Jul 20, 2019

Weekly preview

It looks like the daily cycle turned lower and we have a high which could be the top for all cycles of higher degree up to 4 year and see a decline lasting 6-9 months. For starter we need to see impulse lower to confirm intermediate term high in place.

I do not think the market will crash next week. The daily cycle is right translated - long and strong. In theory the next one should make higher high, but it will be the last 4th daily cycle for the 40 week cycle. Taking into account the other factors like pattern, market breadth etc. I expect it to make lower high.
I am thinking something like 2 weeks lower to MA50 around 2900 and daily cycle low, FED cutting rates trying to stop the decline, the next daily cycle begins 2-3 weeks higher with deep retracement at least 62% and from mid-August the plunge begins.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the first support level 2990 was broken which activated the red count - finished ED. Now we need an impulse lower below 2960 for confirmation.
Many were skeptical about reversal because of the sharp jump higher on Thursday, but look at the reversal in May - 90% retracement and a lot of overlapping the first few days. Nothing different, do not expect perfection, it does not work this way.


Intermediate term - looking the indicators we have a high - the histogram is below zero after divergences, RSI broke the trend line. The next move should be decline to MA50 and daily cycle low around 2900 the end of July early August.


Long term - this should be the top of wave B or D and decline in three waves or impulse is expected.
The weekly candle is bearish reversal candle and the indicators look bad all of them with divergences and MACD/RSI with double divergence.


MARKET BREADTH INDICATORS
Market Breadth Indicators - short term topping in the last 2-3 weeks as expected and longer term divergences. All indicators are turning lower so the indexes should be making intermediate term high.
McClellan Oscillator - divergences and below zero now.
McClellan Summation Index - starting to turn lower.
Weekly Stochastic of the Summation Index - buy signal, but turning lower.
Bullish Percentage - short term topping, bigger divergences and turning lower.
Percent of Stocks above MA50 - short term topping, bigger divergences and turning lower.
Fear Indicator VIX - short term bottoming, longer term divergences, and turning higher.
Advance-Decline Issues - series of lower highs and turned lower again.


HURST CYCLES
Day 33, it looks like the daily cycle turned lower. Last week I wrote the daily cycle is easy way to trade with low risk. Just watch MA10 and RSI - early warning RSI broke the trend line and then on Wednesday the index closed below MA10 and RSI broke below the MA, which signaled daily cycle reversal and on Friday the signal was confirmed.


Week 7 for the 20 week cycle. Peak to peak we have week 42 or imminent 40 week cycle high. Trough to trough week 30 for the 40 week cycle so it should top out and move lower for two months.... there is high probability this happened this week.

71 comments:

  1. Hello Krasi what do you think about Dax? If the plunge of S&P 500 could reach in 6-9 months 2250/2270 the Dax could go down till 9000?

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    1. The first leg was roughly 3300 points from 12600 is around 9300... in the 9000-9300 area there is a lot of support levels so this should be the target.

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  2. I dont understand, you say we have the top but after you say in theory the next one should make higher high. I think we have already seen the top on last monday

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    1. This is the theory - strong right translated cycle is followed by higher high, than I explain why we should see lower high and this is the top.

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    2. but the high of 15 July in 3014.30 is the top?, it will not make another
      higher high

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    3. We are working with probabilities. I explained it in the blog post - there is probability that this is the top and we need confirmation break below 2950-2960 area with impulse. Until then I can not say 100% we have seen the TOP. I have to wait and see what happens next week.
      It could be zig-zag to the support area the next daily cycle makes higher high and then the market turns lower.

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  3. Fantastic commentary.. thank you for your work Krasi!

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  4. Krasi, one comment: I have been following a 1997/1998 fractal since last year and according to it we are in 1998 prior to the sudden drop. After that we will go up again for two years to complete the bull market. I am noticing that in this fractal the 21 years delay would align 1987 to 2008. Those two years are arguably the most traumatic ones for equity investors psychology. Does a 21 years cycle fit into your longer term work? Thanks!

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    1. No, the cycles in this range are 16-17-18 years long.
      The cycles are the sum of shorter cycles... this shorter cycles appear over and over and you can build different model consisting of different number of shorter cycles.
      Example - some are not using standard 4.5/9 years cycle instead 3/6 years and it seems to work - you have your bottoms. Why? - because you have the 18 month cycle. This alternate model is using different combination of this lower degree cycle.

      This 21 year cycle is the same story 7x3 years:) I have looked at long term chart and it hits bottoms many times no doubt. The question is - are this major bottoms or just echos of this 3 years...

