Jun 13, 2020

Weekly preview

The pattern higher has been completed on Monday, the market hanging until FOMC(classics) and reversed - all as it should be.

From the beginning I am following w-x-y which means a-b-c was needed for y - we have it, the move from mid May is zig-zag. I was expecting to see 20w high and decline into 20w low to start - we have it, the last two weeks look like strong rally into important high and reversal.
Short said the price action confirms the analysis so far and there is no need to change it. Now watching for the next steps which should be - completed impulse followed by corrective retracement.

European indices need final low to complete an impulse and retracement, Crude/Brent oil need final low to complete impulse and retracement, USD needs final low to complete 5/c for a-b-c and sharp rally should follow, TLT(bonds) to complete impulse up and retrace. All markets are aligned and ready for a big coordinated drop - just need the confirmation next week.

I moved the trading chart at the first place instead of the most speculative and inaccurate chart - hourly. First it is all about trading so this is the first what you should see and remember. Second I hope those with the comments "wrong again", "you missed it", "EW does not work" will get it finally that trading and analysis is not the same.


TRADING
Trading cycle - the signal is sell. It is obvious the price closed below the trend line and MA10, RSI confirmed breaking below the trend line and MA18. Any retracement should stay below the purple line. It lasted longer than expected, but we have reversal at day 17 which is rather left translated. Now we should see continuation lower for roughly 20 days. Sudden reversal with new highs will be very strange.
Next week we should see some retracement and testing MA10 - this will be the next entry point like 6-8 days from high to high. On the way down we count from high to high. Retracement should not last more than two days and print bullish weekly candle so we should see a low on Monday, higher until Wednesday and turn lower again. If we see deviation something is wrong.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - it looks like impulse to me, but rather not completed - the "fifth wave" is only three and many indices look rather incomplete. Probably a low on Monday then corrective retracement higher.


Intermediate term - sticking to the analysis until proven wrong - test of the March low with slightly higher or slightly lower low.
With possible impulse completing, expected 40d low and MA50/MA200 support next week should be choppy - low Monday/Tuesday, retracement higher like 2 days and turn lower again.


Long term - expecting this to be the final sell off to complete the whole correction which began in 2018.
Has not paying attention to the bigger pattern for a while now reflecting the option that the bull market could be over.


MARKET BREADTH INDICATORS
Market Breadth Indicators - turned lower. With this indicators I would not make bearish bets, but.... I do not know, is this strength or just we have a huge flat correction causing the indicators to swing from extreme oversold to extreme overbought. We are about to find out in the next few weeks.
McClellan Oscillator - turned negative around zero, technically there is small divergence between the two tops.
McClellan Summation Index - turned lower.
Weekly Stochastic of the Summation Index - still in overbought territory.
Bullish Percentage - turned lower, still above 70.
Percent of Stocks above MA50 - turned lower, still above 75.
Fear Indicator VIX - spike higher, cool off for a few days should follow.
Advance-Decline Issues - turned lower, after hitting very overbought level.


HURST CYCLES
Short term cycles - switched to vertical lines for much better visibility. They represent the 20d cycle and sequence of 4 80d or 10w cycle. The theoretical length of the 20d cycle is 14 trading days, but they are running short again. The first one was 12 days, the second one is so far 10 days long. The indices are heading lower into 40d or 5w cycle low early next week. The current pace of the shorter cycles project the low for mid July.
Here is how the high-to-high looks like. Pretty consistent, only in the middle deviating two days. The next 20d high is around 25.06


Week 12 for the 20w cycle. It seems to me we have 20w cycle high so next we should decline into 20w low. RSI still has not confirmed, but the weekly candle looks like reversal candle.
I still think we have not seen the 4y cycle low. We are about to find out in the next few weeks.

126 comments:

  1. Good morning Krasi and thanks for your work.When you say Crude/Brent oil need final low to complete impulse and retracement what is the target of the correction for Crude?

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    1. I think the the retracement should be between 37-38 resistance and Fibo levels.

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    2. Thank you,but when you say final low of Oil what is the target of the price you have in mind? A double Botton at 10$?

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    3. No, idea. The rally is more likely corrective structure, but I do not know if we will see lower low or not. I would rely on time - we have a time window for a low.

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  2. Krasi,
    Great stuff as usual.
    With the visuals using vertical line it is very clear now.
    Thank you

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  3. YOU SAID THE BIG SERIOUS DROP IN THE EURO, NOT THE USD. RIGHT?

