May 16, 2020

Weekly preview

Finally we have a move lower, this trading cycle was missing at least one push lower into the time frame for a daily cycle low.
The pattern is again not 100% clear. At the moment I think we will see another 2-3 days lower for daily cycle low and final move up to complete the rally from late March.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the move up looks corrective, the leader NDX is the weakest so I think we should see another low and final move up. Best guess w-x-y with y as a flat. Some see A-B-C or 1-2 I am not convinced the pattern is so bullish.


Intermediate term - RSI broke the trend line, which is the first sign that the move up is topping. If the market is topping next we should see test of the broken trend line ideally with lower high.
The big picture - the price is close to MA200 and it looks tired. Even if I am wrong it needs to cool off before breaking above MA200. So we should see something lower even if it is only corrective.


Long term - Resistance/MA50/62% is being tested, after that we should see a leg lower to complete the correction.


MARKET BREADTH INDICATORS
Market Breadth Indicators - sell signals, but probably we will see one final weak push higher. Despite the strong move up from the March low, indicators like Bullish Percentage,Percent of Stocks above MA50,Advance-Decline Issues are behaving like this is corrective leg. This is not good news for the market - according this indicators we should see lower low.
McClellan Oscillator - weak, does not buying this two days rally.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - reached overbought level, trying to turn lower.
Bullish Percentage - very weak, obviously only a few stocks make the index look strong.
Percent of Stocks above MA50 - bearish behavior staying below 75, probably divergence when we see stocks higher.
Fear Indicator VIX - second leg higher expected with lower high.
Advance-Decline Issues - weak, continues with lower highs.


HURST CYCLES
Daily(trading) cycle - sell signal, price is testing MA10, RSI below MA18 - nothing to suggest reversal higher. Now it is in the time window for a low and it is right translated so we should see a low soon and a rally higher.


Hurst cycles - 40d cycle low probably early May. I am watching my trading cycle above and think about the cycle theory later.


Week 15 for the 20w cycle. If my count is right we should see 20w cycle high soon and sharp turn lower.

112 comments:

  1. The path of most pain is a false breakout on the upside before a deep corretion, the broader the index the more likely it looks.

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    1. My pattern above will cause pain to both camps:) - first false break lower then false rally higher.

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    2. Asia hours futures pointing to break higher. 2875 and 9200 cleared. Getting trickier.

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  2. Krasi,
    Thanks again for the timely update.
    Looks like you are right that this topping process is taking a bit of time .
    Timing wise if we were to drop lower next few trading sessions and then move up .
    I remember you said something like the final move up will take about max 2 weeks.
    That would mean we will TOP around first week of June.
    Pls five me your thoughts.

    Thanks again for your great blog.

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    1. Time is passing and the time window shrinks. Now if I am right any move higher should not take more than a week.

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    2. Krasi,
      Thank you for your reply.
      Learning new things from you again.

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  3. Excellent work as always Krasi! We're close to a channel trendline on SPY - you think we reach it first on Monday? gap up then sell?

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    1. This move up is so difficult to count, it is impossible to say if next is 10 points up or down.

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  4. when yoy say "according this indicators we should see lower low", do you mean a low next week or in June for the 4 years low cycle?

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    1. For the 4 year cycle. Percent of Stocks above MA50 is a good example - in a bull market most of the time it stays in the upper range oscillating around 75 and really bad corrections drive it lower to 25 and it reverses. In bear markets it is the opposite strong counter trend rally drive it higher to 75. Despite the strength it just touched twice 76.
      AD line still has not broke the pattern of lower highs (my chart smoothed with MA5).

      Market breadth does not show the same strength as price and has not signal trend reversal.

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    2. With choppy ups and downs, what would indicate a trend reversal? What are some of the indications to look for that?

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    3. Lower lows and lower highs. I know we have that already and it is possible that the top is in with the next high as lower high.

