Weekly review

Short term view - I am not sure if a pullback has begun or one more push higher is in the cards. Wait for the opening on Monday.
Intermediate term view - if we see a pullback this should be the beginning of the correction.

The indexes squeezed several points higher and finished flat for the week - exactly according to the plan. SP500 reached the 1810-1815 target which I showed with the inverted H&S for two weeks I think.

Short term there is two scenarios - the ending diagonal, which I showed during the week, looks much better as a pattern. On the other side it could be an impulse which has finished - with the "huge" bar (compared to the others) and the double MACD divergence(see the hourly chart) make this scenario more probable. On Monday we will know more - if we see a gap and decisive move bellow 1800 pullback has begun, if we see the price stalling at the 1795-1800 level than it is just 4 of ending diagonal.
Intermediate term - nothing has changed. I think we are in a "mania" phase (see the previous post). There is a lot more indicators, which are suggesting the same - huge "excitement" comparable with the previous two tops 2000 and 2007. The problem with such "mania" phases is, that you do not know, when they will end. All we know is that they end bad... always.
This levels 1810-1825 are a good area for a reversal. The signals are aligning - EW,Cycles,TD sequential, indicators... well let's see if this time all this will materialize into a pullback.

TECHNICAL PICTURE
Short term - here the two scenarios - the wedge(red) looks better as a pattern, the reversal(green) looks more promising from TA stand point.

- Triple cross(EMA10 and EMA20 crossing EMA50) - positive,short term trend up, but be careful for a reversal we have double MACD divergence.

Intermediate term - waiting for the correction.... we will see if I am right.

- Trend direction EMA50/MACD - the intermediate term trend is up, but we are seeing now double MACD divergence. Watch out for a trend reversal.
- Momentum Histogram/RSI - Momentum ticked lower with another histogram divergence. Short term trend reversal is possible.

Long term - we have reached the point where the price should decide to follow the pattern, as for the last 6 months, or it will negate it and go parabolic.

- Trend direction EMA50/MACD - long term trend is up - the price above MA50 and MACD above zero. Watch out for the MACD divergence.
- Momentum Histogram/RSI - momentum is up, the intermediate term trend is up.


MARKET BREADTH INDICATORS
The Market Breadth Indicators - nothing changed....
McClellan Oscillator - another lower high and divergence is coming.
McClellan Summation Index - trying to generate buy signal... the next divergence.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - buy signal, do not get exited:)
Percent of Stocks above MA50 - yet another divergence... new ATH and another lower peak.
Fear Indicator VXO - BB even more narrow... expect explosive move in some direction. And strong candle on Friday, pullback has begun??
Advance-Decline Issues - expect another lower high and divergence of a bigger degree.
Put to call ratio - making several lower highs.


HURST CYCLES
The top of the 40 day cycle is already long overdue....

At week 54 of the 18 month cycle. It has reached size and length where we should see the top of the cycle. Now it should be only downhill for the next 4 to 7 weeks... come on mother nature you are stronger than the FED:)

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Countdown could finish with 13 making just higher high(green short term top is in) or we will see one last surge(red scenario wave 5) to finish the countdown.
The rules are not exact in this case - no edge here. The message is we are near to a top.

Blow off phase?

I think we are witnessing stock mania again after 2000 and 2007. It starts looking like a blow off move...the last correction was a year ago, percent bears at extreme low and moving down, Mom and Pop buying mutual fonds again with both hands. The problem with such moves is, that you do not know, when they will end. All we know is that they end bad... always.

Zerohedge - Best run since 2004 eight green weeks in a row..

Business Insider - Margin debt at record high...

Zerohedge - Bears endangered species... mid-November were 15% now touching 14%, this are extreme levels.

Solarcycles blog - 15th straight week of inflows to EU equity funds - best run in 11 years.....

Solarcycles blog - parabolic again...

EW charts

And when I am on the EW "wave" here are some charts - food for thought... if you do not like turkey:)

Ok the first chart sums up the counts which I found in Internet. There is variations in the waves of smaller degree, but I am focusing on the big picture.
- the bearish one W-X-Y(red) - not very popular as you can expect. Daneric / Wavepatterntraders.com
- bearish but with expected more upside A-B-C green wavetrack.com / Wavepatterntraders.com
- the bullish one impulse 1-2-3-4-5 - Tony Caldaro/PUG the most prominent I think.

