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.


  1. Hi Krasi - would appreciated your thought on oil. On 11/10 you mentioned that the leg down in oil should last at least 2 weeks, now it is down from $76 to $50 (7 weeks straight down). Do you see any possibility of retrace from this level, or expect more down? - Thank you very much.

    1. In the last several months Oil has very high correlation with stocks. I thought we will see a low with the indexes, but often this correlations are tricky and we will see a low for crude oil with the second low for the indexes... relentless sell off and double bottom for the indexes.
      If you look at back you will say the correlation is working and the time to buy for both assets in end of November, but the move for both is different.
      Currently I think wave iii of 5 is running a few more days for finished pattern and I expect at least 50% retracement.

  2. Krasi - Thank you very much for the response. Have a great week!

  3. Now still final wave 5 to bottom or it has been red B wave in the first short term chart?

  4. Krasi do you believe the low in the S&P occurred and we will rally into the end of the year or do you believe there will be another bottom here before December 25th

  5. I do not believe the most bearish scenario is running.
    The question is do we have a reversal or one final low.
    At the moment I can not say for sure. I have to wait and see continuation for an impulse or the move up failing and confirming only corrective move.
    So far I can not see finished pattern and reversal.

    1. It looks like a bear flag could be forming. I think we'll see the market direction tomorrow (Powell speech) or post Friday/Monday (G20 and trade talks).

    2. Yes, it does not look like a reversal. Looking the tech sector I doubt we have a low too.
      NDX is looking like wave 4 of a diagonal so one more leg lower. Shares like BA,AAPL,MSFT,GOOGL,AMZN all need one more decline for finished pattern...

    3. Now it looks like a strong reversal. how about gold/gold miners? wave 5 down or?

    4. The indexes we need now 4 and 5 to confirm impulse.
      PM and miners - the important low is next year(currently I am watching March) so probably too early for plunge lower. More likely wave c up to finish a-b-c pattern.

  6. Krasi, in the euro dollar, which is more likely for q1 2019 ?
    zone 1.20 or zone 1.10 ?

  7. Thinking 2744 is the end of the abc , with possibility of one more high by tomorrow . Transports was the tell yesterday , printing a new high above the 7/11 highs . Maybe a bit more to go , but for me the next week will be much lower . Stops above 2760

    1. If we see one more high than we will have finished impulse which means more to the upside.
      Closing the gap around 2680 is likely, but another sell off looks unlikely.

    2. I have changed my mind it is possible:) The impulse should be completed around 2760-2765 so patience and adjust your stops. The chart tomorrow.

    3. Thanks Krasi,

      Maybe a sell off towards 2720 today and then a pop higher on Monday to finish us off? If so , I'll trade around my short position .

      A leg lower would then finish in time for a late & small Santa rally . I have one date in mind , but not getting ahead just yet.

    4. Currently wave 4 should be running and I expect one more high next week.
      If the pattern is bearish it should be flat correction from the late October low and one more sell off to test the January/April lows.

    5. That would fit with what I'm thinking. It would set up a super buying opp just before Xmas...we'll see.

  8. Krasi how high could spxs go till end of year 2850?

    1. 2850 is the minimum target, but I can not say if it will hit before the end of the year or a week later.
      If it keeps the same pace yes.