Weekly review / Седмичен преглед

Short term view - still working on short term bottom followed by relief rally
Intermediate term view - lower low and intermediate term bottom second half of June

TECHNICAL PICTURE
Nothing interesting this week. As expected bottoming process. Some relief as expected, but not much strength. Probably the traders are cautious because of the long weekend.
Short term the picture is unclear and with the long weekend its difficult to predict something. The formation looks like a triangle. The price is bellow the EMA50. The MACD is at the zero line and it looks like it want to plunge lower. The Histogram is not looking better either. Best guess - move lower with divergence before the expected relief rally. Lets wait for the opening on Tuesday for more information.

The Histogram is moving higher so any move lower should be short living and make a divergence. So I will stay with the prediction that we will see at least 1340 before any serious sell off.

MARKET BREADTH INDICATORS
Nothing changed.
The momentum indicators like McClellan Oscillator are working out the oversold conditions. The Trend following indicators are telling us that the move is still not over.
McClellan Oscillator - working out the oversold conditions.
McClellan Summation Index - the move on the downside is not over.
Weekly Stochastic of the Summation Index - the move on the downside is not over.
Bullish Percentage - the move on the downside is not over.
Percent of Stocks above MA50 - working out the oversold conditions.
Fear Indicator VXO - pullback
Put to Call Ratio - working out the oversold conditions.

CYCLES (TD - trading days)
Short term - probably bottom next week, which will mark the end of the 20TD cycle and the beginning of the next one. That will fit perfect with relief rally.
The bigger picture - 3 to 5 weeks to reach a 20 week and 40 week cycle bottom. The previous 20 week cycle lasted longer - 23 weeks, so I expect this one to be a shorter one. Currently its 12 weeks old so something between 15 and 17 week to see an intermediate term bottom.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Nothing changed - Countdown is at 5 now and Combo is at 10.
If the indexes move lower next week we could see Combo count marking 13.

Weekly review / Седмичен преглед

Short term view - relief rally
Intermediate term view - lower low and intermediate term bottom second half of JUNE

TECHNICAL PICTURE
I was expecting a move lower for 2-3 days but not so much. SP500 hit the first target ~1290. I thought this will happen in June... but it is what it is!!!
So whats next? - When I look at the McClellan Oscillator and the Put to Call Ratio(see the links bellow) I see a lot of bearishness. When this short term indicators reach such extremes the result is always relief rally and a lower low, which marks THE LOW for a particular move.

Short term - no signs of a reversal.Probably 2-3 days bottoming process and a relief rally. Targets are ~1340 resistance and 38,2% Fibo retracement, ~1360 resistance and 50% Fibo retracement.

Intermediate term - SP500 touched 38,2% retracement for the move since October 2011. I think in June we will see lower low. The next levels are ~1270 and ~1250 which is support level and 50% Fibo retracement.

Long term - On the weekly chart the indexes have reached my target the EAM50. Lets see where we will find a bottom. If SP500 stays above 1250, the bullish scenario is still possible. If not the target is 4 year low in Q1 of 2013 reaching at least the October 2011 lows.

MARKET BREADTH INDICATORS
The momentum indicators like McClellan Oscillator are screaming that the rubber band is too stretched - expect a bounce.
The Trend following indicators are telling us that the move is still not over.
McClellan Oscillator - take a good look at the chart. Always when such levels are reached a bounce is following. Another important thing - that is not the low. Expect lower low
McClellan Summation Index - the move on the downside is not over.
Weekly Stochastic of the Summation Index - the move on the downside is not over.
Bullish Percentage - the move on the downside is not over.
Percent of Stocks above MA50 - it's time for a bounce
Fear Indicator VXO - pullback and a move to 28-30 will mark the end of this intermediate term move.
Put to Call Ratio - crazy levels, everybody are on the bearish side of the boot

CYCLES (TD - trading days)
I am not showing a daily chart of the smaller cycles. I think that there is cycle inversion, but I am not a "cycle guru" so I prefer not to comment something that I do not understand:) The 20 day cycle is moving for 7 days lower instead higher. Probably for the second half of the cycle we will see the prices moving higher, which will correspond to relief rally.
The bigger picture - 4 to 6 weeks to reach a 20 week and 40 week cycle bottom.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Sequential has been completed last week. Countdown is at 4 now and Combo is at 10.
My interpretation:
- Combo finishing next week and a bounce, Countdown finishing later in June. That means three days with lower lows.
- continue lower to finish the Countdown. That means continuing lower with pauses for a day or two.