My comment - take a step back and look at the big picture, forget about all the bull/bear fight, forget about the relentless move up and up and up....
What I see is a three wave structure 2009-2011 and even on a bigger degree another three wave structure huge moves 2009-2011 and 2011-2013 divided with sharp correction in the middle. The two surges has almost the same size and length. According two the EW rules three wave structures are corrective.... Today Wavepatterntraders.com posted the same what I am thinking for a while. This means the count should be W-X-Y. We have not confirmation for reversal so the second surge 2011-2013 could extend further or the A-B-C count.
I am just trying to look at the waves without emotions and I ask my self - why should I discard the count which fits the best - good shape,good proportions? The only argument is sentiment - no one wants to believe in something bearish after 5 years and SP500 has tripled.

Now the bulls will kill me:)) You can forget trying to discuss counts with the bulls - you are a moron,idiot,doomer, Prechter follower aka moron:),lost all your money shorting aka stupid bear, etc. it goes on and on.... It is all about sentiment. I am sure, if 99% of them, see this move on... say 15 min chart will say 3 wave correction but this one is running for almost 5 years and getting parabolic so it "must be" an impulse what else....
I am curious how the bulls will count the DAX the second chart. Impulse on the DAX is pure fantasy, "creative counting" as I call it, count to fit my sentiment not the market....

Now instead fighting with the bulls or the bears,wasting your energy, we should try to be practical - you do not get paid to be the "smart ass" who nailed the top, the market will pay you if you have the right trading plan and follow it. Here are the scenarios:
- the bearish scenario - in this case we should see an important top. Even if this is true, the price is way too far from MA50 on the weekly chart and the first move lower will finish around this levels 1600-1650 and it will be bought. There will be an subsequent rally to test the top. See the last chart how the top usually develops or this post Is-it-different-this-time
- the other two scenarios - for the intermediate term they are the same, but one says this is impulse wave C the other says this is impulse wave 3, after all it is the same impulse. In this case the correction will be just a wave 4 with the same target as above and than here it comes the next rally ~2200. It is logical to see a sharp correction because greed should be purged(the herd has to be scared) before the rally continue higher. That is the way it works.

So for the intermediate term the next 3-4 months all counts see a correction and move back to the top. Here is my plan:
- getting long now is too late for me - the SPX500 could move 20-50 points higher but with downside risk 150-200 points risk/reward looks awful
- take partial profits if you see a spike higher and/or a move bellow 1800. Close longs and open shorts below 1775
- ride a correction lower to 1630-1600
- ride the subsequent move higher
- take half of the profits near the previous top
- wait to see what happens - add more longs after breakout(bullish scenario)/sell longs and go short(bearish scenario)

I showed similar chart two months ago I think comparing the DJ 2000 top and the current action - the similarity continue and the next move should be a sharp decline.

Charts...

Ok it is boring the market action and I was going through the charts and this one is interesting. High yield corporate bonds track SP500 very closely... do not ask me why. I am a chart guy I have no clue about fundamentals:)
Such "proxy" charts which follow closely the indexes can be used to adjust EW count,Cycle count etc. because they diverge a little bit and give you slightly different picture of the move.

I am not an EW expert, but it can not be easier:) almost perfect impulse with almost perfect proportions. The chart says we are nearing the end of wave 5 of a monster impulse lasting more than 2 years. The first target for wave 5 was reached 61,8% of wave 1... hmmmm it can extend to same size as wave 1, that is possible. Lets take close look of this wave 5 - next chart.

You have everything what you expect to see for a last wave - weak,chopy,divergence,falling volume, target for wave 5 reached.
It looks like ending diagonal (the one from yesterday is much smaller only for the last red line 5 of 5). It counts better as a diagonal because all moves a threes. The wave from the August low is a little bit ugly for a wave 3. With the correction in the middle it counts better as a-b-c with subsequent 4 and 5. If this is the right count a significant top is around the corner, if I am wrong there is wave 4 and 5 of 5 missing.

Conclusion: The proxy chart says significant top is around the corner, alternate scenario pullback(wave 4) and then the final top. You will see the difference - if the top is in, the indexes will start falling like a rock.