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  4. Yep, this is only wave 1. Still alot of bulls are bullish and are buying this dip think we go higher. Won't be until wave 3 starts that you'll see fear.

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  5. Do you know the web of cycles http://timeandcycles.blogspot.com/ ?, I dont understand what he says, he talks about a low cycle in late May. Does he think the same as you?

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    1. This 75 weeks +-2w cycle is the 18 month Hurst cycle. My opinion is that we still have not seen this low.

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  6. In the hourly chart I see a divergence in the rsi, I think it is wave 3 and wave 5 of (1), maybe the wave 1 of C is already finished

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    1. I think it is still w4 and we will see bigger divergence.

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  7. http://studyofcycles.blogspot.com/2020/06/simply-hypothetical.html?m=1


    Hey Krasi, thoughts on this? He has it retracing and then blasting off to 3400s?

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    1. I can not fit time with this pattern. First I have to count important low in March to justify continuation and very bullish 20w cycle then suddenly reversal instead of another continuation(after bullish right translated cycle) and then the opposite important low still has not occurred because we have to see strong wave C and lower low.

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    2. yeah its very optimistic for me..

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    3. Such running corrections a very rare I would not bet on them until I do not see confirmation.

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    4. Krasi, what do you think about his labeling of 5 waves up for A? If so there should be another 5 waves up for C. I think that's why he has potential counts like that.

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    5. I know why he is searching for B wave. It loos like impulse, but many indexes are overlapping or have clear zig-zag. I am making the same assumption like the last two years - SP500/NDX are masking the true pattern with strength caused by a few companies, but they are not anything special. Many "experts" failed because they do not look other indices or markets - this is a big mistake.
      Running correction sounds like desperation to me. I was expecting a zig-zag for y no triangles/flats and we have it.

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    6. If I have to bet on alternative with primary B running I will pick this - https://imgur.com/a/fuzBrG9

      It looks good like alternative fits much better with cycles.

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    7. Makes perfect sense now. I always use SPX as main reference because I find they tend to respect price support/resistance levels much better. But ya you're right, we should pay more attention at other indices when it comes to counting EW.
      I'm really learning a lot from you. I also used cycles and EW, but you always tie the 2 very well together. Really hats off to you!
      Frankly I'm slightly leaning to the view that the bull market is behind us now due to the kind of reckless behaviors that we're seeing (buying bankrupt companies frenzy). These behaviors are typically seen at the end of a bull run. Makes me doubt if we'll see another 5 waves up. In short the bull market may be dead more thanks to the Fed.

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    8. Last chance for the bull market is test of the low and impulse higher, but I am starting to doubt this story too. Too many crazy waves up and down feels like topping with retail traders leading the parade - classical end of a bull market.

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    9. What about the possibility of a final blow-off top after the current correction is over?

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    10. I'm speculating this scenario because institutional investors are underinvested. Is it possible that they jump in at this point and drive it higher before the pop? I understand this sort of speculation does not fit with your work but I'm just thinking aloud. Many institutional investors may face 'career risk' because they missed out on the rally from March lows. Thanks as always for your valuable comments.

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    11. Everything is possible, just I do not know how to fit it with my cycle model.

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  8. Short term it is possible that impulse lower is already completed and wave 2 is running... to synchronize with NDX.

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    1. Failed fifth wave, the one I was expecting, impulse lower and now w2 as expanded flat retracing 50% or slightly higher, but below 62% - https://invst.ly/r4c9p
      We will just watch what happens on Monday/Tuesday.

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  9. Time of C.

    A+B:2= july 31+- for C wave.

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    1. This fits very good with the cycle analysis.

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  10. Neowave (modern Elliott).

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  11. This comment has been removed by the author.

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    1. The only consideration I need is pattern and cycle. Subjective interpretation of data has no meaning. My comment is that I do not care about FED bla bla printing money bla bla - all I need is the charts.

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    2. are you saying all this Covid stuff, protesf, etc its non sense.. when in fact it just normal cycle stuff that is happening?

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    3. I am saying I do not care about the reason for the cycle or any move. Trying to interpret events and news is subjective and even if you are right there is no guarantee how the herd will react.
      All you need to know is visible in the charts, which reflect all participant betting with their money up or down.

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    4. i am starting to realize that now, more and more... too much NOISE nowadays.. really have to block it out...