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    2. By the way the next important low should be 2024-2025 so 2003+21 will be another hit for this cycle:)
      But this will not be major low, the major low should be later around 2040.

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  5. Thank you for your work Krasi. I have some problem with your short term predictions, though. If snp is in c of D wave it seems to me way too short. Mainly 3 of c seems to haven’t been completed yet, never mind 5 of c. On your previous post you marked the top of wave 3 at 2960 and the top of 1of c 2906. Considering your proposition that we have just topped out, wave 3 of c is the shortest one here which violates the EW rule. I have a feeling that we are still in wave 3 of c and the top should be in the area of 3100 or slightly higher with c= .618 of a. However, that level is above the top trend line connecting the 3 highs from Jan 2018, oct 2018 and today’s one, albeit by not much. With RSI lower level now due to Friday’s drop it will take longer now for this indicator to move to the overbought level allowing the index completion of wave 3of c and 5 of c and at the same time keeping the divergences intact. This means that on Monday the index should head higher and higher. Please comment on what you think and what problems you see with my preferred scenario. Thanks

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    1. There is potential ED finished shown on the first chart, which does not brake any rules - 3 is not the shortest wave.
      There is no impulse and third wave all we have is corrective crap.
      The indicators do not behave this wave in the third wave for example RSI breaking trend lines.
      Two options - reversal or wave of the same degree.
      If we see an impulse lower it is reversal if we see another correction for 2 weeks most likely w2 of much bigger ED.

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    2. Hey Krasi, did you see YM, or DOW. It is not showing a possible ED is complete because the last wave up is large making wave 1 and 5 greater than 3. What do you think about that? Do you think that is ok because it's just the DOW and only 30 stocks? THank you.

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    3. That it is something else, I have shown something different for DJ last week - it could be that the last wave 5 is ED(wave ii of 5 now).
      The pattern is not clear, we can only guess. We have the minimum for reversal and just watching... confirmation or one more high.

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  6. Krasi, I see wave one 2909, wave from there, wave 3 in the last top, we are in wave 4 many will check 2960 then wave 5, one more top.
    What do you think

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    1. I think this is wrong count. I count see an impulse - just bunch of corrective waves.
      Wave 2 do not retrace even 23,6% this is b wave.

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  7. Alternate patterns if we do not see confirmation this week:
    - one more low this week - ED for wave 5 https://imgur.com/a/2T9AfPr
    - continuation higher with the low yesterday - some ugly version of the ED from last week.

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  8. Replies
    1. The cycle is doing what it is supposed to do - declining for six days so far.
      For now the price behavior is bullish - burning time.

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  9. The trolls haven't showed up yet so may be we are not close to the top. :-)
    What do you mean by burning time, Krasi?

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    1. I am wondering what happened too.... suddenly disappeared:)
      Oops there is no such expression in English - I mean time is passing and nothing happens.

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    2. No, you are right, burning time is the right phrase. I saw a quite a few stocks turning bullish (tech, airlines) so I actually thought that there is a move up again and it was not burning time so wanted to make sure I understood your comment.

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    3. From the low on Thursday is again some corrective crap... some stocks are not finished to the upside(one final fart missing:))) and they are causing this last pushes up.

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  10. looks like Friday was 4 and now we are in 5 of ED, could double top or make new ATH but we are close to the top.

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    1. More and more corrective waves, which makes difficult to nail the pattern, but yes there is no much left.

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  11. Do you have a chart of these stocks are not finished ?, As you have said it could be wave 3 from 2009

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    1. No, I just check the biggest 15-20 stocks from DJ and see that some are not finished to the upside.
      Yes, some are finishing v/5/3 from 2009.

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  12. As I told you, the doin movement looked like ABC

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  13. Thank you for your work Krasi.
    "But this will not be major low, the major low should be later around 2040."
    Wow, 2040 is bottom. But the top is around 2028/2030. ???

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    1. Is this year or index level? :)

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    2. The top should be in 2022-2023 and 2028/2030 lower high B wave.
      See the a-b-c correction from 2000-2008. Imagine the same, but one degree higher - this is what is comming.
      Much bigger amplitudes and lasting longer. Double the time and you have 16 years so from the top close to 2040. Around 2040 the commodities should be finishing their secular bull market and it will be the time to switch to stocks again - secular bottom for stocks.


      P.S. this are years see at the beginning about 21 year cycle.