Update

Boring week as expected.... it looks to me like an ending diagonal - 4 has just started and 5 to mark the top.

Weekly review

Short term view - flat week or the indexes will squeeze again several points higher.
Intermediate term view - nearing an intermediate term top.

Ok this past week I was expecting a pullback,another high and topping to begin. Well I was wrong - the pullback was deeper and lasted longer than expected and there were no time for topping:). With the short trading week and the holidays I do not expect huge moves up or down. I expect now the indexes to continue their work on ATH and the topping not to forget:)

Nothing changed this week, the indexes have squeezed several points higher. I still think that the next intermediate term move will be a correction, and again dance with the bulls until the music plays, but stay near the exits.
Short term we will see higher prices, probably SP500 will reach its target 1810-1815.

TECHNICAL PICTURE
Short term - I have no idea for the exact path. Up to the trend line and pullback, or in reverse order pullback and up to the trend line.....

- Triple cross(EMA10 and EMA20 crossing EMA50) - short term trend up.

Intermediate term - waiting for the correction.... we will see if I am right.

- Trend direction EMA50/MACD - the intermediate term trend is up, but we are seeing MACD divergence.
- Momentum Histogram/RSI - momentum is up,but not really strong. I expect to see another histogram divergence.

Long term - we have reached the point where the price should decide to follow the pattern, as for the last 6 months, or it will negate it and go parabolic.

- Trend direction EMA50/MACD - long term trend is up - the price above MA50 and MACD above zero. Watch out for the MACD divergence.
- Momentum Histogram/RSI - momentum has turned up, the intermediate term trend is up.


MARKET BREADTH INDICATORS
The Market Breadth Indicators - they do not inspire me to be bullish, even with ATH after ATH....
McClellan Oscillator - another lower high and divergence is coming.
McClellan Summation Index - sell signal, we see a divergence for the short term - new ATH not even a buy signal.
Weekly Stochastic of the Summation Index - sell signal..
Bullish Percentage - buy signal, do not get exited:)
Percent of Stocks above MA50 - yet another divergence... new ATH and another lower peak.
Fear Indicator VXO - very narrow BB, which means expect explosive move in some direction... do you think it will be to the downside??? For the whole year 2013 this levels were a bottom.
Advance-Decline Issues - expect another lower high and divergence of a bigger degree.
Put/Call ratio - making several lower highs.
Percent of Stocks above MA200 - do not keep up with the indexes.


HURST CYCLES
The 40 day is now really extended... The longest one, for this 18 month cycle, lasted 32TD and this one is already 33TD long. I must admit, I was not expecting such strong move in the last 20 week cycle of the 18 month cycle.

At week 53 of the 18 month cycle. It has reached size and length where we should see the top of the cycle. Now it should be only downhill for the next 7 to 9 weeks...

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Currently we have 11 of a countdown and I expect to see the 13 next week.

Signals

Short term signal: UP - it will turn down bellow 1784
Intermediate term signal: UP - it will turn down bellow 1776
Comment: No confusion now:) The pullback lasted longer and deeper as expected. The price(SP500) broke bellow the trend line and EMA50 on the hourly chart, but did not trigger sell signals. For a moment I was not sure, but at the end it is just a pullback. Back to the original idea from the weekend pullback and higher high.

If this is the right scenario the next target should be around 1810.

Signals

Short term signal: ? - it will turn down bellow 1780
Intermediate term signal: ? - it will turn down bellow 1760
Comment: FOMC pop and drop no surprise... but now I am confused. I am watching the charts for an hour and I can not decide the first chart or the second one is the real story. The daily chart is more important, but on the other side this move looks corrective especially if you look at the hourly chart of DJIA. If a correction has begun tomorrow should be a strong down day(or very weak positive day).

Clear rejection of this price level combined with divergences....

Corrective move and final push up(not necessary new ATH) before more meaningful move lower?

Update

DJ two shooting stars in a row MACD divergence, Histogram double divergence and ticked lower(another mMm tower) SP500 reached the trend line and MAE50 on the hourly chart and today should be strong green day or the bulls could be surprised to the downside. Quick check through the blogs and everybody expect one more push higher - that is not good when everybody expect the same, including me:). On the other side today is FOMC which usually mark tops/bottoms - probably push higher before FOMC and drop after that.
So be careful here.... the first leg of the correction could start today. VIX BB extremely close, there will be an explosive move and I do not think, that it will be to the upside for the indexes.

