Weekly review

Short term view - small pullback and move up with target 1580-1585.
Intermediate term view - after that topping process should start followed by 8%-10% correction.
Trading system signal (swing trading) - Direction: UP | Last entry signal: at SP500=1558 on 27.03.2013 | Stop at: 1558

Last week I was expecting something on the upside... this whole choppy move took longer than expected but the direction stays up.

Short term I think that we will see small pullback which will be buying opportunity but be careful because I think we are chasing the last 10-20 points. RSI hitting 73,5 on the weekly chart.... do not expect much more upside. On previous occasions since 2009 when we saw RSI at this level the result was 17% / 21% / 11% / 9% correction.
The bigger picture has not changed - after this move a correction 8%-10% should start.

TECHNICAL PICTURE
Short term - I am not sure what kind of figure we are witnessing but the indicators are positive and the next move higher has begun. At this point any pullback should stay above the lower trend line and EMA50.

- Triple cross(EMA10 and EMA20 crossing EMA50) - Price and short term moving averages are above EMA50 so short term trend is up.

Intermediate term - the indexes are moving higher as expected and the indicators will make divergences as expected. The indicators look good for a short term move up but after that.... we should see a correction.

- Trend direction EMA50/MACD - price is above EMA50 and MACD above zero so intermediate term trend is still up. MACD does not made a new high, divergences are visible and we must be careful for intermediate term trend change.
- Momentum Histogram/RSI - RSI and the histogram have turned up, the momentum is now up and we will see higher high on the SP500.

Long term - the big picture has not changed. RSI hitting 73,5 on the weekly chart.... do not expect much more upside. On previous occasions since 2009 when we saw RSI at this level the result was 17% / 21% / 11% / 9% correction. So be smart and patient not greedy. It is too late to chase something on the long side.

- Trend direction EMA50/MACD - MACD is above the zero line and the price above EMA50, the long term trend is UP. No divergences so I think that the cyclical bull is not over.
- Momentum Histogram/RSI - momentum is still up but the move looks tired.


MARKET BREADTH INDICATORS
The Market Breadth Indicators - exactly like last week. They do not look very bullish making their second top, what you should expect before reversal. The move is mature the next big directional move should be lower.
McClellan Oscillator - moved above zero as expected now waiting for the divergence.
McClellan Summation Index - no change, we have a divergence and a sell signal.
Weekly Stochastic of the Summation Index - buy signal, but I think it should be ignored.
Bullish Percentage - working on a divergence, but buy signal for the short term.
Percent of Stocks above MA50 - I expect to see another lower high and double divergence.
Fear Indicator VXO - working on its divergence....
Issues Advancing - the participations is not really broad... just inched a little bit higher.
Issues Declining - the declining issues are not getting less even with the indexes moving higher.


HURST CYCLES
We had 20 day cycle low last week and now we are at day 8 of the next one. I think there is another 3-5 days on the upside before we see the top of this cycle.

Currently at week 5 of the 20 week cycle. I have tried to adjust the projections to fit the time. I expect top for the current 20 week cycle in the first half of April and 20 week and 40 week bottom around the end of May early June.
I think the 40 week cycle is dominant and we are seeing the same shape like the previous two 40 week cycles - the first 20 week cycle moving higher the whole time and the bottom was just sideway move for several weeks, the second 20 week cycle topping very early after several weeks upside.


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Another quiet week.... Best guess we will finish this combo (currently at 9) before the reversal.

We have a combo at 10. Should we expect another three weeks of higher highs.... I do not know but it is possible. See the top in April 2012 - the missing three higher highs without the index really moving higher just winning time and making top.

Short term update

The primary green scenario from yesterday is playing out. I think that there will be one more opportunity for an entry. Looking at the European indexes one final move lower is missing to finish the correction.

