Sep 30, 2014
Update
The pattern is getting very choppy and more complex than I have expected. I do not think that we are seeing impulse lower, such patterns are corrective.
Currently I think we are seeing triangle for wave B and last final push lower should finish the whole corrective move.
The price found several times resistance at MA50 and can not move above it. The bulls are still weak.... I suppose we should see one more flush lower before reversal.
Sep 29, 2014
Update
Completely wrong about the short term, but after 18 points gap instead starting 3 of 3 and huge plunge we are seeing this below.
Come on bears this is not serious.... several days down-up-down-up-down-up, sorry but this is not an impulse. If the bears do not push the indexes near the lows in the afternoon session that will mean for me that we saw the bottom for the pullback.
P.S. I am trading the DAX and I am long near the low. The DAX hit my target today, three wave sequence A=C, 50% Fibo, support level....
Sep 27, 2014
Weekly review
Short term view - I think we have a short term bottom and next week will be green.
Intermediate term view - waiting 2-3 weeks to finish the move up and correction to begin.
Very busy week down-up-down-up crazy:) We have a top and I think it is a short term top as I have expected. Now waiting for confirmation that the pullback is over.
With the reversal on Friday I think we have only a three wave decline. The move from the low looks like an impulse. The market breadth indicators and cycles are pointing to a bottom. So my forecast is that we saw the bottom and now we are waiting for confirmation - higher low and move above MA50 hourly chart and resistance 2000. If I am wrong this is 1-2 1-2 and plunge should follow... till now such count has never worked.
We are chasing the short term but do not lose sight of the big picture - look at the weekly chart, cycles weekly, and the last chart the monthly chart. They look bearish and 2-3-4 weeks short term bullish action will not change the long term.
TECHNICAL PICTURE
Short term - this chart is for the trading plan. It looks like an impulse to me... one more high to confirm it. For short position I would put a stop at break even and if we see a higher low close them and open long position. If I am wrong and we see a plunge you still hold the short position.
Still a lot of bears and the price is below MA50(see below) so I do not expect the indexes to start moving straight up. We should have enough time to position on the right side.
This are the two scenarios which I see - the move lower was either wave 4 or wave 2 of an ED.
Intermediate term - no change, I am waiting wave 5 to finish. SP500 closed back above MA50 which is bullish. Now the histogram should turn up and should be followed by MACD at the zero line.
Below support 1960 is where I am definitely wrong.
Long term - no change just more divergences. The short term bullish forecast does not change anything.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - the oscillators are pointing to a bottom but the long term indicators look bad. My interpretation - we have a short term bottom but do not expect long lasting rally.
McClellan Oscillator - strong bounce near oversold levels.
McClellan Summation Index - sell signal
Weekly Stochastic of the Summation Index - sell signal
Bullish Percentage - sell signal but still above 70
Percent of Stocks above MA50 - did not make it to the oversold level, but we have only a pullback and this is normal level for a pullback.
Fear Indicator VIX - looks bearish after moving outside the BB.
Advance-Decline Issues - reversing from oversold levels?
NYSE New Highs-New Lows - reversing from oversold levels?
Percent of Stocks above MA200 - 40 points below ATH and only 50% of the stocks are above MA200.... how healthy is the market?
HURST CYCLES
I think this was a 40 day cycle bottom and the next one has begun.
Week 8 of the 20 week cycle... probably another 2-3 weeks to finish the move up and the indexes should turn lower for several weeks.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
A lot of up and down.... the buy setup is still in tact. The bulls should proof that we have a reversal and produce a price flip.
The long term.... I think September would stay red and if we see a reversal in October(another red month) the finished countdown will look perfect:)
The histogram does not look good, RSI starts breaking below the trend line.... the trend starts looking exhausted.
Intermediate term view - waiting 2-3 weeks to finish the move up and correction to begin.
Very busy week down-up-down-up crazy:) We have a top and I think it is a short term top as I have expected. Now waiting for confirmation that the pullback is over.