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  12. do you have a chart for NDX? would you mind posting it? Thsnk you

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    1. I do not have a count with high conviction. I assume it is corrective like all other indexes.

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  13. Krasi, just speaking anecdotally, I've been hearing more and more about
    stocks and the stock market from friends etc . People who have no idea about stocks are talking like experts. And this is all happening in the midst of one of the biggest recession of our life time. It feels more and more like a bubble. I don't see how the greater cycle may have a few years left to top. Feels like we are already there.

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    1. It is mania phase for sure with the leaders retail traders. This always ends the same way in tears.
      I will not be surprised if this high is not exceeded for the rest of the year, but neither the pattern nor cycles signal major top.

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    2. I have exactly the same situation...since March many of my acquaintances who before were not anyhow connected/concerned with trading and investing, contacting me with questions how to invest in stocks, open account, etc. They all to the best of my knowledge have opened accounts and bought stocks near March lows. So far they have made decent profits. I have been suggesting to book profits to people I know a bit closer, though interesting is the trend. check out this chart: https://twitter.com/sentimentrader/status/1271783626737401857?s=20

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  14. look Tesla or microsoft, the waves are easier to count

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  15. Krasi, I see W4 of W5 of W1, am I right?

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  16. maybe 5 of (1) is ED

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  17. I think it is a of 2

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  18. It looks like W4 of Y so, one more high

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  19. A very nice candle Day of buyers

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  20. LOL, "buy EVERY dip" retail investor bulls, on half the volume of prior two trading days, heading for overhead resistance of an island reversal gap as well as daily EMA(8, high) and EMA(10) curves. Good luck with that.

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  21. very discouraging for bears, but I think their is alot of bearish sentiment that the market is trying to get rid of before the next move down.

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  22. Retrace looks too large and impulsive to me. Over the 20 ma on daily looks bullish

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  23. Daily and weekly charts will present nice-looking bearish divergences versus indicators (RSI, MACD, stochastics, etc.) if new ATHs are BRIEFLY achieved, and then crap out / fail. To be determined ...

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  24. Looks like 5 waves down to me, the only thing that is suspicious is the subwaves are in 3. So could be an leading expanding diagonal or triple zigzag. Won't know if we are in wave 2 or new impulse until we take out ATH imo.

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  25. Instead of focusing on single index like SPY, take a look at XLF or oil futures. The patterns become more clear. We are in a up after 1 down. We should see b then c. Since it is first wave, retracement can be almost the entire drop.

    - Kali

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  26. with the Fed backstop, are you saying its still all about the chart?

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    1. What backstop? I have not read the news and I do not care.
      Yes, FED does not matter all you need to know is in the charts.

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  27. The spy get doun till the support

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  28. This are all scenarios I can see - https://imgur.com/a/ZIa1SzE
    B wave - running correction or running triangle. The futures overlapping wave A, but not the cash index. So it has to continue lower. Too big if it is normal impulse so it should be diagonal or running triangle with no overlapping. All this sounds to me like fantasy patterns.
    C wave running - the first leg is a zig-zag so this has to be another zig-zag for 2/C ED.

    1-2 as expanded flat(yellow)
    1 - diagonal and now 2 running(white). This makes most sense. I wrote that we will see more than 100 points retracement and now we know why - big retracement should occur after diagonal.

    The problem with the bullish counts(green) is that all possible options need zig-zag lower and it looks more like impulse.

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  29. Hello Krasi,this movement on Oil change the downtrend or no? Could go down to 26/28 in the coming weeks or return ti 41?

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  30. we're already at 3130 with no pullback. 200 points in a day. Honestly, the retail traders need to think this will never come down, go all in on with their unemployment benefits then we can see a crash after. This is too much like bitcoin at 11k - it went to 20k.

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  31. I think it is not 2 of C, it is still B

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  32. Krasi,
    where do you see UVXY going?
    Thank You

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    1. At least doubling 70, even 80-90 is possible.

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  33. I said it the other day, this is the final part of the wave B, the wave C has not started yet

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    1. what is your target for Wave c?

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    2. Can you show a chart, because I can not see B wave.

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  34. Replies
    1. I can not be always right:) Important is not to be caught with pants down. That is why I took half of the profits and now just watching the game... to see which side to take.
      Despite the vertical surge I am not convinced in the bullish case.

