Feb 29, 2020

Weekly preview

There is only one word for this - MASSACRE. Watch south park - aaaand it's gone:))) this is what happened this week.
Short summary with all the excuses and bullshit how the market will reward everybody for ever - what were you thinking guys?
- I am so wrong with my correction and the great market keeps on giving - aaaaand it's gone for 5 days half of it evaporated.
- the buy and hold crowd proud with their returns - aaaaand it's gone, back to the 2018 highs where the correction begun so back to zero two years later.
- the "right count" with third wave - aaaaand it's gone, went down the drain where it belongs.
- economic models, scientific proven, funnymentals - aaaaand it's gone, model this:) it is about emotions fear and greed people are irrational not rational. EW models this not some economic models.
- "I will exit when it turns negative" - aaaaand it's gone, I bet most just watched like a deer in headlights:)
- TA or EW does not work, FED is printing - aaaaand printing is gone:) back to TA like MA200 trend lines etc.
- trolls trying to ridicule me how wrong I am - aaaaand they are gone, have not herd them lately:) now they look mega stupid as always - three times for two years and learned nothing, pure stupidity....

To sum it up the market punished the stupid greedy clueless herd.... as always and it is left holding the bag as always.
I let all this comments with the intention the traders to look back and learn something from their mistakes - keep cool head do not let to be sucked in from extreme emotions greed/fear.... but first this is naive the herd will never learn, second this time it was so extreme with insults like "xxxx dog" why do not I obey the herd and switch to third wave. This will not happen again... such comments will be deleted. Imagine what will happen in a few years when the bull market will end.

P.S. please spare me the bullshit - I got lucky, coincidence, virus blah blah. It is not coincidence it is pattern cycles and emotions. If you can not see them it is your problem not mine.
P.S. waiting for the "not confused expert" xyz to explain me EW and the third wave because I am now really confused - is this wave 4?



Now lets try to find out the real right pattern, it is all that matters the pattern everything else is irrelevant.
Nothing usual with this move the fastest 10% lower ever, but the usual outcome is short covering then test of the low(sometimes lower low sometimes higher low) then retracement - the traders should forget the pain and the indicators/market breadth should reset from extreme oversold levels.
- From cycle perspective we should see 5w high next week and 5w low the second week of March so this fits with short covering and test of the low. In April we should see 10w cycle high - probably the retracement/reset phase. This looks like confirmed 4y cycle high to me so we should not see higher high until the 4y cycle low in June. This is the time plan.
- From pattern perspective - two options w1/C for expanded flat or a zig-zag lower for big W-X-Y or some ED. SP500 has exactly the right size for 1/C to complete C around 2200, but if you look at NYSE it is way too big so I will give 50:50 to the two options at the moment. In both cases we should see something higher w2 or b before continuation lower. First we need a bottom of course:)
- Market breadth/indicators - extremes like December.2018 too much fear too fast, we should see intermediate term low and weeks higher. Healing fear and resetting the indicators takes time so I will not be surprised to see 5-6 weeks retracement. This makes the zig-zag option more likely from time perspective.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - it is so strong looks like impulse... well it is not so clear. We need at least one more low for impulse. AAPL below shows the case more clear.
It looks like prefect impulse, but still we need slightly higher and a new low. If this does not happen we have only zig-zags.


Intermediate term - I was too bullish with 2-3 weeks lower to 38% Fibo level:) Again if this is w1/C projecting impulse with standard Fibo measurements points to my target area 2200, but I will be careful because it is too big for other indexes. We have time window so I will just watch what happens in June.
Watch RSI we should similar price action like Nov.2018. When you see RSI close to the trend line the first half of April and the price in the target area 50%-62% it is time for the next leg lower.

DJ gives interesting perspective. Look at the symmetry above MA200 and below MA200. Next we should see retracement to the broken trend line. It looks like H&S, many other indexes XLF,RUT etc. have such pattern.


Long term - the move from Dec.2018 is over. Decline into important low in June is running. The two scenarios ares C for expanded flat or a zig-zag.