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  14. What??? what is the point of shorting if you think the peak is in 2022-23. All for a potential correction? I should be balls out long right now or at least instead of trying to time a correction wouldn't it be more profitable to either ride it out or staying dry to try to lever up when it comes? we have delusional CBs, a U.S. prez trying to prop up mkts asap ahead of elections next year, better than expected EPS, and the most hated under-owned bull mkt of all time. I've been short for four years and I'm now bullish...I need to cry for how can I buy now after missing out all these years?

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    1. You have gave up... and many like you:) good obviously we are close to the top.
      If you think 25%-30% lower is just a simple correction which you are ready to ride.... fine I have no problems with that.
      I will ride the market in both direction first lower and then higher.

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  15. Krasi, in dayly chart I see wave 5 of 5

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    1. I see a/5, I can not see impulse only zig-zags - see the post below.

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  16. It looks like the ugly version of the ED - https://imgur.com/a/Ef6o655
    RSI seems to confirm it - three zig-zags. The index should be close to the top of wave a of the final a-b-c/5 of this ED.

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  17. About the future :). Year 2000, wave I; 2007 wave II; 2022 wave III; 2024 wave a/IV; 2032 b/IV; 2035 wave c/IV

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    1. What is your count ?

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    2. Wave 4 one degree higher than the 200-2009 correction.

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    3. I dont understand

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    4. Major third wave will be finished in 2022... I do not know this name convention super cycle degree or what ever.
      2000-2009 was w4 2009-2022 w5 super cycle degree (III) and another w4 but one degree higher.

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  18. What were waves (I) and (II)?

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  19. then wave (IV) must return to the zone of the subwave 4 of (III) around 666 ???
     

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  20. May be that wave (IV) will be a triangule and the low you expect for 2040 will be in 2025

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  21. But zone 666 is very down, it could be more than 62% of regression, i think it is too much for a wave 4

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    1. What is coming is of higher degree so it is not very down.

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  22. 1932 till now is 7 waves not 5. It doesn't fit with a 5 wave impulse. Some people say 2009 bottom till now is one big B wave forming an expanded flat. The C wave will take us to the 4th wave of one lesser degree which is SPX 100 from 70s. It makes most sense to me. WHat are your thoughts on that?

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    1. B wave is a joke.... is this Peter Temple:)
      There is 5 waves from 1932.

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    2. How are you counting 5 waves? Can you show your long-term count from 1932. I've read his work and it makes sense to me. Here is what I see.
      https://www.tradingview.com/chart/DJI/eoqafwWM-Long-term-projection/

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  23. Ware1 = 1968-1942=26 years; Ware3 = 2000-1974=26 years; Ware4= 2009 to ????; Ware5= (2028/2030-2035) ???
    Ware ABC = 1942-1929=13 years , A=1932, B=1937, C=1942

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  24. Nikkei (1990-2003) = -80%, Nasdaq Comp.(2000-2009) = -80%; SPX500 (2000-2009) = -57%
    Maybe wave5 for SPX500, but not wave5 for Nasdaq and Nikkei !!!

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  25. What do you mean with smashed down?

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    1. Secular bear market twice bigger and longer than 2000-2009... roughly 20 years and testing this 666 from a high around 4000.

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    2. So 2024 ABC (A) 1500; 2024-2038 ABC (B) 3000; 2038-2040 (C) 666?

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    3. Around 2000 level for A and B year 2028, but roughly something like that.

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  26. Thank you for your work Krasi.
    The count above would be fine w0=1942, w1=1968, w2=1974, w3=2000, w4=2009, w5=(2028..2035)??

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  27. Let’s focus on short term path, guys. Krasi, this market barely grinds... do you think the next week fed meeting will be the trigger for the market to fall?

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    1. Exactly who cares what happens in 20 years:)
      The last chart which I posted with final a-b-c for w5 seems to work.
      At the moment there is already a-b-c higher with c=0,618xa so the top could be even today.
      But another day or two higher will look better for example NYSE to complete the pattern too.

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    2. And the stocks of the DJ, have finished the 5/5/3 from 2009?

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    3. can you explain the recent strength in russell this past week? does this factor into your bearish analysis for the spx?

      what is your final target for spx and ndx this next week assuming this is a wave 5?

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    4. DJ30 stocks - they do not have the same pattern, some are finishing 3 from 2009 some are in a correction for months.

      c=a for 5 of ED around 3040, the same for NDX around 8090
      RUT is just caching up, most likely it will move another 2%-2,5% highr to finish the pattern while SP500/NDX only 1%.

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  28. RUT kept rallying while SPX started correction last time for a day, i.e. RUT was short term lagging

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