P.S. yesterday the system issued buy signal - big red bar down to EMA50 on the hourly chart, no follow through as the next bar closed back above the EMA50 and the histogram on the daily chart turned up. It was too late as I came back from work and it is not fair to state something after the fact:)
Anyway the levels: Trading system signal (swing trading) - Direction: UP | Last entry signal: at SP500=1558 on 27.03.2013 | Stop at: 1552

Short term update

Other view of this whole mess which we are seeing for two weeks. It is bullish again - ascending triangle. The price should stay above 1550 (the lower trend line) so that the triangle is valid. The line in the sand between bullish and bearish is 1545.

Short term update

5 waves up, 1560 exceeded, the histogram on daily chart turned up - the pressure is now on the upside. I think there will be 2-3 days on the upside.
I think it is a little bit dangerous chasing the last 10 points... wait for a pullback, after 5 waves up there is 3 down.

Short term update

UPDATE: OUT of longs at 1552.... I think the triangle has mutated into bear flag. If I am right the price will not exceed 1560 before a move lower to support.



UPDATE: Reverse the trade at 1552....
Trading system signal (swing trading) - Direction: UP | Last entry signal: at SP500=1552 on 25.03.2013 | Stop at: 1548


UPDATE: Now It looks bearish breaking the triangle to the downside....
Trading system signal (swing trading) - Direction: DOWN | Last entry signal: at SP500=1548 on 25.03.2013 | Stop at: 1556


15min chart of SP500 - fake break out and than move back into the triangle. Just 1 point is missing for a touch of the lower trend line. Again in wait and see mode. It still continues to look more bullish than bearish (see the MACD and the histogram on the daily chart, which is reseting). Worst case which I see the triangle breaking to the down side and move lower to support ~1525.
P.S. to be all fair and objective 4 points loss(1559-1555) for the system - open at 1559 than the price moved back into the triangle and broke bellow the last minor highs at 1557 and 1556.

Weekly review

Short term view - move up with target 1580-1585.
Intermediate term view - topping process should start and than 8%-10% correction.
Trading system signal (swing trading) - Direction: at the side line | Last entry signal: at SP500=.... on xx.xx.xx | Stop at:

Last week I wrote "no idea for the short term"... obviously the market hadn't idea too:) and the result is a triangle.

Until the last three minutes on Friday everything was seeing perfect for one small wave lower on Monday to finish the triangle and than came this ramp job.... Anyway I think the next short term move is up and I hope it will not start with a gap. Trigger for a long trade is move above 1559.
The bigger picture - after this move, a topping should start for 2-3 weeks and a correction after that.

TECHNICAL PICTURE
Short term - The price is flirting with EMA50 and MACD with the zero line and the trend line. I think the histogram on the daily chart will turn up and the next short term move is up. The ramp job in the last three minutes makes the picture look like we will have a break out of the triangle on Monday. We can hope that it will not be with gap. Last "e" wave of the triangle is the backup scenario now.

- Triple cross(EMA10 and EMA20 crossing EMA50) - Price and moving averages are back above EMA50 and the histogram on the daily is reseting for two weeks. This is bullish action - clearing overbought conditions.

Intermediate term - nothing new, the plan stays the same. MACD and the histogram should make divergences after this final move up confirming reversal.

- Trend direction EMA50/MACD - price is above EMA50 and MACD above zero so intermediate term trend is still up. MACD does not made a new high and we must be careful for intermediate term trend change.
- Momentum Histogram/RSI - the oscillators are reseting, but the prices is not following which is bullish.

Long term - the plan stays the same.

- Trend direction EMA50/MACD - MACD is above the zero line and the price above EMA50, the long term trend is UP. No divergences so no troubles on the horizon.
- Momentum Histogram/RSI - momentum is still up but the move looks tired.


