Oct 5, 2019

Weekly preview

A lot of volatility and another corrective a-b-c. It is complete mess corrective waves in both directions and too many possible patterns. With cycles it is not 100% clear either. The two main options are this consolidation and when it is over continuation higher or topping pattern is running. At the moment it is difficult to say with very high probability which one it is. What I think I know:)
- Consolidation - I want to see finished pattern lower with final impulse wave c, 40w cycle low around the end of October, market breadth signaling intermediate term low. There is no such signals and small a-b-c lower does not look enough for me.
- Topping - I want to see finished pattern and reversal with impulse. The zig-zag from September is not enough so at least one more high is missing.

No matter bullish(consolidation) or bearish(topping) both cases do not look complete. At the moment I am just watching no need to guess. I will assume it is consolidation, than we should see another 2-3 weeks lower and a low below the August lows for a finished corrective pattern.

Short term - corrective zig-zag higher in September, this decline is another a-b-c my suspicion was confirmed. I will make a guess - this rocket launch is another corrective zig-zag:))).
If we see test of the high with another zig-zag(c=a red) it will be dangerous for the bulls see the third chart. In this case the bulls must hope this is triangle and not ED.

Intermediate term - lower as expected, but I can not see finished pattern and reversal. to the upside the price is testing resistance/MA50 and the gap was closed. In the case of consolidation another decline should follow to test the lower trend line. 40 week cycle low should be followed by 2-3 months higher and test of the upper trend line.... in this case the 1,38 Fibo level will be hit, which is usual extension for B waves in expanded flat.

For something bearish the lower trend line(shown above) should be broken and at least the March/June lows tested. Here is one bearish pattern... who knows with so many zig-zags. In this case B=1,23xA the other usual extension for expanded flat.

Long term - at the moment I will assume that a correction will be finished in October. Then a rally for 2-3 months followed by final sell off to finish the correction which begun in 2018.

Market Breadth Indicators - oscillators turned up signaling short term bottom, but no signs for important low.
McClellan Oscillator - slightly oversold and turned higher, close to zero now.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal, turned lower from overbought levels.
Bullish Percentage - sell signal.
Percent of Stocks above MA50 - turned up in the middle of the range.
Fear Indicator VIX - retracement and one more spike expected.
Advance-Decline Issues - oversold levels has not been reached, now around the middle of the range.

This low is another option for 40 week cycle low - 10 weeks from June to 5th of August and 8 weeks from this August low until this week for 40 week cycle with length 41 weeks. The pattern and market breadth does not really signal an intermediate low, but who knows.

Day 35 another 2-3 weeks needed for finished daily cycle.

Week 18 for the 20 week cycle.


  1. Thanks Krasi.

    I like your second option better, which puts us topping around mid-october. The A wave I calculated based off of EW ending patterns ends at around 2440 (not the Dec bottom). That means the 1.236 extension is around 3450, based on the upper trendline that will be hit around mid-October. The 1.382 extension is 3133, that is much farther in time, next year in Feb. So based off that I think the second option is better. Also TVIX hit a major resistance trendline going back several years, if we head lower now that trendline could be breached and it will be hard to see us recovering.

    I think this back and forth up and down movement is basically we hit the upper trendline but not the ultimate target so the market buys time through consolidation. The pattern I'm seeing playing out now is a flat after Aug lows.The whole structure is a WXY with the flat being the Y. the b wave of the flat reached 78.6% retracement of Aug lows, which is the minimum to qualify for a flat. We can still head over a little bit of A to 3050 and still be classified as a flat. If target was greater like 3100, b wave needs to drop further down to form an expanded flat. This last c wave from Thursday low, looks to be forming an ED.

  2. If the 15 august started the last 10 week cycle and the 18 september the last 5 week cycle, I think 3 october started the last 2.5 week cycle, so we must see 2-3 days bullish and then 2 last weeks for the 40 week cycle low.

    And the analysis top a top 19 september to 7-8 october for 12-13 days of the last 2.5 week cycle to complete the 10 week cycle.

    1. This will be almost perfect cycles:) We will see what happens, I do not think the low this week is important one and we will see more to the downside.

  3. Some people say that 5 August was a daily cycle low at SP500 and 3 October too

    1. This is the same mentioned above in cycles this 10+8 weeks, but I think pattern and market breadth does not confirm it.

  4. https://translate.google.es/translate?hl=es&sl=auto&tl=en&u=https%3A%2F%2Fwww.labolsadepsico.com%2Fsp500-continua-el-apoyo-donde-debe%2F

    1. It is possible to see decline with a zig-zag next year, but forget about triangle. I do not believe in such huge expanding triangle... if such pattern exist at all.
      Triangles are confirmed by RSI and it is telling different story.

  5. It is not an expansive triangule, it is a "neutral" one. I dont know how to say it in English.
    The neutral triangule makes lows with the wave c (december 2018).
    The wave e dont make news lows.

    1. Your chart is showing expanding triangle and I expect wave e in a triangle to be shorter and not necessarily touch the trend line especially for expanding triangle.
      You are showing and explaining expanding triangle, shorter e wave does not make it different exactly the opposite - this is what you should expect for such pattern.

      You can continue believing in unicorns I would not try to change your mind. Your H&S did not work, the same will happen with the expanding triangle. Use indicators and other indexes for confirmation.