Short term update

So much with the "pullback", the bears are too weak... short signal has not been generated(the low on Friday was 1676, 1 point above support). The last two days are green, the candle from Friday is bullish - hammer, so the move higher continues.

Short term update

No surprises so far.... SP500 reached the previous high as expected and it looks like it wants to correct. The last minor low is 1675, move bellow that will trigger short term signal to the downside and confirm that a pullback has begun. Target for a pullback is the 1625-1650 area.

P.S. see the daily chart(green scenario) and hurst cycles daily in the previous post bellow

Update

I can not post in the next three weeks, but now it looks clear which scenario is playing out, so I do not expect surprises in the next 2-3 weeks.
Enjoy the rally in the next weeks.

As I said yesterday the scenario with another leg lower has very low probability. This has been confirmed today. On the other hand this rally still looks suspicious... we had several gaps even today a huge one and we have never seen follow through. Where is the gap an go??? I think this is because this rally is not part of a new leg higher(although we will see a new high), but it is part of a topping process. I am showing this scenario for months(see the weekly chart)... I think we have distribution...

TECHNICAL PICTURE
Short term - small pullbacks along the way to the previous high before a correction with low above 1625 and than all time highs:)

Intermediate term - I can not say how high... at least ~1720 or touch of the trend line around 1770.

Long term - we are on the way to all time highs. If the top takes the same path like the previous 3 occasions this should be the highest high in the topping sequence of highs.

MARKET BREADTH INDICATORS
The Market Breadth Indicators -
McClellan Oscillator -
McClellan Summation Index -
Weekly Stochastic of the Summation Index -
Bullish Percentage -
Percent of Stocks above MA50 -
Fear Indicator VXO -
Issues Advancing -
Issues Declining -


HURST CYCLES

Signals

Short term signal: UP
Intermediate term signal: UP
Comment: the next move lower will tell us what exactly to expect. It is taking too long so I think that the scenario with another sell off from the current levels has now low probability.

Expected behavior for:
- move higher - correction with low somewhere in the support area 1600-1625
- near to the top of pink X - we should see the price moving sharply lower... NOW, busting 1625 and 1600 or the bearish scenario is dead

Levels to watch SP500:
- 1687 is the next resistance to the upside, above is white space
- 1620-1625 is now support - the breakout from the range. It should not be violated
- 1598 is major support.

Current thoughts.....

Signals

Short term signal: UP
Intermediate term signal: UP
Comment: there is nothing to think about... up is up(or at least until the price is above 1625:)

Expected behavior for:
- move higher - worst case correction with low above 1625
- near to the top of pink X - the bears should show up and we should see red candles for the rest of the week or the bearish scenario is dead

Levels to watch SP500:
- 1687 the high is the next resistance to the upside, above is white space
- 1620-1625 is now support - the breakout from the range. It should not be violated
- 1598 is major support.

Short term update

Closer view of the price action... one more push higher as expected the price is only 4(update 1,5) points bellow the target. MACD divergence on the 10min chart and histogram divergence on the hourly chart. I think we will see a pullback to support around 1625. Short after that we will know which scenario will play out.

Signals

Short term signal: UP
Intermediate term signal: UP
Comment: I am still not convinced... but for now up is up.

Expected behavior for:
- move higher - worst case narrow range body candle staying above 1625 and another huge green candle
- pink X is soon over - best case one final surge to ~1655 for a divergence

Levels to watch SP500:
- ~1655 78,6% retracement(X pink?) the next target
- 1620-1625 is now support the breakout - it should not be violated if the move up is not a fake
- 1598 the major support now

Short term update

UPDATE: Just to to clarify the direction is still up and even if the bearish scenario play out I still think that there is one more push higher.

I am sorry but all I see is weak rally for the last two weeks well covered but weakness. On Friday gap and sell off followed by rally with very low volume today gap and weakness again. This "rally" does not behave like a strong bounce from an intermediate term bottom and break out above EMA50........ The DAX has probably completed a triangle with the rally today... If you are bull be very careful. The price should stay above support 1620-1625.

Signals

Short term signal: UP
Intermediate term signal: UP
Comment: the index broke finaly above MA50 so I expect at least 2-3 days more to the upside. This week will be interesting to see which scenario will play out. For now up is up.

Expected behavior for:
- the move higher is not finished - at least 1-2 days to the upside

Levels to watch SP500:
- 1640-1650 61,8%-78,6% retracement(X pink?) the minimum target
- ~1620 is now minor support the breakout - it should not be violited if the move up is not a fake
- 1598 is the next important support

Weekly review

Short term view - more to the upside at the beginning of the week.
Intermediate term view - I am not sure if the intermediate term bottom is in, just go with the flow.

We had this week the expected move higher, but not the answer if we hit intermediate term bottom or one more leg down is missing. I think next week we will have the answer. I expect positive start of the week. If we hit already the bottom expect green week and strength after the indexes closed above EMA50. If the last leg lower is missing expect reversal the second half of the week and red candle with prices moving fast lower.

Next week we will continue following the both scenarios and see what happens:
- Red count W=Y the bottom is in - the only problem I see is that the rally so far is weak and not convincing, usually you see a strong move higher.
- Pink count one more leg down expected - at the moment the only signs which speak for this scenario are that we do not have explosive move higher and the European exchanges diverge, Friday was huge red bar(see the last chart DAX) which says the last leg lower has begun.
Again it is nice to play with the charts:) but trading is more important. We will follow the market and until it is up and there is no price confirmation the direction stays up.

