Jan 12, 2019

Weekly preview

It takes too long and I think this move is of the same degree as the September-December decline and not part of it. The implications:
- short term - deep retracement, but no lower low. To the upside it is only a zig-zag which is corrective pattern so it is part of much bigger corrective wave higher - conform to my expectations for multi month B wave.
- the big picture - for a major top and reversal you need impulse lower, for a top in January.2018 you need an impulse for wave C too. With a corrective zig-zag lower(September-December decline) both options look dead to me - conform to my expectations for a-b-c/IV from 2009 running.

If you step back and look at the charts you will see - NDX/RUT two legs lower with the same size, DJ two legs lower with almost c=1,618xa, SPX/NYSE with an unusual but still Fibo proportions c=1,382xa. Short said my preferred scenario is playing, just got confused with the unusual proportion and the corrective begin of the reversal. It is difficult to see impulse lower and NDX is overlapping already so the odds for another lower low are very low.
With or without lower low the next decline is the buy opportunity for those who trade longer time frames or look for low risk entry.

How could the pattern look like? - Expect B wave for a few months. The price is moving fast and if it continue with this speed shorter cycles and important low in July-August time window(the last chart). Another option is the market to calm down and burn time with slowly moving B wave like in 2018 six months or triangle.
You can not predict how fast or choppy a corrective wave will be so just watching how it develops in the next months.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - I see a zig-zag and a lot of resistance. The next leg should be a deep retracement, but higher low. RSI still holding the trend line, but it looks like it is building a divergence. The micro count is difficult, there is no clear 1-2 waves, but I think the fifth wave of (c) is running with final high on Monday


Intermediate term - the price is testing resistance and MA50, RSI/MACD the trend lines. We should see one more push lower before break out. This will confirm that my preferred scenarios is running and we are in the middle of wave IV from 2009.


Long term - some kind of zig-zag for wave B expected. It could be part of a bigger correction or alternate triangle to burn time.


MARKET BREADTH INDICATORS
Market Breadth Indicators - buy signals and some extremely overbought.
McClellan Oscillator - extremely overbought level.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal.
Bullish Percentage - buy signal.
Percent of Stocks above MA50 - in the middle of the range.
Fear Indicator VIX - lower high around 25 expected.
Advance-Decline Issues - extremely overbought level.


HURST CYCLES
Day 12 for the 40 day cycle. It seems we had longer 20 week cycle consisting of three 40 day cycle instead of two.


Week 3 for the 20 week cycle. This is the model with longer cycles. In this case the price should burn a lot of time very long B wave or triangle.


Alternate is shorter cycles and zig-zag/flat which does not stretch in time. Wave A lasted three months for B/C 3-4 months each and a low in July-August.

38 comments:

  1. In the last chart, is it possible that low in july august is only abc(A)? Or it would burn too much time

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    1. It will take too long and it will not fit very good as part of the 2009 bull market.

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    2. ok krasi. And is it possible 4 january was 5/C truncated?

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    3. No, it is b wave flat correction

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  2. For those who think we should see lower low and the end of a big corrective move from Jan.2018 - yes there is such option.
    Because of missing impulse lower for wave C to finish the pattern you have to count complex combination double zig-zag.
    The first one a-b-c from January.2018 high to the October low. X wave a-b-c in November. Currently a-b from the second zig-zag and final plunge lower wave c to finish it and the whole pattern.

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  3. Hi Krasi. What are your base case view for Nikkei225 and HSI. From what i can see, a new low seems very likely. Thanks

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    1. I do not follow them, but yes one more low low will look better.

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  4. Within spitting distance of the 2620 target , but may stall around here as Dow 24100 should be resistance . It seems too many bears looking for a retest of the lows has given this rally more strength than anticipated .

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    1. I was expecting ED to finish v/c and now it looks complete... waiting if we will see a reversal.

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  5. I think it is a/B 2700. Then b/B 2450 and finally c/B 2800.
    May be chart of shorter cycles.

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    1. Yes, it is a/B but 2700 is unlikely. Testing resistance and MA50, a=c higher, RSI hourly trend line broken and testing it, extremes at some market breadth indiators - all the signs point to final wave and a top.

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    2. Now it seems too long for a topping? This kind of hanging means another wave higher? Thanks.

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    3. Now there is enough waves to count a top with the spike v/5/c... waiting to see what happens next.