MARKET BREADTH INDICATORS
The Market Breadth Indicators - do not look very bullish. They are making their second top, what you should expect before reversal. The move is mature the next big directional move should be lower.
McClellan Oscillator - probably will move above the zero line and make another divergence.
McClellan Summation Index - we have a divergence and a sell signal.
Weekly Stochastic of the Summation Index - buy signal, but I think it should be ignored.
Bullish Percentage - looks like double top and another sell signal.
Percent of Stocks above MA50 - I expect to see another lower high and double divergence.
Fear Indicator VXO - I think we will see a divergence after the move higher in equities.
Issues Advancing - keeps moving lower
Issues Declining - keeps moving higher


HURST CYCLES
The updated charts - I am 99% sure that we have 18 month and 54 month cycle low in November.
The 20 day cycle - either we had low on Thursday or it will be on Monday. It depends on how the triangle will play out.

We saw "stealth" 20 week low in the end of February and we are currently at week 4 of the next one.


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Quiet week.... Best guess we will finish this combo(currently at 8) before the reversal.

Nothing new - setup finished for three weeks and we have 3 of a countdown and 9 of a combo.... I do not think that we will finish them before a correction.

Short term update

Here is the triangle which I was watching for several days. Currently we are seeing wave D, small move lower to finish E and move higher to the trend line.

Short term update

UPDATE: If the price stays above 1543 triangle, if it moves bellow this level next target is ~1530. Tomorrow we will see what will happen.


UPDATE: only 1543,5 missed the target for a 1,5 point:)


I have already wrote that the oscillators are moving lower but the price is not following and the indexes have unfinished business on the upside. One of the options(the worse one) was sideway move probably triangle - it think that is what is going on. The histogram on the daily chart is already bellow the zero line and the daily cycle is already at day 18 but the price is doing... nothing. Reasonable trade with low risk will be to wait this (whatever it is) to play out and jump on the long side for a week or more. My system is for bigger moves and it is not the perfect tool to catch the small moves in a pause in the trend.
If you look at smaller charts the price is testing EMA20/EMA50 on the 15 min charts ~1552 and short is ok with stop 1556 above the minor high for the day and target ~1542.

Short term update

Not very convincing on the upside... strong opening and that was all. The last two hours with shadows, MACD nearing the trend line. It looks like A-B-C, B finishing and C to support ~1530. At this point the red scenario can not be excluded we must see the opening tomorrow. Even if the indexes move higher the upside is limited if you ask me.

Short term update

UPDATE: The stop was hit... currently not exited neither on the long side nor on the short side. The oscillators are reseting but the price is not following which means we are not finished on the upside. I hope the current move will go lower to at least 1530 and it will not be some ugly triangle.


UPDATE: Too much strength put the stop at 1551 and leave it. If SP500 opens higher and moves up break even.


UPDATE: Do not get too exited I think that there will be one more deep retracement or test of the high before the real correction. There is a lot of support levels bellow 1530-1525-1515. I think the 20 day cycle has 2-4 days more (currently at 16) before the next one begins and moves the prices higher.


The signal from yesterday works very good for now:) and if some one has jumped on the premature signal around 13 o'clock has even 5 points more yeah:)
I would move the stop at 1554 which is several points above EMA50 on the hourly chart. The price has noting to do anymore at this levels if it will move lower.
Trading system signal (swing trading) - Direction: DOWN | Last entry signal: at SP500=1551 on 18.03.2013 | Stop at:1554

Short term update

UPDATE: The price is again bellow EMA50 on the hourly chart and if it stays there we will have a signal. I will say the system show short signal at 1551 with stop 1559 (3:43).

UPDATE: Its worth a try on the short side(currently 1555-1556) with stop(1559) above the high for the last bar on the hourly chart(12-13 o'clock). Text book entry will be to wait for a move bellow 1545 with stop 1559.

UPDATE: System stop moved to 1544

Ups they did it again:) What I mean? Two weeks ago I wrote that I do not like such moves crawling slowly up, this time 2-3 points per day, because the outcome is one red day and two weeks of gains are wiped out. I look at the futures today and what do I see? - ~1535 the gains wiped out. Can you do something - no. That is why I do not like them and I was out early. This is not for the first time and it will not be the last time:)
I think that this is the trigger for the correction. The question is how exactly it will play out calm down around support ~1530, up till FOMC and topping, or just continue moving lower. We will know this in the next day or two.