TECHNICAL PICTURE
Short term - minimum target ~1640 61,8% Fibo, move higher to 1655-1660 76,8% has higher probability if you ask me. For the short term I do not see something which points to the downside.

- Triple cross(EMA10 and EMA20 crossing EMA50) - EMA10 and EMA20 are above EMA50 the short term trend is up.

Intermediate term - the price is testing the broken trend line and the down slopping trend line. I think we will know soon which scenario is playing out.
The statement from the last week stays the same - "I am not sure which scenario has higher probability. My feeling says the green scenario, the logic(the indicators) are more favorable for the red one. I will just follow the market and not think too much:)"

- Trend direction EMA50/MACD - price has moved above EMA50 and MACD at the zero line... the intermediate term trend is up.
- Momentum Histogram/RSI - momentum is up.

Long term - no change, corrective move and higher high expected.

- Trend direction EMA50/MACD - the long term trend is up.
- Momentum Histogram/RSI - momentum is turning up.


MARKET BREADTH INDICATORS
The Market Breadth Indicators -
McClellan Oscillator -
McClellan Summation Index -
Weekly Stochastic of the Summation Index -
Bullish Percentage -
Percent of Stocks above MA50 -
Fear Indicator VXO -
Issues Advancing -
Issues Declining -


HURST CYCLES
The count is based on the expectation of one more leg lower. That is not sure at all, the cycle looks stretched already and with every passing day the probability that we hit intermediate term bottom is getting higher.

On one side the cycle is looking stretched already, on the other side the price action does not look very convincing for a 20 and 40 week cycle bottom. I ignore the cycles and follow the price for now. Later I will fit the count.... I do not see an edge at the moment.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
We have sell setup at point 7 on the daily chart and I think it will be finished.

On the weekly chart we have 4 of a buy setup despite the green week.... we are at a crossroad another green week and we will have price flip or sell off resumes and we have the next bar of the setup.

The DAX diverge from the SP500/DJ... after a hammer and huge green bar(not shown on the chart???) on Thursday, on Friday we saw huge red bar closing bellow the previous bullish candlestick and price was rejected at MA20 and MA50. The only interpretation which I have is the next leg down has begun.... or extreme volatility and very ugly fake to shake out the weak hands before the indexes move higher.

Signals

Short term signal: UP
Intermediate term signal: UP
Comment: as I have wrote yesterday - I do not see bearish signs and the index is taking a breath right bellow MA20 and MA50 on the daily chart before moving higher breaking above them. The futures are 14-15 points higher and of you trade the cash index... you missed it.

Expected behavior for:
- the move higher is not finished - at least 1-2 strong days to the upside

Levels to watch SP500:
- 1640-1650 61,8%-78,6% retracement(X pink?) the minimum target
- ~1620 is now minor support the breakout - it should not be violated if the move up is not a fake
- 1598 is the next important support
- 1582-1585 support, must hold if the low for the correction is in.
------------------------------
Levels to watch Xetra DAX:
- 7880-7910 - is now support
- 8070-8130 - the gap/strong resistance/MA50

Short term update

The price is moving sideways for five days... we have some kind of a corrective structure triangle or pennant. I do not see bearish signs at the moment. The line in the sand is ~1600.
It looks to me that the index is taking a breath right bellow MA20 and MA50 on the daily chart before moving higher breaking above them.

Signals

Short term signal: UP? - it looks like we have short term reversal up, but it must be confirmed tomorrow with opening higher.
Intermediate term signal: DOWN - still considered down, decreasing volume to the upside and bars with upside tails
Comment: the same story as yesterday - the price is testing MA20/MA50 and the resistance level 1624/the gap/50% retracement.... and failed again.

Expected behavior for:
- sell off resumes - sharp move lower should begin
- the move higher is not finished - choppy reaction lower(currently we see this)

Levels to watch SP500:
- 1640 61,8% retracement X pink?
- 1624 the gap - 50% retracement X pink?
- 1598 is now support
- 1582-1585 support, must hold if the low is in.
------------------------------
Levels to watch Xetra DAX:
- 7870-7840 - is support for the short term move down
- 7910 - is first resistance to the upside
- 8070-8130 - the gap/strong resistance/MA50

Short term update

UPDATE: again wrong for the short term.... I give up, I will wait to see how it develops. Momentum is negative something on the downside is in play. At the moment is difficult to say higher low or sell off resumes


I think it is a wedge.....

Signals

Short term signal: DOWN - because of histogram divergence on the hourly chart
Intermediate term signal: DOWN - still considered down, decreasing volume to the upside and bars with tails
Comment: the price is testing again MA20 and MA50 and failed again. Intermediate term long signal if we see corective move lower with higher low.

Expected behavior for:
- sell off resumes - sharp move lower should begin
- the move higher is not finished - choppy reaction lower

Levels to watch SP500:
- 1640 61,8% retracement X pink?
- 1624 the gap - 50% retracement X pink?
- 1598 is now support
- 1582-1585 support, must hold if the low is in.
------------------------------
Levels to watch Xetra DAX:
- 7870-7840 - is support for the short term move down
- 8040 - is first resistance to the upside
- 8070-8130 - the gap/strong resistance/MA50

Short term not exactly as expected but the plan stays the same. The scenario that the low is in is the main one now(in green)... simple we should follow the market and if the conditions change we will switch again.