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  6. Hi Krasi.

    Which your analisys for gbpusd long term please?

    I think gbpusd finished her bear market long term.

    Thanks.


    USA markets is difficult medium term.

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    1. USA markets B wave it could get choppy.
      gbpusd I do not follow it... quick look it looks like finished leg lower from the high in 2018.
      If there was a major low it was in Jan.2017 this is either 2 or B.

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  7. Today felt like CTA short covering flows above MA.

    Interesting juncture:
    1. Technicals point to reversal here however,
    2. investors are either not long or short from lower.
    Point 1 has worked in 2018, Krasi nailed it all the way as we know ..
    Point 2 indicates pain trade is market goes higher.

    Any thoughts?

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    1. Yes, like some algos pushed the button simultaneously:) but this does not change the pattern it was just completed.
      I understand only charts and they are saying there is finished pattern and we should see a leg lower before continuing higher.

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  8. Still missing big gap up day, I think 2700 tomorrow is fully possible...every corrective move up recently has ended with a 50pt+ move day...in my opinion it is a necessary move to flush out all the weak shorts. Obviously I would prefer Krasi be right,I'm not long, but I don't see a recent move that ends like today.

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    1. That was yesterday - cleared the most stops. 2700 is just round number and does not have any other meaning - no Fibo levels, no MAs, no support/resistance zone.... just nothing at this level.

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    2. odds are stacked against us when calling a trend change :) I see potential closing high today based on SPY chart...but still see unfinished pattern on futures and believe there is more to the upside...can't help but feel this final move up was supposed to be accompanied by an announcement followed by sell the news (e.g., end to govt shutdown or something) but nothing....I am suspecting something of that nature will come this weekend and another exploding candle that hopefully ends with doji. Also we are getting close enough to 200dma and 50wk for ppl to degross shorts.

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    3. "Trump To Make "Major Announcement" On Border & Shutdown"
      Maybe this will do the job of course one more high is possible, but I think we are close to the top.

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    4. Agreed very close, wish I had more capacity to short higher though... am too short already :(

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    5. I do not think it will be a straight down. I expect 100 points lower to support around 2550(I will cover most shorts) recovering most of the decline(short again) and then comes the bigger move lower.

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    6. That's helpful, thank you!

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  9. meant to say "any recent 'short term trend' that ends like today"

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    1. Today the European indexes joined to the party with final fifth wave higher. Everywhere the same pattern EU indexes,US indexes, different shares.... we are seeing the top. Sudden gap up looks very unlikely.
      Probably lower 50 points after MLK day:)

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  10. Bears need the weekly close back below 2620 , or the medium term trend looks up .

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    1. It is confirmed up. That was clear two weeks ago when we did not saw immediate reversal lower.
      Closing below 2620 will not change anything. As I wrote many times multi month B wave, it is running already.

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  11. which is more likely?.
    A/B (A wave finished today or Monday) or a/A/B

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    1. A/B looks more likely because this current leg is very long. a/A/B is not impossible, but it needs shorter c below 2800 then deeper B.... many conditions which you can not predict just follow.

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    2. KRASI YOU SAID YOU ARE WRONG WHAT IS YOUR SPX TARGET

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    3. I was wrong about how the move will end - I thought the spike was yesterday.
      It is in the target zone for a top already.

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  12. yeah , everyone got this wrong. Market extended by 100+ pts on the downside , now chewing up the bears on the rally .

    not sure how any short term count can predict either of the last few moves . Too big too fast

    Nowt to do but wait for the retrace & see what shape it takes

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    1. Yes, when the market moves too much too fast it snaps back the same way. The bears cheering the bear market and caught with the pants down again.
      I have not found a way to predict V shape moves, but at least not in the bear camp:)

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  13. 2690 ish is the next critical point. (hitting the upper trend line)

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  14. FIBs and trendline resistance just over 2700 , maybe on a ramp into the close tonight!

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  15. Every index and share I look shows complete pattern. The pattern which I follow is still fine. This final wave looks huge, but if you measure 0,618 for wave 1-3/c and add it to the low of wave 4/c and we have the current high for wave 5/c. This is very common fibo measurement for the fifth wave.
    So I still think this is the right count just bigger fifth wave.... I do not believe in more ramps 2700 and above etc.

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