Signals

Short term signal: UP - it will turn down bellow 1783
Intermediate term signal: UP - it will turn down bellow 1760
Comment: Short term picture develops as expected. The move lower looks corrective, so expect another ATH. It is time to be careful - taking some profits after a new ATH and tightening the stops is not a bad idea.

Watch price behavior for clues:
- bearish scenario intermediate term top - we should see the price moving fast lower and breaking bellow last minor low 1746
- bullish moves continue higher - any pullback should stay above 1775

Levels to watch SP500:
- 1730 - minor support
- 1700-1710 - important support level

Signals

Short term signal: UP - it will turn down bellow 1780
Intermediate term signal: UP - it will turn down bellow 1760
Comment: I have not posted the signals for a while... it is obvious, that they are up.

Watch price behavior for clues:
- bearish scenario intermediate term top - we should see the price moving fast lower and breaking bellow last minor low 1746
- bullish moves continue higher - any pullback should stay above 1775

Levels to watch SP500:
- 1730 - minor support
- 1700-1710 - important support level

Weekly review

Short term view - top next week.
Intermediate term view - intermediate term top next week and 10%-12% correction to begin.

Up to the trend line even overshot it a little bit(SP500 daily) nothing unexpected. The intermediate term and short term forecasts played out so far as expected.
What about the long term? - I have posted the first weekly chart with topping pattern on 18-th of May exactly the last green week for the rally before the choppy pattern to begin. It worked prefect for the DJ for 6 months(not bad:), but not so perfect for SP500. It has drifted upward and it is 6% above the May top(not that 6% is a huge gain for 6 months).
What I want to say is, that I have run out of excuses why the market should go higher:) if we speak about technical analysis, "irrational exuberance" is another story. Either I am right and a correction should start next week or I will be wrong and the market will continue parabolic until the end of the year probably SP500 - 1900.

Technical analysis,Cycles,TomDemark Sequential,EW... I can only say that we should expect correction. And again until we see confirmation from the price all this means nothing.
Lets say there will be a correction. How should it look like, so we can prepare better for it? - this last 20 week cycle is taking to long to the upside, which means the last part of the cycle, the last 4-5 weeks, we will see sharp move lower. When there is too much greed it is purged from the system with sharp but short living correction. In October and November we saw only strength and I doubt that in December(holidays) we will see a plunge. Based on this thoughts I think we will see a pullback in the next two weeks, indexes crawling higher in December probably the year finishing near the highs and in January very sharp and strong move lower to scare the herd. I expect now shorter 4-5 weeks and milder 10%-12% correction.

TECHNICAL PICTURE
Short term - I expect something like this if the correction start next week. For a short wait for a divergence or a move bellow 1775.

- Triple cross(EMA10 and EMA20 crossing EMA50) - short term trend up.

Intermediate term - I was waiting for this final high and the MACD divergence - now we have it. Correction target 10%-12% is around 50% Fibo retracement and support, where the choppy move has begun.

- Trend direction EMA50/MACD - the intermediate term trend is up, but we are seeing MACD divergence.
- Momentum Histogram/RSI - momentum has turned up, but I expect to see an histogram divergence.

Long term - we have reached the point where the price should decide to follow the pattern, as for the last 6 months, or it will negate it and go parabolic higher.

- Trend direction EMA50/MACD - long term trend is up - the price above MA50 and MACD above zero. Watch out for the MACD divergence.
- Momentum Histogram/RSI - momentum has turned up, the intermediate term trend is up.


MARKET BREADTH INDICATORS
The Market Breadth Indicators - ticked higher but has not really improved justifying another rally higher.
McClellan Oscillator - another lower high and divergence is coming.
McClellan Summation Index - sell signal we see a divergence for the short term - new ATH not even a buy signal.
Weekly Stochastic of the Summation Index - sell signal generated as expected.
Bullish Percentage - buy signal, do not get exited:)
Percent of Stocks above MA50 - another divergence... as predicted for now new ATH with lower peak.
Fear Indicator VXO - veeery narrow BB, which means expect explosion in some direction... do you think it will be to the downside???
Advance-Decline Issues - moved higher but we are seeing huge divergence.
Put/Call ratio - another extreme another lower high...


