Mar 21, 2020

Weekly preview

Another volatile week, more zig-zags and the next Fibo level 1,618 reached. I still think corrective pattern a-b-c counts much better. When you try some how to justify impulse it is just not an impulse.

In the last long term update I wrote we should see smaller version of 2008 - everything should be sold and the USD higher. Bonds after initial flight to safety are lower 20%(TLT) just like in late 2008 early 2009 before the bottom, the USD joined the party and it is sharply higher. Now it is only gold which refuses to comply:) it should retrace to support 1300-1350 and the picture will be complete.
The point is focus on the long term - this should be important 9 year cycle low, plenty of shares with clear corrective patterns.... look for opportunities.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - it looks like a-b-c to me. One option is c as a diagonal(red) which is not completed... I am leaning more towards second leg as w-x-y or completed ED(green). We will know on Monday.
RSI is compressed now between the two trend lines and break out is imminent. I think it will be to the upside.

AAPL reached the support area with clear corrective pattern - I do not see how this overlapping mess is impulse third wave. It is a summary for the pattern which many shares have, especially in the tech sector.


Intermediate term - next week we should see a bottom and I expect at least 50% retracement. The price is ridiculously stretched way too far from MA200. The more far away it is pushed, the more violent the snap back. On the way up the price was too far away from MA200 and now this distance below it, is even more crazy - 2.5 times bigger. Expect MA200 to be tested.


Long term - the trend line has been reached one option is the price low has been hit and subsequent higher low(green) the other option is lower low, but first lets see the retracement.


MARKET BREADTH INDICATORS
Market Breadth Indicators - extremes, VIX with a level seen in 2008 and McClellan Summation Index level seen in 2002/2008. Those who think there is much more lower to come will be disappointed.
McClellan Oscillator - short term divergences and turned up, heading to the zero line. Yesterday positive despite the 4% lower.
McClellan Summation Index - sell signal, extremely oversold levels.
Weekly Stochastic of the Summation Index - sell signal, oversold level.
Bullish Percentage - turned up, showing signs of life.
Percent of Stocks above MA50 - most stocks are far away from MA50, so it will stay for a while at this extreme levels.
Fear Indicator VIX - extreme level seen in 2008, now a log way lower begins.
Advance-Decline Issues - turned up.


HURST CYCLES
Daily(trading) cycle - still sell signal, but the cycle is mature at day 34. RSI with double divergence and preparing to burst above MA18, and M10 is catching up with price. It should not last long to see a buy signal.


Hurst cycles - speculating that we have shorter cycles and now we are seeing 10w low. Next move up should follow for 20w cycle high.


Week 7 for the 20 week cycle. Usually such sharp moves are compressed in time and the cycles are shorter - speculating that we have 10 week cycle high and low with length 7 weeks.

105 comments:

  1. I agree the zigzag with C as an ED makes sense. The only thing I don't like is someone I follow who uses FLD says Nasdaq needs to fall much lower to 5000s and his projections say anything above 8000 invalidates it. This would make a strong rally above 2750 unlikely. His projections have been pretty spot on, so I'm having a hard time reconciling what he says.

    The other possibility is this is we are forming a 4th wave expanded flat and will retest 2750 before crashing in 5th wave. This fits with projections for Nasdaq better.

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    1. Or we have sideways pattern like flat/triangle for two years and in this case such projection will not work especially for higher degrees of cycles.
      The FLDs are similar to MAs. For example my simple trading system above/below MA10 works great most of the time - in trending markets or even zig-zag correction, but for sideways moving market it just generates whipsaws.

      With that said it is simple - if the retracement is weak and can not make it above 50% around 2840 for Sp500 it is bearish. I see the guy is even more conservative 38% retracement around 8000 for NDX. But if we see something bigger the sideways pattern will be confirmed.

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    2. Krasi, you man wave Y as a triangle to complete wave 4? That's interesting indeed...

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    3. If we see retracement close to 62% or more triangle will be my first choice - now C and the retracement D.

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  2. Bravo, yeah all the rats are leaving the Apple ship, will be buying Monday and Tuesday - thanks as always Krasi

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  3. Hello Krasi what do you think about the situation of Crude Oil? Thanks

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    1. Up for w4 and down for w5 to complete the decline which began in 2018. Overall the same like everything else - 4 year cycle low in 2 months, then rally time.

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    2. W4 could take the price to 40 and close the gap?

