Jan 16, 2021

Weekly preview

Lower this week, which is not a big surprise - just enough for reversal, but not enough to confirm it. I think we saw the top for the move which started in November, but at the moment it is not confirmed.


TRADING
Trading cycle - sell signal, another close below MA10 confirmation is second close below it. RSI is below the MA too, but for confirmation I want to see it breaking below the trend line.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - NYSE made higher high, DJI only intraday, SP500 slightly lower high - similar to Jan-Feb last year non-confirmations.
The move from the November low should be completed, but we need confirmation like brake below the channel and the last minor low.


Intermediate term - the indicators with long and short term divergences warning for a high.
Looking at RSI I think this labeling is better - three moves higher with roughly the same length 11-9-10 weeks.
Neowave pattern diametric completing at 18m high looks good. Classical EW pattern should be W-X-Y(red) with the catch that there is no impulses.
Alternate this is THE top Z/G(white) I do not believe it much, but if we see the last move retraced very quickly like 4-5 weeks we have reversal.


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.


MARKET BREADTH INDICATORS
Market Breadth Indicators - the oscillators are turning lower with divergences. I think they are pointing to intermediate term high.
McClellan Oscillator - turned lower and below zero.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - short term divergence and turned lower.
Percent of Stocks above MA50 - short term divergence and turned lower, sligthly below 75.
Fear Indicator VIX - higher lows, we should see spike higher.
Advance-Decline Issues - turned lower after lower highs and divergence.


HURST CYCLES
Short term cycles - this choppy price action makes it difficult to analyze the short term cycles... this is the fourth week from the previous high so most likely the indices made 5w high and turned lower into 5w low.
Based on the length the 20d low should have been on 12th at day 14. In the alternate scenario you have 17 days for 20d cycle low and turn higher into 5w high.... it has low probability, but can not be 100% excluded at the moment.

I am searching for ways to confirm this short term cycle lows. One possible way I have found is using the McClellan Oscillator. It has this capability to show weakness, which is not visible on the price chart making it suitable for this goal. Those interested in cycles study the chart. It is not perfect, but it seems to work pretty good. It says the 10w low is where I have it and the 20d low is mid this week.


Week 11 for the 20w cycle. The indices are at 20w cycle high and turn into 20w low probably occurred this week.

Jan 9, 2021

Weekly preview

We knew that cycle and pattern are not completed and the market decided to go for blow off, which is not unusual. It has to fool as much traders as possible - judging by the comments it was successful. Three days will not change the last two months - another corrective move, which is topping... it is history it is done.

Nothing changed - the move from the November low is completing and the 20w cycle will turn lower for several weeks.


TRADING
Trading cycle - buy signal, more closes below and above MA10/RSI crosses. The same - expecting setup like Jan-Feb and turn lower.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - you can count a-b-c with c=0,618xa, another option is the whole move from the November low is diametric not just the c-wave. It works for indexes like DAX,SP500 and others, but it is best visible on the NDX chart.

SP500 closer look - from 9-th of Dec real mess and final blow off. This double zig-zags/diametrics are every where. Another one looks close to completion ideally 10 points higher.


Intermediate term - nothing new, the indicators with long and short term divergences warning for a high. Neowave pattern symmetrical completing at 18m high looks good. Classical EW pattern should be W-X-Y with the catch that there is no impulses.
Alternate this is THE top... still the pattern high should be later, but if we see the last move retraced very quickly like 4-5 weeks we have reversal.


Long term - DJI weekly chart another touch of the trend line with double RSI divergence does not make me feel bullish.


MARKET BREADTH INDICATORS
Market Breadth Indicators - oscillators turned up, but weak with lower highs so far. This three days up do not show some big strength.
McClellan Oscillator - slightly above zero.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - bounced from 70 lower high so far.
Percent of Stocks above MA50 - bounced from 75, lower high so far.
Fear Indicator VIX - higher low, short term double divergence.
Advance-Decline Issues - turned up from zero, lower high so far.


HURST CYCLES
Short term cycles - this time the DAX, because it shows more clear what is going on. I still think we have 20d high and next is decline into 20d low.


Week 10 for the 20w cycle. The indices are at 20w cycle high and turn into 20w low is expected.