With the reversal on Friday I think we have only a three wave decline. The move from the low looks like an impulse. The market breadth indicators and cycles are pointing to a bottom. So my forecast is that we saw the bottom and now we are waiting for confirmation - higher low and move above MA50 hourly chart and resistance 2000. If I am wrong this is 1-2 1-2 and plunge should follow... till now such count has never worked.
We are chasing the short term but do not lose sight of the big picture - look at the weekly chart, cycles weekly, and the last chart the monthly chart. They look bearish and 2-3-4 weeks short term bullish action will not change the long term.
TECHNICAL PICTURE
Short term - this chart is for the trading plan. It looks like an impulse to me... one more high to confirm it. For short position I would put a stop at break even and if we see a higher low close them and open long position. If I am wrong and we see a plunge you still hold the short position.
Still a lot of bears and the price is below MA50(see below) so I do not expect the indexes to start moving straight up. We should have enough time to position on the right side.
This are the two scenarios which I see - the move lower was either wave 4 or wave 2 of an ED.
Intermediate term - no change, I am waiting wave 5 to finish. SP500 closed back above MA50 which is bullish. Now the histogram should turn up and should be followed by MACD at the zero line.
Below support 1960 is where I am definitely wrong.
Long term - no change just more divergences. The short term bullish forecast does not change anything.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - the oscillators are pointing to a bottom but the long term indicators look bad. My interpretation - we have a short term bottom but do not expect long lasting rally.
McClellan Oscillator - strong bounce near oversold levels.
McClellan Summation Index - sell signal
Weekly Stochastic of the Summation Index - sell signal
Bullish Percentage - sell signal but still above 70
Percent of Stocks above MA50 - did not make it to the oversold level, but we have only a pullback and this is normal level for a pullback.
Fear Indicator VIX - looks bearish after moving outside the BB.
Advance-Decline Issues - reversing from oversold levels?
NYSE New Highs-New Lows - reversing from oversold levels?
Percent of Stocks above MA200 - 40 points below ATH and only 50% of the stocks are above MA200.... how healthy is the market?
HURST CYCLES
I think this was a 40 day cycle bottom and the next one has begun.
Week 8 of the 20 week cycle... probably another 2-3 weeks to finish the move up and the indexes should turn lower for several weeks.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
A lot of up and down.... the buy setup is still in tact. The bulls should proof that we have a reversal and produce a price flip.
The long term.... I think September would stay red and if we see a reversal in October(another red month) the finished countdown will look perfect:)
The histogram does not look good, RSI starts breaking below the trend line.... the trend starts looking exhausted.
Sep 25, 2014
EW guys are questioned
UPDATE:
Here are the market breadth indicators - move lower for wave 3 usually does not start at such levels. At such levels you are looking for a bottom because the sellers are exhausted.
McClellan Oscillator - almost touching oversold level. This is the second trough. It never recovered after the top at 2011 so we can say this is a new move lower. The selling continued even with the new ATH at 2019. That is why I think the top was at 2011 and since than we have a correction. McClellan Oscillator is one of my favorite indicators it never lied me:)
Fear Indicator VIX - again above the BB should reverse soon. The high was 16.75 near the previous one.
Advance-Decline Issues - almost touching oversold levels
NYSE New Highs-New Lows - at oversold levels.
If I look only the indicators I would say the indexes should start bottoming(of course we could see lower low 1960 or 1955)... the other option is panic sell off for several days to send the indicators to very extremely oversold levels like McClellan Oscillator -110. ---------------------------- I am not an EW expert and complicated patterns are not my thing. EW guys are questioned if the pattern below is allowed at all..... because expanded flat should be 3-3-5. If this is the case a bottom is not far away. Bearish case is suspicious for me because market breadth indicators like New Highs-New Lows, Advance-Decline Issues, McClellan Oscillator are oversold and this happens around bottoms not at the beginning of a correction plus we have right translated bullish 40 day cycle which should bottom any moment. It looks crazy to predict a bottom now but we will know soon and it is worth to keep an eye on this idea. P.S. Do not get confused about the different ideas on the blog and in Internet hold the short and that is it:) we are not chasing the bottom for maximum profit.