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    2. My pants are down I hope I don't get caught

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  35. About the wave B, I mean that the wave B that started in March has not finished, it is not necessary that it makes new highs, it can finish in failure around 3000-3200

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  36. They are going to close the gap in S&P

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  37. Hello Krasi,this movement on Oil change the downtrend or no? Could go down to 26/28 in the coming weeks or return ti 41

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    1. Difficult to say both is possible double top and down to 26-28.

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  38. Replies
    1. Topping is happening - double top.

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    2. "double top" on hourly/daily, or long term, please? Thanks.

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    3. Daily for the move from the March low.

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    4. Thank you. Thought the island reversal gaps were going to hold, but R2K and NSDQ have closed them (somewhat).

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  39. The "talking heads" are signaling the "all clear," and that the markets will continue upward to the moon. Someone is going to be quite wrong.

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  40. Krasi - you're doubletop call - is it because you are looking for divergence on the daily rsi?

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    1. And divergences on daily Force, MACD, stochastics, ROC, and more.

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    2. yeah, i just figured rsi took care of the bundle

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    3. I just feel much more confident in my interpretations when a large majority, or all, of my indicators agree with one another. With less than 50/50, I am not near as convicted to a leaning, and wait.

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    4. when I feel confident I'm often wrong :(

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    5. I understand completely. When there's money on the line, doubts can arise. I have to believe in my system, trade it, and utilize good risk management. The rest is up to the market. Good luck in your trading.

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  41. could be in wave 3, wave 2 was an expanded flat.

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  42. 15 JUNE 5W LOW?

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  43. look like a triangle, but if everyone sees that, then probably no?

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  44. Be open-minded guys, Apple made all-time highs this week....why not the S&P500 to then provide an excellent risk / reward sell.

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  45. I'm open minded. 2200 or 1800 is my target

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  46. Replies
    1. UVXY looks like it will pop tomorrow.. will you still wait for it to come back to $35 or did you buy in the $37s?

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  47. Nothing new to add, waiting continues. Even if we see higher high it will just produce divergences and turn lower will follow.
    The difference with higher high is that it will take more time and the probability for a higher low(above March) will increase.

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    1. Short term cycles are already indicating that we have topped this week. I find it difficult to believe that a new 20d cycle would topped so early, hence I'm still not taking any short position yet.
      Bulls have another shot next week if price can stay levitated here, but bears are surely but slowly taking over here.

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  48. Looking good this morning bear mates

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    1. Krasi - are you seeing this as a possible wave 3 (of 3 of 1)? I assume we really need to sell impulsively the rest of the day?.... https://invst.ly/r69sd

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    2. I see triangle - either b and up started or 2 and now completing e before turning lower.

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    3. "Triple witching" day tomorrow - woo hoo!

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    4. Krasi, I'm still a neophyte learning Elliot Wave. Can you post triangle. I'm not really seeing it.

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    5. I was thinking the same hanging until the triple witching.

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    6. The two possibilities green for continuation higher and red for move lower - https://invst.ly/r6d5p

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  49. Chewing up so much time with this rubbish .

    Lots of action in futures , with a regular 3-4am buyer who seems to be on a mission to erase any overnight gains before rth starts.

    Guess it changes when it changes , but tomorrow will be day 8 since the decline started , so we really should be seeing some acceleration lower which breaks monday's low in the next day or two . Fresh highs otherwise & then shift the next low into August- which makes no sense to me .

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  50. Louis did you buy uvxy or are you waiting for $35?

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    1. No I shorted it on every pop and covered already

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  51. I will see tomorrow what I'm gonna do

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  52. There is a possibility that can get smashed down to 2800

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  53. reversal day - there I said it. Have a great weekend all! Thank you Krasi for your guidance and allowance of fun comments :)

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    1. You are looking prescient, Roberto. This move down should have some "legs" to it, at least on the daily. Have a good profitable day/WE yourself.

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    2. Apple announcing it's CLOSING some stores ... hmmm. COVD being taken too lightly here in the States, at least currently.

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    3. Some people develop a Spidey sense, others develop a Krasi sense. Well, IWM chart looked bearish today. I've been short for a while, just didn't want to get stopped out. Hopefully the BTFDers go home today. Good Luck Johnny!

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    4. Thanks much. Island reversal gaps still intact on DJIA and SPX (vs. R2K and NSDQ), so the equity indexes are not in lock-step with one another. Definitely not making it any easier to "read" this mess.

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