Oct 17, 2020

Weekly preview

Short squeeze and exhaustion on Monday, overall choppy week. I have discussed cycles and patterns in comments one more time my thoughts:
Pattern - the triangle is dead, many indices made higher high so it is more likely this is the top of the pattern and not early September. I can not not explain the move from the March low with classical EW pattern the only one fitting is neowave diametric.
Cycles - the 5w high is where it should be and we need one more 20d cycle high to complete 10w and very likely 40w high.
TA - and if you do not trust or care about "complex theories" like EW/neowaves/cycles just look at RSI and A/D issues - the trend line connecting the lows has been broken and now tested - this are very very reliable signals. It is game over the move from the March low is completing.

To summarize - 4-6 trading days higher to complete 4x20d/10w/40w cycle high, which will be most likely the top of wave B of a triangle as a diametric pattern then wave C to begin with target below the March low.

G.Neely(EW, more precisely neowave) and D.Hickson(cycles) have new videos, you can watch them on youtube if you are interested. The interesting points - Neely sees the March rally completing and wave C of a triangle for 3-4 months lower below the March low, D.Hickson and other guys commented that the September low could be 20w low.
About the pattern I agree I am following corrective pattern from the beginning. I was wondering how will wave C look like(it should be fast) when we have 40w low early December(too short only 2 months) and 18m low mid 2021(too long like 10 months). If you merge the two analysis and assume 20w low late September than we have the expected 3-4 months lower for wave C and 40w low - interesting. Such long 20w cycle is very weird, but since 2018 all moves are very weird. At the March low I made the mistake to stick to the cycle nominal model so I suggest to be open minded this time.


TRADING
Trading cycle - buy signal, MA10 was tested again(the futures did not broke the trend line). I think we have one 20d cycle which is right translated and the next one should make higher high and fail as left translated.
If you see the price breaking below MA10 run for the hills:)


TECHNICAL PICTURE and ELLIOTT WAVES
Short term.... this move up in October is exactly the same story like the whole rally from the March low - it is corrective, the majority has no clue how to count it so it is impulse what else should be:) Best match w-x-y, but it does not count so well and if we see higher high it will look better again as diametric.


Intermediate term - triangle was my last hope for classical EW pattern from the March low. With the price action this week I think neowave diametric fits much better. With orthodox EW we have the top in early September. The biggest decline was in September, which means we have reversal and this rally is not supposed to be happening.... and now we have to look for excuses like it is impulse just completing 5/5, LD and deep retracement or flat/expanded flat.
Many indices made higher highs, if SP500 follows instead of looking for excuses it is better to accept it for what it is. What is the point of just pasting labels somewhere and looking for excuses?
Again if you are not interested in theoretical discussion just look at market breadth/MACD with double divergences and RSI on the daily and weekly chart - this is all you need to know:)


Long term - the bull market completed in 2018. Since then a bunch of corrective waves. Currently I think this rally should be a corrective wave of a bigger pattern most likely triangle. Look at NDX we have corrective wave which is 1,618 bigger than the previous one which could be only b of a triangle.
I think the best looking pattern is Neely's triangle. Wave C should begin soon - white if September is 20w low and alternate yellow if late November/early December is 40w low.


MARKET BREADTH INDICATORS
Market Breadth Indicators - are positive, but we have many indicators with double divergences forming. Do not expect some lasting strength we have topping process.
McClellan Oscillator - around zero, one more lower high for short term diveregence?
McClellan Summation Index - buy signal with possible double divergence.
Weekly Stochastic of the Summation Index - buy signal.
Bullish Percentage - around 70 with possible double divergence.
Percent of Stocks above MA50 - around 75 with possible double divergence.
Fear Indicator VIX - the same consolidating sideways. Look at it from another perspective SVXY, volatility is about to explode higher - see the last chart.
Advance-Decline Issues - similar setup like RSI - testing the broken trend line and lower high.


HURST CYCLES
Short term cycles - low to low count I see 20d cycle low testing MA10. It is right translated so the next one should make higher high
High to high count - the 5w is where it should be. I expect one more high for 4x20d cycles to complete the 10w/40w cycle. Judging by the previous three 20d cycle we should see another 4-6 trading days higher and major top.


Week 14 for the 20w cycle. Another option is the September low is 20w low this is what fits with the pattern I favor.
I think this is the top of the pattern from March, which means this should be the 40w high.


SVXY huge pennant/triangle so that MA200 can catch up with price. What do you think will happen with volatility, when the pattern is completed?

Oct 10, 2020

Weekly preview

This 5w cycle high continued unusually long, but the move is still corrective and now long and big enough for a bigger sideways triangle than the one I was expecting last week - I think the whole Y wave is a triangle. Now we wait and see if a decline for about 2 weeks will follow or not to complete 5w cycle low.
Do not get fooled the market is topping with some complex pattern, but this is a top not continuation. From March we have complex corrective leg, which is typical for a triangle - I am starting to like the Neely's triangle more and more.


TRADING
Trading cycle - buy signal, the trend line was tested one more time. Not a big surprise the 4th daily cycle was expected.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - I see corrective moves.... I do not buy this reversal with LD or impulse higher. Wedging again and another double zig-zag so we have moves, which are part of bigger corrective pattern.
It is what it is - complex corrective pattern. The Majority try to simplify it to see something familiar impulse lower and higher.... it is not, just accept it complex corrective topping pattern.


Intermediate term - it is still speculation, but with three corrective legs and expected high in a few weeks the pattern which fits is triangle for Y.
Alternate we have A-B and C lower should follow.... looking cycles and market breadth this does not look very likely.
And if you want it more exotic look at RUT it looks exacly like Neely's diametric:)


Long term - the bull market completed in 2018. Since then a bunch of corrective waves. Currently I think this rally should be a corrective wave of a bigger pattern flat/triangle or x wave. With corrective waves often you have to adjust so stay open minded.


MARKET BREADTH INDICATORS
Market Breadth Indicators - are pointing higher, not a big suprise after they were signaling to expect a bottom.
McClellan Oscillator - close to overbought level.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal.
Bullish Percentage - buy signal.
Percent of Stocks above MA50 - reached the 75 level.
Fear Indicator VIX - the same consolidating sideways.
Advance-Decline Issues - finaly testing the broken trend line.


HURST CYCLES
Short term cycles - unusually long 20d cycle... nevertheless I think this is 5w high and next 5w low should follow. Lets see what happens next week. The alternate scenario is 5w high last week and just continuing higher for 10w high...


Week 13 for the 20 week cycle. The 10w low looks confirmed, the 40w high... if we have triangle or something else as a top the cycle top should be placed where the pattern is completed.