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  5. with time running out on this retest of the lows and nearly every commentator expecting a retest of the low (or worse) , do you have a more medium term bullish count please?

    is there a count that has 1 up off the March low done & now would see us complete 2 down in the next few weeks ?Or an alternative ?

    every important low in the last 10 years has foxed a lot of wavers - a lot of whom were looking for one more low & with new ath's still in the offing , any further dip to say 2500/600 might be offer an entry for the medium term .

    Thanks for your time..

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    1. I have lost a lot of money following EW over the years. I appreciate the work Krasi does and I think he is better than most EW practitioners out there.

      My conclusion is that EW is not a good tool for short-term traders. It may be a good guide for longer term trends but otherwise simple technical analysis setups and patterns work pretty well.

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    2. Medium term bullish is to count a and now b running. I do not think this is the case.

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    3. Trading using EW did not work for me too, which does not mean it is not useful.
      Simple strategy like MA10 cross and counting simple cycle works great for trading.
      Adding Hurst cycles and EW for the big picture and you will beat most of the experts.

      EW said 2019 is a fake - it worked, other tools can not tell you this.
      Now 4-5 weeks is a mess so using other tools like cycles, which are saying patience.

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    4. That makes sense, Krasi. The 2019 call was brilliant. As far as I know, only you stuck to it and were proved right eventually. Thanks for your efforts!

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  6. Krasi is different because he knows EW is a price pattern and have no time cycle value at all.
    That is why he has a time cycle pattern.
    And he uses EW with his time cycle and I find that the combination of both is very critical.
    And as Krasi said many times . Very important to know if it is impulsive or corrective wave.
    Just my 2 cents and why I follow Krasi.

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  7. It still looks like another zig-zag, another speculation triangle b - https://invst.ly/qubrc

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    1. The same for the NDX - https://invst.ly/queos

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    2. Seems to be through all those levels bro. it could turn around from ES 2960 / NQ 9360 ..

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    3. The patterns are still valid.

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  8. Good blog,Krasi,and also your work.I follow the Brent:do you think is topping now?The next level of retracement could take the price to 27 or more low?

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    1. Yes, divergences we should see a move lower it could easily drop to 23-25 area.

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    2. Thank you for your daily answers and for your patience.

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  9. Krasi 2950 then 2741 still intact?
    Or is 3000 plus first

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    1. I have posted chart above, at the moment I think higher low 2820 something like this than 3000.

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    2. The cash index has a different pattern, it looks more likely just go higher to 3000.

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    3. what are you saying Krasi? are you saying that the ES and NQ patterns you posted earlier don't work?
      Now scenario is 3000 first no pullback to higher low 2820?

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    4. They do not work for the cash index. The had different patterns maybe synchronizing now.
      Posted a chart below.

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  10. krasi are you still going to tell me that you completely dismiss the possibility of march being a 40 week low!! I so much disagree. next low is not due before election timeframe late oct/early nov. we'll see.

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  11. We fight against the fed again, one more high isn't good for short pepel

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  12. 31 january was 10w low and 23 march too, then 28 february 5w low?. If this is right why not the same now between 23 march 14 may with 21 april 5w low?

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    1. I have a different count February is 20w low.

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  13. February? when? 28 february?

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  14. The cash index looks like this - https://imgur.com/a/XxqKzmS

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    1. Hmm .. okay. Thanks for update. indeed complicated pattern here.
      so what is the low risk trade here? are you positioned, or waiting for top to form?

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    2. One trade was long last week for a few days. Now it is waiting for a top.
      So far it is not different than the expected behavior and the big plan, just the start was looking corrective and I am surprised to see something like third wave.

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    3. i had the long last week, unfortunately stepped out of it Friday closing as it was noisy all last week 2750-2850 range, ST indicators it would trade back to lower end. Now must wait having missed this 100 pointer today.

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    4. Since the March "bottom," EVERY upleg has been on ever decreasing volume. Only a matter of time.

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  15. What do you think is the next target for NVDA?