HURST CYCLES
The 40 daily cycle is now mature for a cycle top - compared with the previous cycle highs it is lasting longer...

At week 52 of the 18 month cycle. It has reached size and length where we see the top for the cycle. Again the big picture - the 18 month cycle peaked at week 59/53/51 in the last 20 week cycle and a correction for 10/12/9 weeks has followed.Do you believe that the rally will accelerate now when it is already one year old?

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
On the daily chart another combo has been finished. We have setup+countdown/combo followed by another setup+combo and this combined with 9-13-9 finished on the weekly chart. That says to me expect reversal not a rally.

The index has completed TD Sequential 9-13-9 Sell Count, that is why I expect correction and not another rally for 3-4 months.

Update

DJ and SP500 have reached their targets, which is not a surprise... the MACD divergence has now one more top:) Now it is interesting if we will see a reversal. It will be very cool if TA and EW make a perfect hit to the point.

Update

Ok it did not work out:) but you can make a profit even now or leave a stop above the HOD 15713 if you believe in the bearish idea (I am talking about DJ the short entry from yesterday). SP500 and DAX have very strong reversal DJ looks weaker... I do not know.
This on the chart has higher probability if you ask me.... back to the idea from the weekend - marginal higher high.

Short entry

If you are bear and looking for an entry this is a good entry point with low risk stop above the high for the day. There is NO signal but good risk/reward. It looks promising - daily divergences Histogram(notice 3 short term tops and 3 lower towers),RSI,Stochastic and hourly MACD quadruple divergence.
Look at the previous two tops - big green candle followed by small red one....

Correction time???

DJ Transport weekly - I keep a chart of another indexes because sometimes the cycles are more clear.... I am posting it because it is interesting to see the perfect cycle resemblance. Two things:
- first the cycles are more clear and you can see visually why I expect correction at this point. The first 18 month cycles of the two 4 year cycles are exactly the same... now the last part is missing:)
- second in the weekly review I wrote that we should see a top this week... ok last chance is next week. This is not by coincidence or because I am trying to nail tops(which is very stupid). The reason is because SP500 is at week 6 of the last 20 week cycle which is almost the middle of the cycle and if the price will move lower it must be NOW. You can see it on the chart too, it is time:)

We have all pieces of the puzzle in place - indicators, market breadth, cycles, TomDemark weekly 9-13-9 finished, sentiment, historical similarities, the topping pattern which I am posting... but if we do not see the price starting to move lower all this does not matter.
The 18 month cycle will finish just moving sideways with small pullback and the low will be around the end of January when we have the "debt ceiling drama again" and another strong move will begin. See the low of the 4 year cycle - expect something similar. I can be wrong, I can not see in the feature:) and this is the plan if we do not see a correction.

Is it different this time?

Is it this time different? Mmmmm I do not think so, the bull market accelerates in its final phase, not when it starts, and excessive greed is punished. Could it move higher another month or two? Of course SP500 can reach 1800 or 1850. Is this makes a difference? - No it will drop from 1%-2% higher levels nothing more.
I do not think, that this time is different, because the humans are the same stupid and greedy beings, only the excuses are different.
We had dot com bubble,housing bubble, another stock mania,Oil mania,Gold mania Apple mania and it always ends the same way. The people never learn - greed,greed,greed and the same bullshit - this time is different.

Weekly review

Short term view - more upside for 2-3 days probably
Intermediate term view - the indicators tell me we should see an intermediate term top next week... but who can say how long a mania could last:)

The expected downside action this week was more like flat correction or sideway move. I thought we will see at least 2-3 days pullback... obviously not. The red scenario which I am showing for several weeks is intact and I continue following it.

This week has not changed a lot. A wrote two weeks ago that the indicators say we should see an important top... now they look worse - more bulls and more mania. Investors intelligence survey - 15% bears very very low reading, bull/bear ratio 3,5 extreme... everybody on one side of the boat. TomDemark sequential sell setup on the weekly finished. Cycles - 18 month cycle reached size and length where we see the top for the cycle. Marker breadth indicators turned lower saying internals are not ok, see below Percent of Stocks above MA200 awful.... where is the strength?
It is your choice - go all in expecting that this time is different and will never ever see a correction, party with the bulls but stay near the exit thinking that you are faster than the herd, or just watch from the sideline. I am not chasing it....