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    3. This is too much for w4 usually it is 38% around 34-35 looks more likely.
      Pattern which takes time triangle or flat.

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    4. And then w5 to hit double bottom or more low...

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    5. It should make lower low, but probably not much lower the 18 area.

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  4. https://www.youtube.com/watch?v=VUpHUxlDs6w. This is what I follow to get an idea. Just worth sharing.

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    1. Three different cycle analysis, worse than EW:))))) All he says is, that he has no idea.

      I watch his videos too... before the decline the cycle is soooo strong it must be bullish some important cycle low hit 2018 - mildly lower and up up.
      Now the cycle lower is sooooo strong it must be bearish major top 18 year - some retracement and lower lower.
      This is exactly how a triangle works - whipsaws all the time and fooling everybody both camps bulls and bears... and the cycle guys lost in the cycles.
      It is simple - there is no top with three waves, there is no reversal with three waves.

      2-3 years ago argued in the Hurst cycle forum that patterns are important EW etc. - the answer was EW does not work and cycles are superior and you can build models blah blah bullshit. Now we are seeing the result - they are lost.

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  5. Krasi, nice update boss. After South Park and Texas Chainsaw in past weeks I was expecting Omen (666) :-)

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    1. The bounce should be called the Walking Dead :)

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  6. No walking, only falling .. Monday Asia open took 4 mins to lock lower limit 2173!

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    1. Patience the week should be positive.

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    2. Absolutely, averaging in longs...

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  7. Hi Krasi, you mentioned "It should not last long to see a buy signal." What's a firm buy signal in this scenario?
    There is already strong RSI div on 4hr and 1D but it was there 2 weeks ago as well so probably that's not sufficient.

    A) Move above MA10? Probably too late by then as MA10 is further up.
    B) Clear breakout from the ED?
    C) Something else?

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    1. Firm signal is test of MA10,higher low and move above it.
      The other signals are speculative because they are not confirmed.
      Do not forget the context - this is not a buy signal in a up trend, it is a buy signal signaling retracement.

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    2. Complete answer, as always! Thank you! And yes, I meant to ask about the retracement.

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  8. I was a member of EWT for a while and I can't believe that Krasi is providing all this great analysis for free. Really appreciate it!

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  9. "Firm signal is test of MA10,higher low and move above it." What time frame are you referring to here? Also what do you think about USD INR?

    Thank you for all your work! Really really appreciate it.

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    1. Daily chart, USD INR looks like it is heading to 80.

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  10. Krasi, dont you think it's w3, look at weekly chart
    I am very appreciate your work
    It looks scary, we are going to see 1600

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    1. If it is an impulse this is the fifth wave completing.

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    2. Here it is with expanding ED for 5=1 - https://invst.ly/q7cib
      You can not ignore this big reaction and count it iv/3 - it is bigger than 2.

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    3. Is there any chance we can go down to 2000 here with expanding ED?

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  11. Hi Krasi, one more question if you don't mind related to this statement -
    "This should be important 9 year cycle low, plenty of shares with clear corrective patterns.... look for opportunities"

    Though RSI is oversold on weekly chart, there is no divergence on the weekly chart on most of the shares as we were just at ATH a few weeks ago. Doesn't it makes more sense to wait for the divergence on the larger time scale before buying individual stocks?

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    1. This means plan your trade - which sector, which shares, how much, when. Not exactly buy now.
      I will buy at the cycle low - lower or higher low what ever it comes.

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  12. Krasi, do you have an updated chart for gold? Thank you

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    1. It looks like impulse lower correction higher and one more leg lower to support - https://invst.ly/q7i9d

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    2. How about gold miners? the same as GLD? In terms of stock, it should go up for rebound, gld should move lower … Thanks.

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    3. Difficult to say it could be the bottom, but correction and one more leg lower will look better.

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  13. DeMark on Bloomberg TV now saying today is TD10 on SPX, TD13 closer to 2097 should happen later this week.

    So the Fed news about unlimited QE and this rebound notwithstanding he expects another test and lower low to 2100 first.

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    1. I do not see 13 countdown, I see buy setup finished... no idea what he is counting.
      He was many times wrong, it is a guess now one more low or not. The pattern is mature with RSI double divergence.

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  14. Krasi, your views please on:
    1. EEM - looks like completed pattern double bottom $30?
    2. NIFTY - oh gosh, don't know how to read this one ... heading to 6300?