McClellan Oscillator - almost touching oversold level. This is the second trough. It never recovered after the top at 2011 so we can say this is a new move lower. The selling continued even with the new ATH at 2019. That is why I think the top was at 2011 and since than we have a correction. McClellan Oscillator is one of my favorite indicators it never lied me:)
Fear Indicator VIX - again above the BB should reverse soon. The high was 16.75 near the previous one.
Advance-Decline Issues - almost touching oversold levels
NYSE New Highs-New Lows - at oversold levels.
If I look only the indicators I would say the indexes should start bottoming(of course we could see lower low 1960 or 1955)... the other option is panic sell off for several days to send the indicators to very extremely oversold levels like McClellan Oscillator -110. ---------------------------- I am not an EW expert and complicated patterns are not my thing. EW guys are questioned if the pattern below is allowed at all..... because expanded flat should be 3-3-5. If this is the case a bottom is not far away. Bearish case is suspicious for me because market breadth indicators like New Highs-New Lows, Advance-Decline Issues, McClellan Oscillator are oversold and this happens around bottoms not at the beginning of a correction plus we have right translated bullish 40 day cycle which should bottom any moment. It looks crazy to predict a bottom now but we will know soon and it is worth to keep an eye on this idea. P.S. Do not get confused about the different ideas on the blog and in Internet hold the short and that is it:) we are not chasing the bottom for maximum profit.
Update
It looks like the market made a decision for the short term... and I like it:) it is the preferred one. Probably I should trust more my assessments:) I hope you hold a short position, as I wrote it should make some money... later we will know how much.
Now the next area to watch is support around 1958 plus minus several points.
Update
We knew we have a short term top, we saw an impulse as expected with perfect proportions, the last wave lower touched support and almost MA50 on the daily chart and reversed... that was the easy part what we knew.
Now it is decision time..... I do not see an edge using any technique and I do not have an answer.
Either sp500 have finished flat and a move higher should start or we have more to the downside.
If the indexes want to move higher should print another strong candle after the bullish one from yesterday.
If the indexes want to move lower should reverse soon small body candle and a little bit higher is allowed. I prefer to see more to the downside... but the market will decide:)
Sep 22, 2014
Update
The bearish candle has been confirmed. The move looks like an impulse to me 3=1,618x1 and bouncing currently from the first support. After the opening the price bounced from MA50 as I wrote so I hope you used it to jump on the short side.
I would say so far the plan for a top looks good. We will see what will follow and decide if this is only short term top or something else.
Sep 21, 2014
Weekly review
Short term view - short term top expected a move bellow the last minor low 1980.
Intermediate term view - I think that we will see a pullback and another high before something more serious.
No surprise this week. FOMC and traders are already trained like Pavlov's dog, so it was an easy bet that we will see a move higher.
Now what to expect... to be honest I am not sure. Enough signs for a trouble and important top but something does not feel right. The pattern does not feel right for a top. The more I watch the charts the more I think the red scenario is developing(chart 1 and 2). The market will kill the bears one more time than the bulls and correction will start - perfect as the big boys like it.
So instead guessing and trying to be smart I will keep it simple. What we have - higher high with MACD divergence daily, 40 day cycle at day 30 time for a top, Market breadth looking awful, bearish candle on Friday. I said this should be some kind of a top, at least a short term top and we will see a pullback.
For trading it does not matter wait for a lower high and open short position. If it is an important top great, if it short term top small profit... I can live with that:)
TECHNICAL PICTURE
Short term - reversal candle and the move lower looks like a 5 wave. The safe bet is to wait for a bounce from MA50. The price is above it and all MAs point up so I am pretty sure we should see a descent bounce from MA50.
Intermediate term - Bounce near MA50 and MACD divergence as we wanted... but something does not feel right. I do not like the pattern and the waves for a top. If the indexes start moving lower I will watch what happens around 1960.
Long term - no change just more divergences. The short term uncertainty does not change anything.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - look awful. A lot of weakness and divergences... everywhere. We have not seen this at previous tops so it is different this time:)
McClellan Oscillator - could not make it above the zero.. very weak.
McClellan Summation Index - sell signal
Weekly Stochastic of the Summation Index - sell signal
Bullish Percentage - making lower highs
Percent of Stocks above MA50 - new ATH and only 62% are above MA50. How strong is that?