Weekly review

Short term view - I do not know, no topping pattern for now.
Intermediate term view - when we see topping pattern expect 8%-10% correction to follow.
Trading system signal (swing trading) - Direction: UP | Last entry signal: at SP500=1514 on 01.03.2013 | Stop at:1535

Last Sunday I have posted a new chart and wrote that the picture is a little bit more bullish - exactly that is what we are seeing. For the short term I was hoping that we will see some pullback.... in vain:( SP500 continued crawling up 2-3 points average per day.

The action and the indicators confirm for now my forecast that we should not expect major top and any move lower should be just a correction. This move is bigger and lasts longer than the previous move up so it should be a part of a bigger one and after correction another push up should follow. From cycles point of view the next cycle of a bigger degree has begun. You can not expect 18 month and 54 month low and instead seeing 17 weeks up. That means the November low was a 4 year low and the next 18month/54month cycle is running. The markets does not make major top with the indicators showing strength - on the weekly chart there is no Histogram/RSI divergence, MACD made higher high erasing the divergence so it will be a huge surprise if this is the top for the cyclical bull.
On intermediate term scale the move is very stretched in time and we see MACD divergence on the daily chart and the market breadth indicators so I expect a correction. For the short term there is no topping pattern and it could last 2-3 weeks before a correction begins.

TECHNICAL PICTURE
Short term - no idea. There is no topping pattern and I expect the first push lower to be bought. Triple MACD divergence that could be a signs for a pending push lower.

- Triple cross(EMA10 and EMA20 crossing EMA50) - EMA10 and EMA20 are above EMA50 so the direction is still up.

Intermediate term - Wedge busted as i wrote on Sunday and now we have a channel. Sp500 could squeeze another 10-15 points higher but the next bigger move should be a correction.

- Trend direction EMA50/MACD - price is above EMA50 and MACD above zero so intermediate term trend is still up. MACD does not made a new high and we must be careful for intermediate term trend change.
- Momentum Histogram/RSI - RSI is testing the broken trend line with triple divergence. The histogram is pointing down with small divergence between the peaks in the current tower. The oscillators are saying momentum shift to the down side is not far away.

Long term - the action confirmed the corrected chart from Sunday.
P.S - changed the count... you can count it different ways but it shows the same. It just fits better - first move as a part of a bigger one.

- Trend direction EMA50/MACD - MACD above the zero line and price above EMA50, the long term trend is UP. MACD made new high erasing the divergence.
- Momentum Histogram/RSI - up and strong


MARKET BREADTH INDICATORS
The Market Breadth Indicators - the market participants are very complacent again(VXO) but the indicators are not very supportive. A lot of divergences which suggest weak internal structure and less stocks participating in this rally(Percent of Stocks above MA50/MA200).
McClellan Oscillator - divergence....
McClellan Summation Index - divergence - in buy mode but making lower high...
Weekly Stochastic of the Summation Index - issued buy signal I think it should be ignored.
Bullish Percentage - making double top
Percent of Stocks above MA50 - divergence, less stocks are above MA50
Fear Indicator VXO - the traders are again veeery complacent VXO making multi year lows.
Issues Advancing - making lower high...
Issues Declining - making higher low...


HURST CYCLES
At day 14 of a 20 day cycle.
P.S. NOT adjusted for the changed cycle count on the weekly chart bellow, but that does not change the 20 daily cycle presented on the chart.

The way this move looks like, its length... everything says this a move from an important low and a cycle from a bigger degree has begun. Translated into cycles that means we saw 18 month and 54 month low in November and first 18 month cycle from the next 54 month cycle has begun(I will keep an eye on the old chart but it has no low probability). This 18 month cycle was shorter than expected and I missed it... I do not think that we will see another 4 year up move. Last week I have posted a chart and stated that we have a 9 year dominant cycle. That means that we will see probably an year the indexes pushing higher and H&S top. The important conclusions:
- I do not expect violent 15%-20% move lower, just a normal correction.
- 2013 should be a transition year when the bigger cycle turns from up to down. We should see sharp moves first down and then up H2 2013.
- The next 4 year cycle should not carry the prices much higher. H&S or double top is to expect and the indexes are still working on the first shoulder.


Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Another setup was finished this week.

Setup finished for two weeks and we have 2 of a countdown and 9 of a combo.... I do not think that we will finish them before a correction.

Moves size and length

The charts since 2000... The CFD data feed is not 1:1 with the cash index. I am sure I have counted somewhere a day more or less but that it is not important. The average size/length is more important. I will update every year with the next chart and this will be something like historical reference.
P.S. Raw Data bellow the charts.


Observations Swing moves - I am interested in catching the swing moves which last for weeks sometimes months. They are not so consistent as the corrective moves described bellow but anyway I have made some useful observations:
1. Bull Market
- They last at least 45 trading days and the usual range is 45-70 trading days. The exceptions are two times in 2010 and 2011 after the huge drops the first move up was shorter and there was deep retracement before a swing with normal length. The other two exceptions - only 32 trading days before the top in 2007 and 38 trading days before the top in 2011 followed by huge scary drop. Currently 2013 the last three swings up are longer than usual....
- The size vary a lot and depends on at which phase of the bull market appears - average size normal swing 10%-15% / after counter trend moves ~20% +-3% / after bear market bottom >25%

2. Bear Market
- They are shorter than in a bull market average size 30 trading days the range is usually something between 25-35 trading days. The exceptions are the final low, the move is longer 71/50 trading days and other two occasions 42 and 46 days I have no explanation for them:)
- The average size is 10%-15% when the bear is still calm / the panic sell off one per bear market - 30%/36% / final move lower bigger than average swing 17,5%/28,8%. The 2000 bear has two extra mini panic sell offs 21% and 22% and one more counter trend move.
- Wild market swings - they appear after the panic sell off for the bear market and before the final low. This is an up-down-up sequence of three swings visible in both bear markets. The length can vary but the size is 20%-26%.

3. This moves are divided from corrections or pullbacks which last ~15 trading days or more. You will see at least 2 such moves in the direction of the trend, more often 3 swings, before meaningful move in the opposite direction - usually counter trend move.


Observations Corrective moves - no so random as you would expect:) and very consistent. Here is how I categorize them:
1. Pullback - they are great entry points to jump on the trend so when you see 4%-5% pullback you can jump on it or add to the position with very low risk. In a bull market they are smaller and last longer compared to bear markets which is normal, the bear markets are more volatile.
- bear - average size is 5,3% and range 4,5%-6,5%. Average length 6 trading days +-2 trading days deviation.
- bull - average size is 3,8% and range of 3%-5%. Average length 7 trading days +-2 trading days deviation. There is exceptions when a pullback lasts longer 11,13,16 days but the size stays the same.

2. Correction - they are great entry point for a new position. When you see correction 8%-9% and there is no divergences on the weekly chart or the market breadth indicators you can safely load in the direction of the trend. They differ a little bit in bear and bull markets - the same story a bear market is more volatile and the corrections are bigger and faster.
- bear - average size is 9% and range of 8%-10%. Average length 15 trading days +-5 trading days deviation.
- bull - average size is 8% and range of 6,5%-9%. Average length 22 trading days +-7 trading days deviation. It vary a lot from 15 to 35 trading days.

3. Counter trend move - someday the trend is tired and a move in the opposite direction starts. Usually you have 2-3 swings in the direction of the trend divided from corrections before such counter trend move appears. They last longer than normal correction 45 days or longer.
- bear - lasts 40-50 days and size is 15%-25%. The difference with the "wild swings phase" is that the "wild swings" are short living 20-35 trading days.
- bull - difficult to summarize.... the 2003 bull was more calm this moves lasted longer but were shallow. The 2007 is more volatile the moves are deep but short living. Why such drops like in 2010 and 2011 are not the beginning of a new bear market? - because a bear market does no begin with explosion.