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    1. EEM the big zig-zag looks complete, short term so many gaps and overlapping it is impossible to make exact forecast if there is one more lower low or not.
      NIFTY like all other indexes either complete or wave iii of ED.

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    2. thank you.

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  15. Krasi, we have to see s&p go up the canal first, every day we see new low

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    1. I am long, more zig-zags up and down this should be ED.
      There is a probability that this leg lower is impulse and the whole correction from 2018 is complete.
      The other option zig-zag than it is C from a triangle and E should make higher low too.
      I do not believe we have retracement and much lower.

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    2. hey man - what would be your SL to invalidate the long? If it breaks 2100 on downside?

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    3. So far the candle looks like reversal candle, if I see open higher and move higher tomorrow it is a confirmation. If I see open lower or move below the low today I am out.

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    4. Thanks for prompt reply. Good luck, hope it holds up.

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  16. The a-b-c - https://imgur.com/a/OfJVIk3
    The impulse - https://imgur.com/a/qogtUyU

    In both cases the ED and the pattern should be complete. In both cases I think this should be the price low and and the cycle low the test will be higher low.

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  17. But you say 4 year cycle low in June

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    1. Then it will be just a retracement 20%-30% - I will not refuse it.

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    2. So no more 2000/1800 scenario for June given the extent of the decline in this leg to 2200?
      how sad? i was saving my real bargain hunt for the summer !

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    3. It is not impossible, but I am skeptical and rate it as the lowest probability scenario.
      The two patterns which make more sense are expanded flat and triangle - in both cases the next low should be higher low.
      Such w-x-y with lower low, I can not fit it in a pattern.

      Not all shares make a low when the index makes a low, that is why I wrote look around for opportunities. Those who hunt single shares should look each one what it is doing.
      Personally I like low risk and low risk is when I see lower low with divergences or higher low to confirm reversal - all this when the time for reversal is mature.
      I do not think this is a huge miss - now will ride it a little bit to the upside making some money and later enter long with much bigger position.

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    4. Thanks Krasi. Today's cash open was a gap, which should get filled at some stage i guess.

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    5. The usual behavior is MA10 test then most likely gap fill with higher low and continuation higher.

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  18. thanks for all the updates Krasi...

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  19. Seems like today was the start of the last 5 waves down. 1-2 complete, 3 should be overnight if it's correct. Trump and Fauci having disagreements, what if the good doctor gets fired?

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    1. After 13th of March it is such a mess... it should be a 10w cycle low what ever it is.

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  20. I wanted to say thanks to Krasi for holding his ground on his views and providing timely updates. As of now, it looks like the playbook Krasi outlined seems to be following through.
    Well done!

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    1. Crossing fingers that it stays at this levels until the opening:)
      If not it is just a trade, which did not work - not a big drama.

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  21. I don't understand, in your first paragraph you say 9 year low cycle but in your cycle chart you say 4 year low cycle.
    You have always said that in q2 4 year cycle

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    1. Such long term cycles like 9/18 years are more about theory discussions and less about trading. For example there is high probability that this is 18 year cycle too. My focus is trading, waiting 5-10 years to be proven right/wrong if this is 18 cycle is irrelevant.

      If you mean the last chart, several months ago I switched from theory oriented chart with most cycles on it including 9 year cycle, to more trading oriented chart - I want to see visually when roughly to expect the next relevant high/low.
      Last year I lost focus and now it is simplified with focus trading.

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    2. then the 9 year low in may-june ?

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    3. Yes, I think it is more than just 4y low.

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    4. but it could also be in q3 or q4 because in 2011 it made low in October

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    5. No, the shorter cycles are mature it is in the next 2-3 months.

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  22. krasi i shorted uvxy all the way up past 80 what do you think your target would be thanks

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    1. Louis is back! I thought he cashed in all TVIX gains and retired in the Caribbean!
      Oh well, I guess he has to wait until flights are back in the air. :-)

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    2. I think up to around 80-90 area and down around 30.
      The game is again short the volatility rips.

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  23. After that 10% move in US cash here is what i am thinking:
    1. 50% retrace bounce should take us to 2786. Is that the level you have too Krasi?
    2. The 5% pre-cash open gap (2200-2310) needs to be filled at some stage. Key is to see if we see 2700s first before returning to fill this gap.