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    1. I am guessing not sure about the pattern:
      - 1-2 i-ii lower to around 240
      - 1-2 and 2 is expanded flat 170

      Just watch the time, when the indexes make a low it should be one of this targets.

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    2. As always, thanks for your input!

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  16. The futures and cash indexes both hit 1,618 extension probably wave 3 and it looks like wave 4 has begun.

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  17. Replies
    1. I have the feeling everything is aligning and completing their respective pattern, preparing for a decline - gold,silver,oil,eur/usd

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  18. Krasi,
    Thank you for your your timely updates.
    When ES completes the topping pattern , do you think it will follow the yellow line or the red line in your 3rd graph?
    Or is it too early to tell now?
    Thank you in advance for your valuable insights.

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  19. AD line two months in 2019 and now, can you spot the difference? - https://imgur.com/a/Yq4BShd
    Rally 20% in 2019, AD straight up wiping out the previous decline.
    Rally almost double the percentage 35%, AD up and down retracing half of the decline.

    Tell me about strength and broad based rally.

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  20. Krasi, I can see the graph but not the AD line, can you send the picture of the AD line?

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    1. The picture is above follow the link.
      This is direct stockcharts - http://schrts.co/hIkFbDCe

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  21. So you expect this is the and 0f wave B

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    1. See the first chart, nothing changed just the yellow one is 50 points higher because there is no another low.

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  22. Replies
    1. It is more likely 3 and now 4 running.

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    2. Bit confusing now sir. You mean higher low to 2800 followed by 3000/3108 scenario running now? Or topping done, move towards re-rest of March scenario beginning to develop?

      I see your AD chart above, but unclear how to use that to conclude that topping is complete.

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    3. We are talking about the move which began last week - short said we should see a pullback(above 2900)and one more high to consider a top, which is consistent with the expected targets.

      The AD chart is the big picture and the message is - it is very unlikely that we saw the bottom. There is no broad base rally, the opposite the internals are weak.... probably tech stock lifting the market.

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  23. eh...we'll probably head back near ATH before we have any significant downside.

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    1. I do not agree. There is no signs to confirm this.

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    2. there are no signs to say we will crash anytime soon. I can count 5 waves from the bottom and we are in the 5th wave, which means we still need to put in a B and C wave up. nyad line is weak but so what we could continue to go up on limited stocks

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  24. I think 14 May was 10 week cycle low

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    1. There is no 80 day cycle lasting 36 day this is way too short. This is 40 day cycle low 4x10d cycles with one of them a few days longer.

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    2. if this is ok then only a 40 day cycle remains to finish the 4 year cycle. So the second week of July for the 4 years cycle low?

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    3. This is what I think it will happen. The decline should last only a few weeks.

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  25. So in few weeks you see 2200 again?

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    1. I think so. Louis you will see.

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    2. Krasi she said 2weeks I thought we would pop this week to almost 3000
      But maybe not I've been building uvxy in the high 34s

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    3. I would say 4 weeks. Yes we should see a one more pop around 3000.
      I think the uvxy trade will pay out.

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  26. Krasi, we 1h chart, this is wave 5?

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    1. Probably not w2 was flat so w4 should be deeper zig-zag(I assume cash index)

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  27. At this stage unclear still if we see higher low 2400 or lower low 2200 still? how can we be confident March lows will be breached?

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    1. We do not know until we see the move lower.

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  28. Text book w4 zig-zag to the trend line and 38% retracement - https://invst.ly/qv79p
    Around 3002-3004 we have 5=1 and c=a. The other possible target is 5=0,618x(1to3)=3040

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    Replies
    1. Krasi,
      Thank you for your timely charts and your patience.

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  29. Hello Krasi,please a comment on Crude Oil:i would go short from 33 ti 25-26? What do you think?

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    1. I think everything should turn lower in sync stocks,PM,Oil and USD higher.
      This trade should play out and the retracement should be at least 50%.
      The long trade after that will be much more profitable.