Observations Reversals Bull<->Bear:
- Topping is a process and it lasts several months, in 2000 and 2007 it was roughly 6 months. You have enough time to see it.
- A Bottom is an event it just happens. The bottom could be tested like in 2002, or not like in 2009. The common what I see is after a panic phase there is a phase with large 20% "wild" swings up-down-up and than we saw the final low. Watch for this sequence panic sell of -> wild swings -> final low.
- How to be sure that we are really in an new bull/bear market? - after a top or a bottom the subsequent move should be long enough. From the two cyclical bear and bull markets what I see is that not the size is important but the length. In bear markets you have wild swings up larger than 20% and in bull markets sudden and huge drops like in 1987/1997/2011 20% or more, but they all are short living.
Bear markets counter trend moves lasted 40-45-50 days, the wild swing 20-30 days - but the first moves before we even see a correction after the bottoms in 2003/2007 lasted ~70 days. For bull markets the counter trend moves lasted again 45-50 days, but the first moves lower after a top were again longer than 68/78 days (even longer than 100 days before a counter trend move of 45-40 days).


Observations Reversals Dates: - go through the charts and look at the major turn dates. You will notice the same months repeating over and over.
REMEMBER THIS MONTHS - March / July / October.



BEAR 2000




BEAR 2007



------------------------------------------------------------------------------------------



BULL 2003-2007






BULL 2009-





------------------THE DATA-------------------

BULL MARKETS

Trend moves
2003
- 225TD - 47%
- 133TD - 15,8%
- 132TD - 10%
- 144TD - 13,5%
- 155TD - 19,4%
- 89TD - 14%
- 38TD - 15%
2009
- 287TD - 82%
- 205TD - 36,4%
- 160TD - 32,7%
- still running

Swings
2003
- 69TD - 28,5%
- 52TD - 10%
- 46TD - 12,8%
- 39TD - 7,7%
- 47TD - 11,7%
- 79TD - 9,9%
- 61TD - 10,8%
- 64TD - 5,8%
- 155TD - 19,4%
- 58TD - 13%
- 38TD - 15%
2009
- 70TD - 43%
- 51TD - 23,7%
- 48TD - 11,7%
- 53TD - 16%
- 23TD - 11,9%
- 49TD - 18%
- 56TD - 14,5%
- 32TD - 10%
- 18TD - 20,2%
- 83TD - 23,8%
- 77TD - 16,4%

Counter-trend moves
2003
- 112TD - 8,6%
- 50TD - 7,9%
2009
- 49TD - 17%
- 107TD - 21,9%
- 49TD - 11,1%
- 44TD - 8,8%

Corrections
2003
- 33TD - 5,5%
- 12TD - 7%
- 28TD - 6,3%
- 36TD - 7,4%
- 29TD - 7,7%
- 24TD - 6,5%
- 15TD - 6,8%
- 20TD - 11,8%
2009
- 23TD - 9,1%
- 18TD - 8,4%
- 12TD - 8%
- 17TD - 6,8%
- 32TD - 8,4%
- 20TD - 11%

Pullbacks
2003
- 6TD - 5,8%
- 7TD - 3,9%
- 8TD - 4,8%
- 7TD - 3,6%
- 8TD - 3,3%
- 7TD - 3%
- 6TD - 2,7%
- 13TD - 4,7%
- 18TD - 4,4%
- 5TD - 2,5%
- 6TD - 2,8%
- 11TD - 4,3%
- 18TD - 4,3%
- 11TD - 2,5%
- 19TD - 3,2%
- 7TD - 2,3%
- 7TD - 2,6%
- 8TD - 3,6%
- 7TD - 2,3%
- 16TD - 4%
- 10TD - 3,8%
2009
- 7TD - 5,8%
- 8TD - 5,4%
- 9TD - 6,4%
- 7TD - 4,2%
- 7TD - 3,4%
- 7TD - 4,4%
- 8TD - 5,2%
- 11TD - 4,4%
- 7TD - 4%
- 5TD - 4%
- 7TD - 3,8%