MARKET BREADTH INDICATORS
Market Breadth Indicators - extremely oversold, many at levels seen in December 2018. We should see up and down with divergences for an intermediate term low.
McClellan Oscillator - extreme level, I have not seen such.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal, in oversold territory.
Bullish Percentage - sell signal, oversold.
Percent of Stocks above MA50 - sell signal, extremely oversold.
Fear Indicator VIX - extreme level 50, it should cool of for weeks.
Advance-Decline Issues - reached extreme oversold level.


HURST CYCLES
Daily(trading) cycle - not much to explain sell signal with extremes. Price and RSI way too far from the MAs and they should try to test the moving average. The usual length of this cycles is 35-45 days. Currently we have 19 days and price is moving way too quickly so I think it should be shorter like 30 days... which will synchronize it with Hurst 40d/5w cycle low.


Hurst cycles - the same like last week. The first week of March we should see 5w high and the around mid-March 5w low.


Week 4 for the 20 week cycle.
Quote from last week says it all - "We should see spectacular decline into the 4y cycle low because first it is compressed in time and second it follows vertical patterns.... and they always end the same way - vertically lower."

89 comments:

  1. I agree we need one more low to make an impulse. Right now it looks like a double zigzag. I don't think the next low if we have one will be very deep, it might be a double bottom. VIX is at resistance, whenever VIX is at 50, market makes a bottom except in 2008.

    The other thing is the pattern can be very complicated. This wave was very fast and deep. I don't think this is a C wave. I think we are making a large WXY and we are in Y. The Y itself can be an expanded flat in that case the next wave will be a B wave and we can make a new high. This will confuse everyone. Just don't get arrogant. We have some predictive tools but nothing is 100% accurate and there are always alternatives that can form.

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    1. The pattern is already complicated:) but I do not think it will get so complicated with another higher high. Statistically with such market breadth multi week move higher is expected which means b and not 2 so yes WXY looks more likely... although this week was clear statistical anomaly.

      I will try not to get too arrogant or the market will kick me hard:) It happened a few times.
      I will describe it this way - the tools give pretty good framework, but inside this framework predicting the exact path is almost impossible. Many can not make this difference with the conclusion the tools do not work.
      I can not predict the exact path of a corrective zig-zag which does not mean it is not a corrective zig-zag. This pretty much describes what happened in 2019. Exactly the same story with cycles not only EW.

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    2. When we started to speculate about zig-zag here is my best fit for a zig-zag - https://imgur.com/a/6vvPHmW
      Triangle is better than WXY for w4, good alternate pattern to w2, the high for wave d is at 18m cycle high and the low for wave e is at 18m cycle low.

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    3. I think we will have some divergences between the indices, like 2018 correction. Nasdaq made new highs in late Feb/Early March, while DJI and NYA only retraced 78.6 % retracement. I think it will be very similar.

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  2. Krasi your a good man thanx for your time

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  3. Hi Krasi, I like your analysis but this post sounds very arrogant. Perhaps by being more humble you would attract fewer trolls in the comments section :)

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    1. I could not resist to take take the victory lap:) This is the third time for two years and I got tired to listen the same bullshit over and over.
      On the other side how will you describe the constant bragging from the "experts" the last few months? The market has not punished my arrogance.

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  4. Very good Krasi! Keep up the cycle work and just followed your work!

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    1. Yes, cycles are great tool. I was punished (missing profits) in 2019 when I did not pay attention.
      I hope I will not repeat this mistake:)

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  5. Why not 18 february 5w high and next week 5w low?

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    1. I am counting the average length 28-30 trading days for 40d/5w cycle.
      Could it be shorter - yes the move is very steep and usually in this case the cycle is shorter.

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  6. What do you think is magnitude of retracement bounce now? ES 3100,NQ 9k?

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    1. I expect 62% retracement. When we see completed move lower we can measure the level and look at resistance levels trend lines etc. fo possible target.

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    2. thanks. you think move lower is not complete yet? looked like 200dma got tested and held for weekly close?

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    3. I do not see signs that it is over.

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    4. Plenty of RSI 20s

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    5. This is not a sign for a bottom, rather a lot of weakness and to expect lower low.