Weekly review / Седмичен преглед

Short term view - indexes are bottoming and relief rally is expected
Intermediate term view - we are in an intermediate term correction lasting till the second half June

TECHNICAL PICTURE
Next week a relief rally should start. The prices are at support, 23,6% Fibonacci retracement and the histogram is showing divergence.
On the weekly chart the histogram continue moving lower so the momentum is still on the downside and any move higher should be just a pause before the next sell off into the second half of June.

For the short term - I am not sure if we already hit the bottom. We have a triangle which does not look nice for a bottom. Looking at the indicators move on the downside has higher probability. Probably the indexes will break support to mislead most of the traders and reverse.
The size of the triangle is 21 points so break on the downside points to 1332.

MARKET BREADTH INDICATORS
Mixed picture and supports the technical charts - short term bottom but intermediate term is still negative.
McClellan Oscillator - shows divergence we are near to a short term bottom
McClellan Summation Index - still weak no sign of a reversal probably bottoming before relief rally
Weekly Stochastic of the Summation Index - buy signal, but I am not buying it:)
Bullish Percentage - says the bigger picture is still negative
Percent of Stocks above MA50 - nearing bottom
Fear Indicator VXO - hit 21.60 as expected
Put to Call Ratio - at extremes we are near to a short term bottom

CYCLES (TD - trading days)
The 55TD(blue) and 28TD(yellow) nominal Hurst cycles have bottomed or will hit bottom next week Monday/Tuesday.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Currently there is buy Sequential at 7 so two more down days are necessary to finish it. That fits perfect with the hourly chart - fake move on the downside and reversal.

Weekly review / Седмичен преглед

Short term view - short term bottom expected next week
Intermediate term view - we are in an intermediate term correction lasting till the second half June

MARKET BREADTH INDICATORS
McClellan Oscillator - I expect to see a divergence next week
McClellan Summation Index - will form a divergence next week
Weekly Stochastic of the Summation Index - already issued a buy signal
Bullish Percentage - still moving lower no signs of a reversal
Percent of Stocks above MA50 - probably we will see a divergence too
Fear Indicator VXO - will push to 22-24 end the move ends

TECHNICAL PICTURE
Last week I have said that the next move lower should start - there we have it:). On Tuesday we saw fake move to suck in the most players on the wrong side and the market reversed.
Now I think that we will see a bottom next week and a rebound which will last longer than 4-5 days. Logical targets are reaction of the same size like the first one - 65 points or that means target ~1350 and the second target support ~1340(see the daily chart).
Short term - probably pause for a day or two to reset MACD and the histogram, followed by another move lower with divergence to finish this leg of the correction.

Daily chart - the histogram is bellow zero, several more days on the downside probably to support ~1340 and 23,6% Fibonacci retracement to form divergence and finish this move.

The big picture - I am still following two scenarios. The bullish one is the favorite one. The market is holding on brave for now so probably when we hit more significant bottom in June the prices will be above significant support ~1270(see the daily chart above) which is 38,2% Fibonacci retracement, EMA50 on the weekly chart and MA200 on the daily. If we breach this level than it gets dangerous for the bulls.

CYCLES (TD - trading days)
The small cycle(in red) lasts 18 trading days already. I think next week we will see the cycle bottoming.
This will be a bottom for the bigger cycle(in blue) too and we will see more significant rebound.
The biggest cycle(in red) points lower into second half of June.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
No trade-able Info - we have 1-2 from a sequential on the down side for now.