------------------------------------

BEAR MARKETS

Trend moves
2000
- 139TD - 29,4%
- 81TD - 28%
- 134TD - 34%
- 71TD - 17%
2007
- 106TD - 20%
- 129TD - 48,3%
- 50TD - 28,8%

Swing moves
2000
- 33TD - 13,4%
- 30TD - 12,5%
- 36TD - 21%
- 35TD - 11,3%
- 31TD - 22,8%
- 34TD - 10,7%
- 46TD - 29,7%
- 71TD - 17,5%
2007
- 32TD - 10,6%
- 26TD - 17,8%
- 27TD - 8,1%
- 42TD - 16,5%
- 31TD - 36%
- 50TD - 28,8%

Counter-trend moves
2000
- 41TD - 21,7%
- 52TD - 24,3%
2007
- 45TD - 14,3%

Wild bear market rally
2000
- 22TD - 23,7% (up)
- 32TD - 20,2% (down)
- 36TD - 23,4% (up)
2007
- 7TD - 21,8% (up)
- 12TD - 26% (down)
- 30TD - 26,1% (up)

Corrections
2000
- 15TD - 8,3%
- 25TD - 10%
- 17TD - 9%
2007
- 10TD - 7,8%
- 8TD - 11,9%
- 20TD - 9,1%
- 15TD - 9%

Pullbacks
- 5TD - 2,8%
- 6TD - 6,4%
- 6TD - 4,5%
- 11TD - 5,2%
- 6TD - 4,9%
- 6TD - 5,1%
- 5TD - 5,6%
- 4TD - 5,8%
- 8TD - 5,6%
- 8TD - 6,6%
- 17TD - 5,1%

Short term update

Another touch of the trend line another MACD divergence.... I was hoping to see some pullback this week... in vain:((


The big picture of the DAX tells the same story like the indexes in the USA but it is much clearer... Y is already the same size as W (Y=W green).

Short term update

UPDATE: There is FOMC on 20.03 so do not expect reversal before that, just a pullback to 1540 EMA50 on the hourly chart or max 1530 to support, and up until FOMC meeting.


MACD divergence on the hourly chart, good enough for a pullback... reaction of the same size like the previous one and support level are pointing to max ~1530 for a move lower.

Long term chart update

I went through the charts... and I think that the picture is a little bit more bullish. The wedge is probably busted and now I am much more confident in my position that this is not a major top(when some kind of a correction starts).

Weekly review

Short term view - squiggles up an down expected.
Intermediate term view - we should see soon 8%-10% correction.
Trading system signal (swing trading) - Direction: UP | Last entry signal: at SP500=1514 on 01.03.2013 | Stop at: 1523

We saw move up which was the preferred scenario. The upper trend line (now purple see the hourly chart) was touched on Friday. Nothing unexpected... The system still points up. I took profits a little bit earlier because I did not feel comfortable with the market action. What I mean - the market is crawling 2-3 points up per day. That is not because the buyers are strong but the sellers are missing. I have seen this many times and one red day wipes out a week or two gains.

Next week - with all this hype all time highs do not expect the market to revers just like that. It has inertia and it will take time. I hope the SP500 will move lower to support ~1530 which should be another good entry point for a short term trade on the long side.

TECHNICAL PICTURE
Short term - SP500 touched the upper line of the megaphone again. There is no bearish signs, but I hope that we will see a drop to support, which will give us another opportunity. The alternate scenario is explosion on the upside. This option has lower probability for me because the market tells me there is no sellers and not the buyers are strong... but who knows.

- Triple cross(EMA10 and EMA20 crossing EMA50) - EMA10 and EMA20 are above EMA50 so the direction is up.