Short term - powerful reversal on Friday, but really awful internals. I think it was short covering. Probably we will see another attempt for a new ATH.
Intermediate term - either I am right and we will see an intermediate term top next week, or the indexes will go parabolic. What should I say... it is up until we see something else.

TECHNICAL PICTURE
Short term - the bears were killed again and I think the indexes will drift higher probably making new ATH... but I think there is no buyers left too, the internals are awful.

- Triple cross(EMA10 and EMA20 crossing EMA50) - not clear MA50 is moving sideways

Intermediate term - the red scenario is playing out... not perfectly but it's what it is. I was expecting at least 2-3 red days and 1730, but obviously the bull mania is huge.

- Trend direction EMA50/MACD - the intermediate term trend is up.
- Momentum Histogram/RSI - momentum is trying to turn up.

Long term - The middle trend is tested one more time.... I think the bulls will fail again.
The pattern is still intact. We have a rally which lasts almost a year without a correction and I still think that this leads to excessive greed and the consequence is always a sharp correction to purge the greed from the system. This shows us the pattern and I do not think that this time is different. It is always the same and only the excuses are different.

- Trend direction EMA50/MACD - long term trend is up - the price above MA50 and MACD above zero. Watch out for the MACD divergence.
- Momentum Histogram/RSI - momentum has turned up, the intermediate term trend is up.


MARKET BREADTH INDICATORS
The Market Breadth Indicators - the indicators have turned lower saying, that this move is exhausted and should reverse.
McClellan Oscillator - huge rally yesterday... the oscillator hardly move higher. Any new ATH will produce even bigger divergence.
McClellan Summation Index - the signal flipped to sell.
Weekly Stochastic of the Summation Index - we will see a sell signal next week.
Bullish Percentage - sell signal and triple divergence
Percent of Stocks above MA50 - weakening and I think any new ATH will produce another divergence.
Fear Indicator VXO - building a bottom... a looot of complacency again.
Advance-Decline Issues - Very weak moving lower. There is a selling beneath the surface even when the price is not following for now.
Percent of Stocks above MA200 - Looks awful... When you have a strong and healthy move 85%-90% of the stocks are above their MA200. And now - after a parabolic move higher we have 65%. After a rally for an year without a pause you have only 2/3 of the stock above MA200. This is a joke.


HURST CYCLES
The daily cycle continue to progress perfectly... lets see if the part to the downside will play out.

At week 51 of the 18 month cycle. It has reached size and length where we see the top for the cycle.
Again the big picture - the 18 month cycle peaked at week 59/53/51 in the last 20 week cycle and a correction for 10/12/9 weeks has followed. I do not see a reason why this time should be different.Do you believe that the rally will accelerate now when it is already one year old?

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
We have completed the sell setup on the weekly chart. On the daily chart we have finished setup/combo/countdown and now both time frames say we should see a correction.
The index has completed TD Sequential 9-13-9 Sell Count, that is why I expect correction and not another rally.

Signals

Short term signal: DOWN - it will turn up above 1765
Intermediate term signal: DOWN - it will turn up above 1765
Comment: Soon was really very soon:) Another gap for SP500, huge rally on the DAX and in Europe... and you know what happened. I hope you were smart enough and have opened some shorts. Second chance was the test of the broken trend line around 1765(btw that was the level for the short term signal) After a gap up and reversal for a second time... this is distribution, there is no match to analyze especially with this indicators at this levels.
Now what? - The move looks like a strong impulse lower probably we are in a minor wave 3. The next support level is 1730 and I expect minimum a pullback for several days to 1730. That is the red scenario which I showed in the weekly review. We will see how the move develops and decide if this is the case.

Watch price behavior for clues:
- bearish scenario intermediate term top - we will see a move bellow 1710
- bullish scenario short term top - any pullback should stay above 1710

Levels to watch SP500:
- 1730 - minor support
- 1710 - important support level

The updated chart.... the lower trend line should be only temporary support. The bears should push bellow it in the next day or two.