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    2. Thanks Krasi! What about TLT?

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    3. Thank for the answer about Oil. Have a nice evening. 😊

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  30. Hi Krasi,

    You mentioned the deflationary cycle to begin in near future, I think interesting development which would trigger (or be a consequence depending how we look at it) this would be strong dollar

    https://www.tradingview.com/x/ix0HQTWd/

    The obvious question is how do you go to cash and protect it when the deflationary cycle begins

    Regards,

    Mily

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    1. I do not see the USD like this, but yes it will go higher as a consequence.
      I explained how money is created - money is debt so I think the reason will be debt defaults(FED will lose control) -> money will be destroyed -> deflation -> money/USD price jumps higher.

      How to protect - no debt if possible, cash as much as possible, trade short for those who can trade.
      After that comes the big inflation so with the cash buy cheap precious metal/gold miners.

      The problem is I am a chart guy and I can not predict how the rules will change and they will - look at now you can not go out or travel for example. If it is really bad we can see all sort of things like frozen accounts or you can not withdraw money or your bank goes bust. I have the bad feeling we will have to prepare and protect in the real life too not just what to buy and sell playing around with our broker account:)

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  31. Good question, i will let the expert answer.
    My thought is also about deflation. Here is what i feel, if DXY does what the chart says then USD rates are going skyhigh. In our generation the flight to safety is USD no matter what PTJ says about BTC.

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  32. Krasi, when do you think the top cycle arrive? Days or weeks?

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  33. How many days?
    It looks like wave 3 of 5

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    Replies
    1. Until the pattern is completed.

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    2. Ask for much? In exactly 4.2563 days, at 1:46PM, Central Time. Good grief.

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  34. Krassi, if your not shorting futures what are you trading to capture the possible sell off?

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    1. thanks - Any one in particular. I've been burned trading options on a few inverse ETF's in the recent past

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    2. I can trade only ETFs issued in Europe so probably you have not heard them - 3USL/3USS
      A friend of mine trades only options on the index and says it is much easier than trading ETFs.... I do not know probably options are not my thing.

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  35. Krasi, no trolls, are you sure the indexes are topping? :-)

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    1. This is what my analysis says. In 1-2 weeks we will know if it is right or wrong.
      Maybe two months is two short period or after the third time learned something:) I do not know.

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    2. VB, compare and contrast DJIA and RUS2K (everybody else) versus NASDAQ and SP500 (tech). The March rebound / "bottom" has not been broadly embraced. Russell especially struggling to hit/hold Fib retracement percentages.

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    3. I don't disagree but outside of tech, there are many stocks / sectorstsectors have lagged behind, that are actually now looking bullish with strong divergence building up.

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  36. Some such as Eliot Trader are calling this Wave IV

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    1. Which time frame? Hourly? It looks like impulse and w4... but I am open for surprises.
      The pattern is very tricky I am repeating for weeks that I am just guessing at the moment.

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    2. As Krasi shows above in his long-term chart.

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  37. sentiment is still very bearish rn. I think we head down but not below 2700 on the next selloff. The most painful move rn is for us to reach ATH before crashing. Right now nobody including bears and bulls believes we can get that far up. Everyone is still looking to short imo.

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  38. Looks good. Ndx and qqq reached 90 percent today, possible b wave up. Spy got to it's. 658 fib. Everyone expects 300 and the 200 ma to be reached, maybe the rug gets pulled here instead

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  39. The final fifth wave has not been completed(better visible if you look DJ or DAX), so either it is developing as ED or the move from the low is another zig-zag making the pattern even more complicated.

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  40. where do you see Shopify going? $1k like chipotle?

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    1. I can not say vertical moves are difficult to predict, rather no. This seems to be the last fifth of the fifth wave from the start 2015, the last few $.
      Careful with this stock - this is the third leg higher and each one is steeper with the last one vertical. This is how parabolic moves develop, you are watching it at 1k and next it is at 300.

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