Sep 28, 2019

Weekly preview

The choppy price action continues, I can not see clear reversal pattern it looks corrective. For some indexes like NDX and RUT you can say ok it is impulse lower, but for NYSE/SP500/DJI it is a long shot, you can only assume we have reversal and wait for confirmation - lower high.

The EW pattern lower is not convincing, cycles expect a bounce from mid-daily cycle low, oscillators like the histogram or McClellan Oscillator resetting for two weeks so I expect one more high, but I will watch closely if we have just deep retracement and turn lower.

Short term - the corrective move lasts longer than expected and now the a-b-c from mid-August looks like 1-2-3 with missing fifth wave. I can not see convincing impulse lower, but lets say I am wrong than we have a-b-c higher and 1-2(red) now running.
RSI with downtrend, but overlapping and ready to break above the trend line - no signs for an impulse lower.

Intermediate term - with one more high for wave B you have to count double zig-zag w-x-y(red).
MACD with double divergence. RSI with double divergence and broke below the trend line, probably it will be tested with divergence. The histogram should make a lower high and divergence. The indicators are bearish and signal topping process is running. The price is at support and MA50 so we should see something higher.

Long term - one final leg lower into 2020 to complete the correction. The big question is if the decline will be a zig-zag or an impulse.
All the indicators look bearish like on the daily chart - topping and intermediate term high.

Market Breadth Indicators - with multiple divergences signaling important high around the corner. Now preparing for short term divergences and the end of this rally which begun in August.
McClellan Oscillator - resetting and below zero.
McClellan Summation Index - turned lower and sell signal, but I think we will see a divergence first.
Weekly Stochastic of the Summation Index - buy signal reached the overbought territory.
Bullish Percentage - double divergence and turned lower, I expect short term divergence as a sell signal.
Percent of Stocks above MA50 - double divergence and turned lower, I expect short term divergence as a sell signal.
Fear Indicator VIX - I expect higher low, when the market makes higher high.
Advance-Decline Issues - plunged lower to the zero area, I expect lower high and divergence.

This move up is taking too long and if we see another 2-3 weeks higher the more likely count is 40 week cycle low in late August. This will mean 20 week cycle lasting 12 weeks and 40 week cycle lasting 35 weeks. I have seen such occasions when one 20 week cycle is too long and the other one is shorter so 35 weeks for the 40w cycle is perfectly fine the average anyway. We can only wait and see how long it will take the current move to make a high and how big the subsequent decline will be. For now I will stick to the current count.

Day 30 for the daily cycle. The most likely count is that we saw half daily cycle low(or 40 day cycle low) this week.

Week 17 for the 20 week cycle... it is taking too long.


  1. If September was a low cycle of 40 weeks, this new cycle of 40 will be a cycle translated to the left ?, two months going up and 6-7 going down for the cycle low of 4.5 years?

    1. Exactly. Watching closely how the next decline will look like - if we see a low above the August low it will confirm this scenario.

  2. market looks really tough to break this year, not saying we won't drop but I think we could be forming a triangle and so we are only in the C leg, and we still have D and E waves to form that could take the rest of the year.

    The other possibility is that this is a WXY forming, but the structure is not as clear as a triangle. It's really hard to short this market, because everyone is still looking for a short. On every drop the P/C ratio spikes.

    1. There is no triangles.... there is no a single sign for a triangle. No idea how do you came up with the most clear pattern is triangle.
      The pattern is a-b-c/B less likely w-x-y/B.

      Yes, it is taking very long and I think it will take another 2-3 months.

    2. really... you don't see this triangle forming?

    3. This is not a triangle, this is an ending diagonal.... or if you do not use EW it is called bearish rising wedge.
      I see it and I follow it for a while. I have different version(unlikely higher high for your C) with the same outcome.

      Here it is the ED version -
      With one more high your C will be an impulse or bigger zig-zag and your pattern will be invalidated.
      The move from the August low did not make higher high so the ED did not begun in June(your wave A) - we have a flat for b/B.
      And now w2 of ED or wave a-b/y currently running.

    4. what I showed was a triangle, this is not an ending diagonal. ending diagonals only appear in C waves or 5th waves. My triangle is for the B wave that is forming since December. Look at it again, you're reading my count wrong. A triangle has 3 wave structures on each leg ABCDE. The first A was from December to July, B was in August and we are still in C so it can make a higher high and it won't be invalidated.

      Your count is not correct because your a wave is not an impulse, it's internals do not match 5 waves.

    5. It is still a rising wedge just bigger and not a triangle learn the patterns.
      This is a variation of the ED for 5/III which I have shown two weeks ago.
      With five waves this will be an impulse and not a B wave.... triangle is dead wrong any way.

      My count is perfectly fine. There is no need for a to be an impulse - c must be an impulse.

  3. if sp500 goes down below 2720 then it is more likely 40 week low cycle in october?

    1. Yes, below 2820 will mean with high probability 40 week cycle low.
      My feeling tells me this will not happen, but lets see first the next few days - confirming impulse or zig-zag lower.

    2. Waves 3 and 4 are still missing for impulse. SPX/DJ are ok with 1,618 extensions for possible third wave, but NDX it looks like a-b-c. I do not know I do not have the feeling that we saw the final high.

    3. >100pts in 2 days seems impulsive to me...what am I missing?

    4. Waves 4 and 5:) This 100 points impulse could be wave c and not 3.

    5. Details... details :)

  4. looks like a flat now formed form July highs, triangle and ED are off the table now.

    1. Too early to say impulse is not finished so this is just a guess.
      Too many corrective waves accordingly too many possible patterns... I was playing today and I can show at least five:) It depends on if you are bullish seeing consolidation or bearish seeing topping pattern.
      For starter I would wait to see if the current move is impulse or a-b-c.

    2. look russell, it is b of B

    3. as at the end of 2015

    4. I mean from february 2019 b of B, exactly the same as 2015-2016, now in october c/b/B for the 40 week cycle low and then 3-4 months for c of B and then 3-4 months for C and the 4 years cycle low

    5. I know this idea b/B brought many times up. This will work great for DJT or RUT, but for SP500 the measurements will be so high that wave B will be invalidated.

    6. Sp500 wave X, not B

    7. Wave X connects two corrective structures and does not make new highs.
      Zig-zag making new highs is B for expanded flat or part of ED not X.

    8. I just read Neely's book and it is possible that a x-wave makes highs, he calls them "double three running correction"

    9. This is not EW, this is some ones theories. I would stick to the few simple rules of the original EW work.
      Tried to read Neely throw it away.