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    6. Krasi,
      Love your work.
      But after such a selloff last week, there was 500pt to be had on NQ between friday low and Monday Asia hours to play the RSI oversold bounce.
      Not sure what confirmation is real to load up and exit either way to make serious $$$.

      No offense, way i see it you sat out from 2900 - 3400 on ES waiting for the downside turn. Too early on your 1/3 short, probably about broke even after last week. Now you are waiting confirmation for selloff to be complete so you can potentially play retracement ...

      I know trading is not money in market all the time, like investing. But you are hardly involved bro!

      Just to re-iterate, I love your analysis .. but I think you can take bit more risk to make it worthwhile.

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    7. This move up is not a surprise, but is more day trading this is not for me. Probably I will go long when we see the next low - lower risk and lasting a few weeks. Confirmation we will see RSI and market breadth divergences.
      Yes I trade seldom usually waiting for a move of a bigger degree around 20w lows/highs for example.

      There were two short the first one the November top exited break even, the other one at the December high around 3225 so 300 points lower was not so bad.

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  7. Hi Krasi, 2 questions. Just trying to understand inter-relationships -

    1) When I asked you about bonds, you said - "Right on schedule, divergence on the weekly chart - I do not see a reason that something else will happen.Do not forget after the summer we should see inflation accelerating and yields will follow."
    Using what type of data do you guesstimate that inflation will accelerate after summer?

    2) A few days ago you also mentioned "At some point the yields will start to rise and the USD will start a bull market then we should see a deflationary shock between 2025-2030"
    What causes USD to enter a bull market?

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    1. 1) the USD will decline a lot for several years and all other asset classes will be higher.
      2) No idea... the next liquidity crises maybe, the emperor(FED, CBs) has no cloths:)

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  8. This guy thinks this move down is A of 4.
    You have said many times that many stock were ending III since 2009, maybe in sp it is the same and this is just A of 4
    https://www.labolsadepsico.com/sp500-paro-la-subida-donde-debia/

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    1. When I see the chart I think he is counting expanding triangle e/4. The move 2019 is clear zig-zag so it is not the top of III.
      I think it is normal contracting triangle and this is the middle of wave c of the triangle https://imgur.com/a/6vvPHmW

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    2. I think this is:

      https://prnt.sc/rab3zn

      The neutral triangle is from Neely's theory

      Neutral triangule as wave 4 of III and now wave A of 4. This wave A of IV can be a flat or triangle.

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    3. I would call this toooo much theory and wave overcounting.
      Is there a reason to choose something so extremeeeely complex when you can count just normal triangle?
      According Neely Non-limiting triangles such with e wave triangle does not appear as wave 4.

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  9. Krasi, where do you see gold going?

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    1. Lower into Q2 for 4 year cycle low like everything else.

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  10. hi Krasi, is the 4-5 leg lower invalidated at this point? should we instead look for the pullback B then C up? thank you

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    1. Yes, with very high probability this is not 4. More likely this is b and the test of the low c.
      Then a-b-c higher begins.

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  11. Replies
    1. Lower 2-3 days max target should be the gap 80, one more higher high and then cut in a half at least.

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  12. Looks like a rising wedge bear flag. I think we will drop again until we reach 200 week MA. Structures looks to be forming a double zigzag.

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    1. Yes, it looks like corrective structure, but the second drop should be weaker not so deep.

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    2. What makes you say that? This looks like a zigzag forming and not a 4th/5th wave. The C wave can be just as deep as the A wave in a zigzag.

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    3. Yes, but RSI and market breadth extremely oversold, too much fear too fast this makes another leg with the same size less likely.

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    4. rsi is being reset on this bounce. Look at Oct-Dec 2018. Similar thing is happening. The B wave can be prolonged for another week.

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    5. I think it should look similar to February 2018.

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  13. Do you mean pullback to ma10 daily and a last low to 2750?

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    1. Something like that. I can not say where the second low will be, the first leg was too big so 0,618 or shorter. In February 2018 was double bottom.

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    2. Last low of 2750? Wasn't the scenario a mid year low of 2300/2400?
      Or that's changed since first low was too big?

