Jun 9, 2019

Weekly preview

One more decline on Monday to touch the neckline and 38% retracement followed by sharp reversal... as I wrote why should someone short a bottom?
I hope now the non-believers understand what I meant with go long or at least take your profits. If the market wants to make a higher high ride it, if it makes lower high short it again at much higher levels - simple trading plan, low risk, no emotions.

After this vertical move the only pattern which makes sense is that we saw the top in May and the decline begun with a zig-zag... this is a bad news because the pattern to the downside will be difficult to predict and trade.
What is the alternative - if you count this week as the start of an impulse it will be finished in the 3150-3200 area. This is not c/B anymore it will be i/3. I do not see evidence to support such pattern.

Short term - I see two impulses higher with the same size which is corrective and support my view - expecting lower high. The only way to count this an impulse is extended fifth wave - I doubt it.
Do not count it automatically as w1 because of strength. In Feb and late Oct 2018 we saw explosive moves up too, which ended with another decline (see the daily chart).

Intermediate term - I have tried to explain with simple TA why this is a low... many did not want to hear, but it is playing out as expected. History(rectangles) says we should see 3-4 week higher even if the pattern is bearish. The main pattern which I follow for weeks is that we have reversal with a zig-zag(yellow) which means complex pattern to the downside.
The trend line could be tested now only with ending diagonal to burn time June/July.... it is too early to predict such pattern.
The green pattern for impulse higher points to much higher levels and does not make sense any more.

Long term - one more leg lower to finish wave IV from 2009. Expect complex pattern because of time and so far we have only corrective zig-zag lower.

Market Breadth Indicators - are turning up. Advance-Decline Issues never moved to oversold levels, which is unusual... the indicator says we are still in the middle of a move lower which corresponds to the main EW count a-b-c lower.
McClellan Oscillator - above zero.
McClellan Summation Index - trying to turn up.
Weekly Stochastic of the Summation Index - trying to turn up.
Bullish Percentage - turning up.
Percent of Stocks above MA50 - turning up .
Fear Indicator VIX - I want ot see another low in the 13-14 before the next explosion higher.
Advance-Decline Issues - in the middle of the range. It does not give a sign that the move lower is finished - no oversold levels hit. It looks like the bearish EW count zig-zag lower now retracement and final decline to oversold levels.

For bullish right translated 20 week cycle I wanted to see shallow decline for 2-3 weeks. It was much bigger and longer and coupled with probable 40 week cycle high in May(discussed many times) the odds are higher that the next 20 week cycle will make lower high.

Day 4, it looks like the next daily cycle is running.

Week 1... possible 20 week cycle low at week 23.


  1. b/B for 40 week cycle low in August instead a/C, now a/b/B ???

  2. Maybe.... not a perfect fit(cycles), but it does not look impossible both time and pattern.

  3. Krasi your thoughts apple chart


  4. Hi Krasi... according to your first chart spx should reverse now about 100 points, it reached 76% Retracement today from the all time highs.

    1. We will see what happens now... despite the strength it is a-b-c well visible on RUT.

    2. So you mean pullback to 2850/2800 before next move higher?

      By the way, nice call on May lows. I am just selling out of the longs today, no sense getting too attached to any thing in these markets..

    3. It will look better(cycles,indicators,market breadth) if we see pullback like 50% retracement then one more high with divergences.

  5. Any thoughts on TSLA? Is do you see this as a B wave retracement?

    1. TSLA is impulse lower this is some wave 4. There is more to the downside.

    2. Short TSLA bonds, great hedge against almost everything bad that can happen with either this company, funding markets and global growth!

  6. krasi, you expect a 40 week cycle low in mid August but if on 4 June it started a 20 week cycle and it should last at least 12 weeks, we will see the 40 week cycle low in September

    1. The average length is 32-36 weeks or the first and the last week of August. By the way the last week of August is the 13th week.
      September is week 14 and so on... it could be in September it is not a problem.
      At the moment two months in advance without knowing the pattern I can only refer to the average length
      and watch what happens in August... if there is signs of a bottom.

    2. So does one first play for ATH first assuming 2830/2800 holds on a pullback?
      Or start positioning for the mother of all selloffs to aug/Sept low ?

    3. If you sell now you should know that this trade could last only a few days... or continue lower. I few traders I know are short because the pattern is playing out as expected.
      If you buy a low above 2800 you should be aware that it could last only 1-2 weeks 100 points and no new ATH.
      This means if you do not have a problem to be active trader, in and out without hesitation, you can trade the moves down-up with tight stops and if you are lucky it will plunge or go to new ATH.

      My view is that 1 week is way too short for the cycle to reverse and market breadth to reset. I think it should take a few weeks the move up to play out. Personally I do not have the time and I will trust my analysis and wait until the end of June.

      Again if you you do not have problems with in and out you can try to short with stop above the last high... or if you are not active trader try with 1/3 or 1/2 position to see what happens.

    4. Thanks Krasi, very helpful and detailed as always.

    5. Just to follow up, when you say you trust your analysis and wait till End June, what are you watching for? 1) pullback close to 2800/2770 but it holds and then you get long for ATH or (2) 2750 breaks and you play short for 2100 or (3) do nothing and wait till 2100 to get long?

      Just trying to understand how you match the various possible scenarios with actual implemetation.

      I'd be happy to share how I do it if you care.

      Thanks in advance.

    6. Another followup, similar kind of views on timing developing out there...


    7. This is one possibility which I mentioned this week - ED to touch the trend line.

  7. My time frame is 2-3 weeks or longer. I do not have the time and energy for trades lasting a few days...
    I went long last Monday lucky me:) Now if I see corrective pullback, I will add more and see what happens - lower high or ATH what ever.
    If I see impulse lower wait for a small pop higher sell the long and enter shorts. In this case I will miss some profits(I will have to trust my analysis that this will not happen), but as I said I am aiming longer moves.

    The current trade is based on analysis that we have 20 week cycle and the move higher will last at least several weeks to reset market breadth. Then I will watch for short trade.
    The goal is not ATH or 2100.

  8. Hi Krasi... I know that market crashes are impossible to predict but it seems to me that one might be brewing in the near term, like 20-25% drop in 2-3 days. I wonder what you think of such possibility. Thanks

    1. Usually there is signs that something is wrong - strong divergences with market breadth for a long time and it happens around important cycle low ind the final wave 3/C.
      I do not see this conditions at the moment so I do not expect crash this year.

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