it looks like a trap for the bears and b is still running.

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  8. Agree with a flush this morning , still see scope for a test of y'days low or a new low , per your chart y'day Krasi .

    Not easy to trade all this volatility

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  9. USD is now 35 weeks up from the low or c 0.618 x the 58 wk decline that preceded it .

    Nice double top before GDP on Friday might be a good entry & looking for long EUR entries round there

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    1. Yes it is time for the USD to move lower.

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    2. In this sense, gold could move higher? I thought gold should finish wave 4 up and begin wave 5 down?

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  10. Now this is wave v? Thanks.

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    1. No, I expect higher low and move higher.

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  11. Looks more like 3 than B.

    Regards,
    Mily

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    1. Gosh that monthly candle looks horrible, still one week to go, lets see if bulls can "fix it"

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    2. Wave 3 does not make divergences just pushes all indicators and market breadth lower and lower. It is a-b-c from the last chart.
      I thought with the huge shadow from yesterday more complex b is running... but I was wrong just quick a-b-c from the top.

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    3. If this is wave c, does it mean we are approaching your intermediate term low? Today it has been about 2656. The green line for intermediate term points to 2620, and if measure directly c=a, it should be about 2600...

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    4. Short term it looks like iv and v missing to finish 5 of c.... 2620 looks more likely.

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  12. Good morning Krasi. Your chart from yesterday worked out, but my problem is how and where we closed...which is below the trend line from Feb lows and at the lows of the day. The uptrend line from Feb lows and Nov2016 lows now look definitively broken on my daily charts...which now make it resistance? Either we just saw 5 waves down from the high for A or something way more bearish is forming. If this is wave 4, it just overlapped with wave 1 from what I can tell so could this be a diagonal triangle? (I have no clue honest question). But the risk reward of being long just below a broken uptrend line is terrible, and when IWM the leader is actually imploding even harder than SPY it doesn't spell confidence. This just seems like a crappy setup for longs from today's close, especially in front of massive list of bellwethers reporting, ECB, and more importantly the midterms Nov6th. Who's going to back up the truck and buy now, to save (bad r/r) broken charts just before all those risks?

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    1. How the emotions swing from one direction to the other:)
      What I see - short term iv and v missing to finish 5 of c(v of 5 RUT).
      We will see false starts to the upside one more lower low to finish the pattern, one more test of the low with higher low because the buyers are scared.
      Definitely the indexes are close to important intermediate term high and move higher for months... until March/April next year.
      If you do not like risk/stress you should wait for a few weeks until the bottoming process is over.

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    2. Lol, you are right to sense stress and emotion. I am lost and afraid now... But you bring comfort with your words. I want you to be right on this, but I will stay out of it since I'm already at my limit of stress for now since no stop loss seems low enough...if I had a stop loss would be more comforting. :) Best of luck everyone and thank you Krasi for always being here for everyone! you are the best!

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  13. Feels like a false break and due a bounce to try reclaim DMA at-least. Asian indices flirting with long-term supports too. Early November looks bleak, but perhaps a bounce into monthend first.

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    1. Bottoming will start... a few false starts to to upside, one more lower low, one higher low then really something to the upside.

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  14. What are your upside targets if there is a bottom due?

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    1. At least the resistance zone 2800-2870, but it will take time months.

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  15. Hi Krasi, what timing do you see for the missing iv and v? thx!

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    1. What's the targets for missing iv and v please?

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    2. Hi Krasi.... what is your view on the possibility that it is an ending diagonal as C wave to complete a iv for a downside target of 2580.... with mid-term election results as the excuse for a final up push . Thanks.KT Wong

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    3. I think 2620-2630 if we see one more sell off.

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    4. Thanks Krasi. KT Wong

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  16. Can you give us your view on HSI

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  17. Could see 2725-2730 today , then all bets off on the tech reports tonight & GDP tomorrow.

    Wild market....

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  18. The move lower is overlapping zig-zags. Two different Fibo measurements point to 2620 as a target, which is the expected level for wave c from the daily chart above.

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  19. Finally seems short term reversal... still another wave to 2620? Thanks.

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    1. This will be very strange if we see another reversal. The Fibo measurements give you roughly the target. The target range was hit this is enough.

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    2. Perfect prediction Krasi! It was absolutely perfect!

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  20. That's true but still feel rebound too quickly, should be another higher low right?

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    1. We saw already the bears squeezed twice it is more likely to see violent move higher.
      I expect test of the low but later in a few weeks, first the shorts will be squeezed.

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  21. Krasi, You're far more seasoned than I am, but still wanted to share my opinion...which is that the SPX chart is broken as of today on a daily and weekly basis...you can just look at the daily and weekly up and downtrends to see there is more downside and maybe it's only to 2575, but there's too much risk to get long here. I'd rather get long on a close above the 200dma. Every chart is below the 50wk MA in every sector ETF, AMZN and GOOGL even below 200dma so why not wait for a sign of a reversal before taking a risk on the long side? There is tremendous downside from here and the writing has been on the wall for a long time looking at the indexes across the world and even IWM. What's the upside/downside today? makes no sense here. We could potentially be in a wave 3 down...at least until this sharp downtrend line is broken. If we get a squeeze higher that is able to close above this downtrend, that's a bullish signal only a few points higher vs 100s of pts lower. My problem is that CFTC S&P futures/CTAs positioning this week was even more bullish than last week - at multi-year highs still. Russell CFTC still going more short, at year record and no sign of reversal or a short squeeze. The most shorted and extended charts should show us when there is a bottom as always and they haven't yet. I know EW says this could be a bottom, but r/r is better on the short side vs. Thursday's closing price in my opinion and any rally will be a bear market rally.

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    1. I see analysis of your fear. It is fine if you see too much risk as I wrote we should see test of the low in a few weeks so you can wait no need to go long.
      The correction has not begun a few weeks ago, it has begun 10 months ago and it is finishing.
      Look at NYSE DAX and study market breadth... I do not have the time to post and explain.

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    2. I have added charts in the new post.

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  22. Also, look at the H/S on SOXL

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