Signals

Short term signal: UP - it will turn down bellow 1764
Intermediate term signal: UP - it will turn down bellow 1752
Comment: Gap up and perfect touch of the upper trend line(green scenario see below).... then a plunge and rebound!?!!??! I do not think that you can trade it if you are a human:) The move up is definitely not impulsive... I think it will reverse soon.

Watch price behavior for clues:
- bearish scenario intermediate term top - we will see a move bellow 1710
- bullish scenario short term top - any pullback should stay above 1710

Levels to watch SP500:
- 1730 - minor support
- 1710 - important support level

Signals

Short term signal: UP - it will turn down bellow 1762
Intermediate term signal: UP - it will turn down bellow 1740
Comment: More confusion for the short term.... I do not know which scenario is playing out, in the middle of nowhere at the moment... up so far.
Both scenarios are shown one more push to finish the pullback or a move higher before something more significant to the downside.

Signals

Short term signal: UP - it will turn down bellow 1762
Intermediate term signal: UP - it will turn down bellow 1740
Comment: Short term I am not sure, I think we should see one more leg lower to finish the pullback, but that it is not sure. We could see another ATH with divergence before a correction. Anyway it is not important because it is too early for short trades.

Watch price behavior for clues:
- bearish scenario intermediate term top - we will see a move bellow 1710
- bullish scenario short term top - any pullback should stay above 1710

Levels to watch SP500:
- 1730 - minor support
- 1710 - important support level

Weekly review

Short term view - more downside next week.
Intermediate term view - so far it looks more like short term top.

Up until FOMC, SP500 has touched the upper trend line and than pullback has begun. Too predictable, it is not even interesting any more:)

This week has not changed anything. What I wrote last week stays valid. Only the more bullish scenario with one more push higher, has a higher probability for now because the indicators are "correcting" from extended levels, but the price has not followed them lower.

TECHNICAL PICTURE
Short term - I think a pullback has begun. We have not seen much to the downside, but I think next week the price will follow the indicators lower. Next support and 38,2% is ~1730

- Triple cross(EMA10 and EMA20 crossing EMA50) - triple cross is positive, short term trend is still up.

Intermediate term - SP500 touched the trend line as expected and pulled back. The price action so far looks like a pullback so watch the red scenario(green is back up plan).

- Trend direction EMA50/MACD - the intermediate term trend is up.
- Momentum Histogram/RSI - momentum has turned down.

Long term - The middle trend is tested one more time - shooting star candle.... I think the bulls will fail again.
The pattern is still intact. We have a rally which lasts almost a year without a correction and I still think that this leads to excessive greed and the consequence is always a sharp correction to purge the greed from the system. This shows us the pattern and I do not think that this time is different. It is always the same and only the excuses are different.

- Trend direction EMA50/MACD - long term trend is up - the price above MA50 and MACD above zero. Watch out for the MACD divergence.
- Momentum Histogram/RSI - momentum has turned up, the intermediate term trend is up.


MARKET BREADTH INDICATORS
The Market Breadth Indicators - the oscillators hit extremes and reseting, the trend following indicators still on buy.
McClellan Oscillator - we saw divergence it plunged bellow zero. We are in a correction and the price should follow soon.
McClellan Summation Index - still on buy.
Weekly Stochastic of the Summation Index - still on buy.
Bullish Percentage - buy signal, but lower high and triple divergence.
Percent of Stocks above MA50 - small divergence and moved lower.
Fear Indicator VXO - building a bottom... a looot of complacency again.
Advance-Decline Issues - divergence as expected and moved lower. There is a selling beneath the surface even when the price is not following for now.
Put/Call Ratio - the traders are very bullish again... do you see the divergence now?

HURST CYCLES
The 20 day cycle has topped out. I can not say it is the 40 day cycle top too. The price action says the high will be tested at least before something serious on the downside.

At week 50 of the 18 month cycle. Again the big picture - the 18 month cycle peaked at week 59/53/51 in the last 20 week cycle and a correction for 10/12/9 weeks has followed. I do not see a reason why this time should be different.
Do you believe that the rally will accelerate now when it is already one year old?

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Last week setup/countdown/combo has been finished. Price flip this week says we have short term trend change.

As expected the Setup will be finished(unless SP500 plunge 60 points and close bellow 1700). Price flip should confirm that the intermediate term trend has changed. We have already finished setup+combo followed by another setup, that is why I expect correction and not another rally.