Nov 25, 2018

Weekly preview

Heavy sell off in the tech sector and deeper retracement. Not a big surprise if you look at the previous corrections. As I wrote simple statistic 5-6 weeks sell off with most of the loses in 2 weeks then 2 weeks sharp rally followed by 2 weeks to test the low... nothing new under the sun.
With or without new lows the signs are for a low - cycles, market breadth, seasonality and a rally for 2-3 months is expected.

Short term - one more low around 2600 next week for perfect Fibo measurements - 5 to finish c and c=a. I expect to see the green scenario.
What if I am wrong - if we do not see impulsive move above 2700 than the probability is very high that something else is going on.... probably bigger double zig-zag with another cluster of Fibo targets around 2500. This is the red scenario... I do not believe it will hapen, but you want to be prepared.

Intermediate term - expecting a low and move higher for months, then we will see if it is X or double zig-zag for 3 of ED.

Long term - the histogram with second very deep trough lower than 2016(8 year cycle low) and 2011(21% correction) only in 2008 it was lower. It will take months to reset, then expect the next big sell off.

Market Breadth Indicators - turned lower, even if we see lower low we will have divergences.
McClellan Oscillator - retraced lower mildly oversold and trying to turn up.
McClellan Summation Index - turned lower.
Weekly Stochastic of the Summation Index - buy signal.
Bullish Percentage - turned lower.
Percent of Stocks above MA50 - turned lower near the oversold level.
Fear Indicator VIX - another lower high...
Advance-Decline Issues - near the oversold level.

Day 18 at least short term low i expected.

Week 4 if we see lower low probably we have to extend the 18 month cycle with 4 weeks.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
We have a third sell off and for the third time we do not have finished setup, the bears can not show enough strength.

Nov 17, 2018

Weekly preview

Leg lower and confirmed corrective a-b-c to the upside as expected. The current move to the downside does not look finished, looking at the indicators and market breadth I do not see signs for a low either. The most likely scenario is to see one more leg lower and this will be the expected test of the low. It is deeper than expected already so the more likely scenario for the big picture is wave X testing the January high or slightly above. For an ED the bulls will need now double zig-zag like April-September, not impossible but you can not bet on complex corrective pattern at such early stage.

Short term - we have extended fifth wave which makes the pattern look like a-b-c, but if you look at NYSE and DJ impulse lower counts better. As I wrote the pattern does not look finished so I expect one more leg lower.

Intermediate term - the both scenarios shown - X wave in red and ED in green. With the deeper retracement X looks more likely, for ED the bulls have a lot of work to do. Double zig-zag to reach the upper trend line looks more likely than big wave c 1,5-1,6 the size of a.

Long term - most likely December/January higher and waiting for the next top for more clear pattern.

Market Breadth Indicators - look positive to me...
McClellan Oscillator - retracing lower after very overbought level.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal.
Bullish Percentage - in the middle of the range.
Percent of Stocks above MA50 - in the middle of the range.
Fear Indicator VIX - moving lower....
Advance-Decline Issues - in the middle of the range.

Day 14 fro the 40 day cycle, half cycle low expected with the next low.

Week 3 for the 20 week cycle.

Nov 10, 2018

Weekly preview

We saw another higher high as expected, but much stronger and this changes the intermediate term picture a little bit. Such price behavior feels as part of corrective structure.... I know what you will say how could it be so strong and corrective:) That is the problem we do not have "stable" price behavior we have erratic price swings which is common for corrective structures.

Either it is a-b-c or if we see one more high impulse but way too strong for wave i of 5. If I am right than the possible patterns are wave X from a complex correction or wave iii of 5 of ED. The indicators and market breadth just turned up from very oversold levels and it is too early for another reversal lower. I expect something like 50% retracement in the next 2-3 weeks and another leg higher.

Short term - it looks like a-b-c to me... one more high for impulse can not be ruled out, but this will not change much the big picture. After that 50% retracement expected and the pattern will look like inverted H&S.

Intermediate term - retracement and another leg with the same size to the upside... either connecting wave X from complex correction or wave 3 of ED(last chart DJ better visible). ED is more common pattern than such complex combination of corrective patterns... we will see in a few months. For trading the direction for the next 3-4 months is the same so it does not matter.
RSI is respecting the trend lines - testing the upper trend line defining the down trend and it is time to pullback lower to more sustainable trend line.

Long term - a few months to the upside before we can think about a top.

Market Breadth Indicators - turned up and we have buy signals.
McClellan Oscillator - overbought levels, which is sign for a strength.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal.
Bullish Percentage - buy signal.
Percent of Stocks above MA50 - moved up to the middle of the range .
Fear Indicator VIX - moving lower, expect another higher low for triple divergence.
Advance-Decline Issues - heading higher nearing overbought levels.

Day 9 of the 40 day cycle. Most likely the retracement will mark half cycle low.

Week 2 of the 20 week cycle.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Despite all this selling we have two failed setups to the downside which was a warning for the bears. In contrast we have finished setup to the upside which means strength.

DJ is stronger than SP500 - it made higher low above the June low and retraced big portion of the decline 76%. One more leg higher with the same size and we will see a new ATH hitting the upper trend line.... and the pattern will scream ED.

Nov 4, 2018

Weekly preview

We saw one more low and really nasty bear trap with reversal in the last 15 minutes. The signs for an intermediate term low were obvious, but of course it is scary to trade such volatility. With overlapping structure this second sell off was doomed to fail and one week later most of it is erased. We have impulse higher so next expect retracement lower and more to the upside.

The big picture - we should see a few months higher. The bearish case wave B to test the two tops from January/September, the bullish case new ATH... I will not be surprise to see ATH with corrective wave B either.

Short term - I wrote that one more lower low is possible with oversized ED.... it though this has lower probability - well it happened.
Now the move higher looks like impulse, which confirms the reversal. I am not sure if this high is 3 or 5... with one more high we will have impulse with better FIbo measurements, testing MA200(hourly and daily), testing the RSI trend lines (daily chart), indexes like RUT and DAX need one more high for impulse, if you look at previous correction we have roughly 2 weeks higher and 2 weeks lower to test the low 3-4 days higher is too short.
I want to say that one more move higher next week Tuesday/Wednesday will look much better.

Intermediate term - it is official we have overlapping and the move lower is only corrective a-b-c. With this final low on Monday the Fibonacci measurements look perfect with a=c(for C) and A=C and for the trend line the shadows are included. The price is nearing resistance and MA200, the low should be tested and the gap closed, but this will be a buying opportunity.
The bulls see 3000 at the end of the year, but I think the index will spent the rest of the year between support/resistance zone for a-b-c->X or 1-2 i-ii.

Long term - the histogram with huge trough like 2011/2015/Jan.2018 it will take months to reset, RSI confirming a-b-c. We have an intermediate term low which will last for months. Now waiting to see how the move up will look like to confirm one of the two scenarios.

Market Breadth Indicators - most of the indicators are turning up after divergences. It will take time, I do not see V shape recovery.
McClellan Oscillator - above zero after triple divergence.
McClellan Summation Index - turned up from extremely oversold level.
Weekly Stochastic of the Summation Index - trying to turn up from oversold level.
Bullish Percentage - buy signal.
Percent of Stocks above MA50 - turned up and trying to move above 25 level.
Fear Indicator VIX - moving lower after a divergence.
Advance-Decline Issues - moving higher after a divergence.

40 day cycle was finished which is not a big surprise, now day 4 of the next 40 day cycle is running.

Week 1 of the next 20 week cycle. I think we have 18 month cycle low.