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    3. No, this is just for a/C. We are discussing that now decline with zig-zag is more likely than impulse and this is just the first leg lower from the zig-zag. Later in April we should see retracement 50%-62% for b/C. In June the final low c/C.... it is too early for calling a target - I guess 2550 +-50 points.

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    4. thanks for your patient explanation.

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  14. target for the euro dollar in the remainder of the year? road to 1.25?

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    1. 1.04 mid year then higher, how fast I can not say probably 1.12-1.13 the end of the year.

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  15. friday 28 was 2.5w low?

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    1. although maybe a little long, according to my count is 19 days long

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    2. Probably the next one will be shorter like 10 days.

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  16. Krasi - are you expecting something like this? I would think the downward channel would get retested?

    https://invst.ly/q0321

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    1. more like this - https://invst.ly/q03ws

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    2. many thanks as always for your guidance!

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  17. Hi Krasi.. is today’s move down b in abc up? What do you think?

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    1. Only if the move lower is complete... I doubt it is.

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    2. However, even if this is a short term bounce it should form at least a tiny zigzag.

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    3. We have huge zig-zag retracing 50% not tiny.

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    4. I think this was only a. Then wave b, which looks complete and now c running.. it may actually hit 62% retracement from Friday low.

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  18. Apple already retraced .618 from low to high, and everyone is expecting a slightly lower low and then more bounce. 3200 is the mantra everywhere. I think the majority will be amazed this is the end of the bounce and we are going lower sooner rather than later. Thanks Krasi!

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    1. Many indexes are testing the broken MA200 I doubt the move lower is finished.
      Usually such extreme levels indicators/market breadth means the move is strong and this is not the low/high.

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  19. possible support at 3000 , 50% retrace of the move up for a "b" ... who knows

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    1. Yes, with this crazy corrective moves up and down it is impossible to predict the exact path.
      Only that we will have strong bounce and test of the low - this is what usually happens.

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  20. 5 down and 3 up now? target on ES around 3070?

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    1. Only corrective waves, difficult to predict the path.

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  21. Is the recovery now looking like Dec2018 instead of Feb 2018? :-)

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  22. Replies
    1. I think so, next should be the test of the low.

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  23. Probably an overshoot back to ES/NQ 3200/9100 before moving back down.
    Enough algos using stop limits each way, need stops to be cleared out first.

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  24. Do you still think that this week is 5w high and the next one 5w low?

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    1. There is no reason to think something else.

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    2. maybe last week 5w low or even 20w low

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    3. Only if we do not see test of the low.

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  25. Krasi thanks so much. Killing it on this C wave.

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    1. Crazy markets 3%-4% up and down every day.

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    2. Krasi what is your tvix targetand thanks

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    3. With such crazy 3-4% moves, IMHO it is impossible to set targets for stuff related to VIX. It is probably pure gambling.

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    4. TVIX difficult to predict... 2-3 days higher and then big slide lower begins.

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  26. Krasi - are you long here? Or is your strategy to wait until SPX gets closer to the previous low (~2860)?

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    1. I am waiting, I think there is more lower even if it higher low.
      I am watching crude oil it should make one more lower low. Now the indexes are in sync with it again.
      If we see lower low and 62% retracement for crude oil, with triple ETF this is almost double so who cares about the indexes:)

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  27. lots of buying at the lows today and a bit of hourly divergences, I went long. Also, everyone think we're going to test bottom. Also, gold - wtf !

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    1. I am not convinced, this will not fit much with the pattern.... we will know today.

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    2. And now the move lower is too big exceeding 62%, test of the low coming.

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    3. if this low holds (we'll see) it was exactly 1.272 of the previous B wave. Well, let's see what happens - thanks Krasi! https://invst.ly/q1bch

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  28. It feels like 3 of C started yesterday. If 3 of C = 1.618 of 1 of C then we are looking at additional 770 point drop on s&p500 in the next few days. That would be spectacular.

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    1. I would see if we have c more likely is 0,618 and just slightly lower low.

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  29. EW rules. Hopefully everyone will not catch on. Thanks for the blog. I can't wait for 2200 area.

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  30. 4th wave C today took half my profits. Will kill it more next week. Have a nice weekend Krasi!

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