Dec 8, 2018

Weekly preview

Lower as expected, very fast and volatile move... and it looks like impulse to me. I can not see bottoming pattern and watching the charts my feeling tells me we should see something higher next week and final move lower to finish the decline which begun in September. So I still think the more likely outcome is up for wave 2/b and final sell off. Alternate options are triangle if we see MA50/MA200 tested on the daily chart or it is just bigger b/C, unlikely but let's say if I am wrong rally to around 2840 for much bigger flat.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - looking the indicators I do not think third wave or c lower running, more likely is to see something higher. If the second leg lower is already running the price should fail at MA50/MA200 on the hourly chart. If we see the price testing MA50/MA200 on the daily chart you can speculate that we have a triangle(e/B yellow) or just bigger b(red) wave. The last option much bigger flat(green labels) I think this scenario has very low probability.


Intermediate term - the same on the daily chart. The indicators suggest a-b-c higher, RSI turned lower from the upper trend line and it is testing the rising trend line, the histogram turned lower. As long as the price stays below MA50/MA200 the direction is lower. If I am wrong most likely we have a bigger flat with complex b wave(green).


Long term - no change, expecting one more low and move higher for a few months.


MARKET BREADTH INDICATORS
Market Breadth Indicators - some turned lower, there is no convincing buy/sell signals, expect divergences with the indexes making lower low for strong buy signal.
McClellan Oscillator - below zero.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal.
Bullish Percentage - turned lower.
Percent of Stocks above MA50 - turned lower, nearing oversold levels.
Fear Indicator VIX - still elevated levels, but several lower highs, intermediate term low is expected in the next few weeks.
Advance-Decline Issues - in the middle of the range.


HURST CYCLES
Day 27 possible mid cycle low.


Week 6... the picture is not 100% clear, adjustment will be needed after we see the indexes hit a bottom.

33 comments:

  1. I think we should see a bottom today and the mythical Christmas rally:)

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  2. Hey krasi!!! Thx for the comments! What level do you think we should bottom at today then? October low or a mini-capitulation around 2565 to 2530? Or do you think the bottom has been seen today already? And rally to 2710 still as in your weekend update?
    Thx, and good luck to you

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    1. Something like 2600-2610, then at least to the previous high 2710.

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  3. Hi Krasi - What do you think about crude oil? I'm not sure whether we are at 3 years commodity cycle low/ or do we have more down to go? Do you see any chance of bouncing before going down some more? Thank you very much.

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    1. Yes, we should see a bounce wave B from a zig-zag and a low next year.
      When you mention cycles I think crude oil follows the Benner cycle 11-10-7 years. You have 3,5 years component which vary between 3-4 years and compose bigger cycles 7,10 and 11 years long and combined are the 30 year commodity cycle.
      Hurst cycles do not seem to work.

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  4. Hi Krasi,

    Any thoughts on SSEC and HSI which is targeted by the US? Do you think the rebound is over or could extend into Q1 2019?

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    1. SSEC - impulse finished from the high and now correction higher. Wave 2 or b running lower to 2500 and higher again.
      HSI - something similar.

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    2. Thanks Krasi! as always!!

      Wondering if the corrective move higher has already resumed?

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    3. If ask about SSEC/HSI - no. It is possible to see a lower low for HSI when we see the final plunge for the US indexes.

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  5. Hey Krasi , there was another 4 & 5 after all! Hopefully that's an interim bottom , but some risk on further volatility for a few days until today's highs taken out.

    Thanks for all the input this year...

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    1. No, I think it is a zig-zag and this were waves b and c, that is why it has overshot my target.
      But now the pattern looks clear - the same from the weekend:) Wave b up most likely 50% retracement, but below 2710 because the index made lower low.
      Measure all three sell offs from the September high and you will see that they have the same size.
      I think we are in the middle of the second leg lower.

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    2. The short term chart this week is cut off, so we can't see the path you are referring to. Thanks for the updates!

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  6. Krasi, ending diagonal from 03-12???

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    1. I was thinking the same could it be ED because it is developing too fast and it will be finished before Christmas the whole decline from September.
      It is possible.... if we see longer and/or 61,8% retracement.

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    2. given the weak retracement, do you think another wave higher to above 2700? Thanks.

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  7. Out of longs here . At this rate this wave will be over today/tomorrow & we could have fresh lows ahead . Too much risk of an extended fifth wave down to hold long & would rather short another spike.

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  8. Kudos for your timing krasi....these things are outrageously difficult and treacherous to forecast.... do you still see the near term upside target limited to roughly 2710, before the final leg lower? Or with recent development, maybe more likely to reach 2740 to 2770? Thx and good luck to all!!!

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  9. I think we have a corrective move higher, which just begun and it will last for a while.
    That is why I wrote this weekend - "something higher". The obvious choice is quick a-b-c(2700) and final plunge, but my feeling tells me something else, which will last longer... probably the last leg of big sideway pattern(up to MA200).
    For example Europe has different pattern correction lasting almost a year, but all highs and lows are in sync with the US indexes. I think DAX just finished wave 3 and it will take a few weeks for wave 4 - the Christmas rally , which everybody is talking about:)

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  10. Do you have a chart of dax?
    when did wave 3 start?

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    1. I do not have a chart, the high in May or in June...

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  11. Still see the risk of fresh lows here ..last two days rally attempts have failed at resistance and if she gaps down today , the ending diagonal looks entirely plausible

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    1. weak again today . Bulls need it to hold 2635/7

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    2. I think is more likely to see one more wave higher before turning lower again.

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    3. Thanks Krasi ,

      Should hold around here at 2620 or see a spike to 2590 in early rth . Either way , I'm then on-board for a rally next week and a short term retrace .Transports was the tell again yesterday .

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    4. I have traded the first spike higher with nice profit, but this time is too risky for me:)

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    5. I agree - I think any rally will be very short lived, so certainly risky .See where we are on the open and at the european close & if the risk/reward looks decent enough from there . Ideal for me is a spike towards 2590, but might be too hopeful...

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  12. HI Krasi, I know oil is a tough one to forecast. Nevertheless, what is your view on it? Is it basing (not something that happened to this commodity for the past few years though) for B wave up or it still want to slid lower to make a fresh low? many thanks and cheers

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    1. Short term it looks like leg higher triangle and I expect another leg higher above 54.50... It is very difficult to forecast if we will see one final low with the indexes or not.
      If this leg higher is weak something like 55-55.50 the probability for lower low is higher.

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  13. still feel confused about the current move.. another low or continue higher until Christmas? Thanks.

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    1. It should be confusing(corective) move:) I think it will continue higher next week.

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  14. Hello Krasi! Confusing it sure is...it’s striking how the market wants to inflict pain to the short term punter... after having done the same to medium term ones :). Regarding this corrective move, do you see it bouncing today/Monday around 2600 to make a higher low , till 2700 to make a higher high next week? Thx and good luck!

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    1. Yes,something like that. The problem is this time I can not say with high confidence it will happen like the last few weeks.

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