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    1. So far it looks like impulse to me and test of MA10, so next should be pullback and gap test with higher low.
      I think the gap test will be before 2700.

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    2. If 2020 is 9 year low then the previous 4 year low was february 2016?

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  24. april 2011 9 years high and april 2020 too?

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    1. The correction began in 2018 that is the 9 year cycle high.

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    2. And the previous one ?

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    3. I think it counts better as 5x3,5-4 year cycles and not 4x4,5/2x9 cycles for 18 year cycle high 2000-2018
      https://2.bp.blogspot.com/-5rw4Mwubk0Q/XmM2SLYzQYI/AAAAAAAAJrQ/kOz6sJ-RnRktGSShQ9GfYflqxOUJx5pcQCNcBGAsYHQ/s1600/w432-6.PNG

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  25. Now one leg too much for impulse and rejected at MA10 as expected. Next expecting to see higher low.

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    1. Thanks Krasi.

      "From my earlier message, 5% pre-cash open gap (2200-2310) needs to be filled at some stage. Key is to see if we see 2700s first before returning to fill this gap."

      Do you think higher low will be in that 2200-2310 zone?

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    2. This is something what I can not predict - size and shape of corrective move before it has begun.
      It should stay above 2340 which is 62% retracement, below that it is dangerous - high probability for lower low.

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  26. If 2020 is a 9-year cycle low how do you fit the wave 5 from 2009. This wave 5 would last 5-6 years, it's too much

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    1. Why should it last 5-6 years? Exactly the opposite it should be short like 2 years.

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    2. Because if the wave 4 and the 9 year cycle make low in June, the wave 5 should start in July

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    3. Yes, it will start in a few months and it will last 2 years. I do not understand the logic.

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    4. I say this because the next 9 year cycle low will be in 2029 and if the wave 5 finish around 2022-2023 then it will be 6-7 years of going down, is not it too much?

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    5. No, this is what should happen. It will not be straight line lower.

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  27. Possible impulse if we see higher high - https://invst.ly/q8wjk

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  28. what do you think of crude?, up around 35 and after down to 18?

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    1. This is to much, more likely sideways move in the established range 20-27 and final spike lower.

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  29. The futures completed possible impulse with 5=1 - https://invst.ly/q9194

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    1. Am I getting this right? It looks like another bottom in two days - March 30 or 31?

      Then a resumption of the bounce?

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    2. Something like that to finish the first leg of the bounce followed by bigger pullback for b of the bounce.

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  30. You nailed the prediction on the bottom and on this move. Hats off to you! The only thing that needs to change now is shortening the timelines for all predictions as the machines have taken over and indices are moving just way too fast. :-)

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    1. hella fast... acting like pre crash with some of the moves

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    2. True, big profits but too much stress:) I prefer slower price action and not to compete with the algos.

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    3. Yeah, agreed. Especially the last 15-20 min in the trading session are turning out quite interesting. Yesterday I was so sure that that it will hit your target in the last few minutes and it did!
      I wonder how all this algo driven trading impact dollar cost averaging which majority folks do in their retirement accounts. If the recovery is quick, you barely get a chance to sample the lower prices. So this strategy makes more sense though it is a lot more stressful due to the volatility.

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  31. Well done Krasi, you were spot on with the turn. Looks like ES close to your 5=1. Did not expect all this in 3 days though.

    Like Feb 2018, Oct 2018 please add March 2020 to your list, for when the trolls start next time!

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  32. This is following Oct 2018 Crash. Double zigzag forming.

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  33. https://invst.ly/q93bh Krasi, would you mind taking a look at this and letting me know your thoughts? It caught my eye that the proposed "3" landed exactly at the common fib extension of 1.618. Could this be a possibility? Thank you very much, Roberto

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    1. PS I know the timing is off. "5" would have to be sometime in April

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    2. Looks nice, but everything speaks against it - indicators,market breadth,cycles.
      I do not believe in such expanding patterns, they are fantasy for me.
      Open a weekly chart and tell me - is this wave 4? Vertical 10% is not what w4 should be.

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    3. yes true - weekly looks much clearer that it's an impulse - thank you!

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  34. The candle chart also has a long-legged Doji flag. Potential trend reversal.

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  35. what wave 4 do you mean in the message above?
    Do you still think that we are in wave 4 from 2009?

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    1. The one shown on the chart, which Roberto Mattheus is asking about.

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