Intermediate term - the trend is still up, but the MACD is showing a divergence, so if I am right we a nearing the correction, which I am talking about for weeks.

- Trend direction EMA50/MACD - price is above EMA50 and MACD above zero so intermediate term trend is up. MACD starting to diverge so we must be careful for intermediate term trend change.
- Momentum Histogram/RSI - the oscillators are pointing up momentum is up.

Long term - the plan stays the same correction and one more move higher. I do not think that this is the top for the cyclical bull because the indicators showed strength and major tops form with weak indicators. I have changed the EW labels this wave is longer than the previous one so no ending diagonal. I think we are in Y of Y of Y and the correction will be X followed by one last wave up Z.
P.S. Look at the weekly cycle chart for the long term picture. The cycles are telling the same story.

- Trend direction EMA50/MACD - MACD above the zero line and price above EMA50, the long term trend is UP. Triple divergence on MACD watch this veeeery carefully.
- Momentum Histogram/RSI - the oscillators are pointing up momentum is up.


MARKET BREADTH INDICATORS
The Market Breadth Indicators have turned up, but it looks more like they are building divergences and not new highs to confirm the move of the indexes.
McClellan Oscillator - moving higher but it is bellow the previous highs.
McClellan Summation Index - issued buy signal but it look like a divergence is developing.
Weekly Stochastic of the Summation Index - still on sell.
Bullish Percentage - issued buy signal but it look like a divergence is developing.
Percent of Stocks above MA50 - moving higher but bellow the previous top.
Fear Indicator VXO - double bottom or divergence??
Issues Advancing - at last showed some strength but still bellow the previous tops.
Issues Declining - moved lower but it is still higher than the previous bottoms.


HURST CYCLES
The strong up move says that we saw already the bottom of the previous 20 day cycle and now we at day 9 of the next one.


I have decided to take a step back and take a look at the very long term picture. My forecasts were bearish most of the time in Q1 2013 because I was expecting another 18 month and 4 year cycle lows, and the previous two 18 month lows in 2010 and 2011 were very violent - 17% and 21% drops. So I was wrong. We are at week 16 of the last 20 week cycle for a 18 month and 4 year cycle and the best I see is a normal correction 8%-10%. What means that we will hardly see the 4 year cycle low on the chart? That means that we have a dominant 9 year cycle. What are the implications?
- I do not expect violent 15%-20% move lower, just a correction.
- 2013 should be a transition year when the bigger cycle turns from up to down. We should see sharp moves first down and then up.
- The next 4 year cycle probably will not carry the prices much higher. H&S or double top is to expect and the indexes are still working on the first shoulder. So this should not be the top and we should expect one more move higher.
If I compare the move now with the top in 2007 I would say the action now corresponds to June-July 2007 intermediate top, which was followed by scary but short living move lower in August 2007.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Another TD Sequential was finished this week. That is the problem with TD Sequential, you never know if another one will follow. But you can use it as an advantage. The technical analyses and the system say the move is not finished - how long can it go? - another TD sequential.

Last week another setup on the weekly chart was finished. The indexes reached the next level of exhaustion. Lets see if this time the correction will start.

Short term update

Tomorrow is NFP... it is similar event like FOMC - the market is pushed in one direction before the news and then moves in the opposite direction. I think the indexes will squeeze several points higher and then a pullback to 1525-1530 will follow.

Short term update

I am posting the chart to show you the RSI indicator... RSI breaking its trend line is the first sign for a trouble, but usually a move in the opposite direction starts after a retest of the broken trend line and a divergence.Do you see something similar on the chart? - broken trend line, retest, double divergence, indexes making all time highs and RSI can not move above 66 to confirm strength. That is the reason why I was so eager to close the trade even when there is still now signs for reversal.

Shame on me.... I wrote on the weekend that there is nothing interesting - just the opposite SP500 reached another point of exhaustion according to the TD method. Last week TD Setup 9 was finished on the weekly chart and today on the daily chart we have TD countdown 13 finishing.