Fear Indicator VIX - another higher low.
Advance-Decline Issues cumulative - divergence lower high with 5 waves lower.
New Highs-New Lows - another lower high
Percent of Stocks above MA200 - new ATH and only 60% are above MA200. Divergences and weakness.
HURST CYCLES
40 day cycle at day 30. I think it is time for the cycle to turn lower.
Waiting for the 20 week cycle to top.... currently at week 7.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
At 8 from a countdown... probably the move up is not finished.
Intermediate term view - I think that we will see a pullback and another high before something more serious.
No surprise this week. FOMC and traders are already trained like Pavlov's dog, so it was an easy bet that we will see a move higher.
Now what to expect... to be honest I am not sure. Enough signs for a trouble and important top but something does not feel right. The pattern does not feel right for a top. The more I watch the charts the more I think the red scenario is developing(chart 1 and 2). The market will kill the bears one more time than the bulls and correction will start - perfect as the big boys like it.
So instead guessing and trying to be smart I will keep it simple. What we have - higher high with MACD divergence daily, 40 day cycle at day 30 time for a top, Market breadth looking awful, bearish candle on Friday. I said this should be some kind of a top, at least a short term top and we will see a pullback.
For trading it does not matter wait for a lower high and open short position. If it is an important top great, if it short term top small profit... I can live with that:)
TECHNICAL PICTURE
Short term - reversal candle and the move lower looks like a 5 wave. The safe bet is to wait for a bounce from MA50. The price is above it and all MAs point up so I am pretty sure we should see a descent bounce from MA50.
Intermediate term - Bounce near MA50 and MACD divergence as we wanted... but something does not feel right. I do not like the pattern and the waves for a top. If the indexes start moving lower I will watch what happens around 1960.
Long term - no change just more divergences. The short term uncertainty does not change anything.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - look awful. A lot of weakness and divergences... everywhere. We have not seen this at previous tops so it is different this time:)
McClellan Oscillator - could not make it above the zero.. very weak.
McClellan Summation Index - sell signal
Weekly Stochastic of the Summation Index - sell signal
Bullish Percentage - making lower highs
Percent of Stocks above MA50 - new ATH and only 62% are above MA50. How strong is that?
Fear Indicator VIX - another higher low.
Advance-Decline Issues cumulative - divergence lower high with 5 waves lower.
New Highs-New Lows - another lower high
Percent of Stocks above MA200 - new ATH and only 60% are above MA200. Divergences and weakness.
HURST CYCLES
40 day cycle at day 30. I think it is time for the cycle to turn lower.
Waiting for the 20 week cycle to top.... currently at week 7.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
At 8 from a countdown... probably the move up is not finished.
Sep 17, 2014
Update
There is now five waves up from Monday and FOMC is behind us... this could be just wave 1 of 5 but on the other side this is enough for a final wave 5.
Given the indicators a little bit higher will look better, but be very careful here.... with this ugly daily candle we should not see a gap lower tomorrow or it is game over.
Sep 14, 2014
Weekly review
Short term view - one more push to finish the move higher.
Intermediate term view - when the current move is over we should see a serious correction like in 2011.
Another choppy week... the move lower still looks corrective, but we should see a move higher soon or this is not wave 4 of 5. The move is taking too long so I have changed the cycle count which in fact looks more bearish now and is aligns now with the EW count that a correction of a bigger degree is comming.
What we have now are market internals which are near to oversold levels and indicators reseting while the price is moving sideways....
Most of the time this is bullish, we have FOMC next week, the move lower looks corrective, the plan is working for months so far and I think one more push higher has the highest probability.
The problem is we have weekly bar closing bellow the previous two weeks with weekly MACD and RSI divergences, there is a way to count this move as finished, and it happens a correction to begin slowly reseting indicators and near to oversold levels to plunge into very oversold territory... so careful next week. I have not seen a top before FOMC so far but who knows.
Monday we should see SP500 start moving higher. If the top is in the choppy move should be some kind of a 1-2 1-2 and we should see gap lower and strong sell off. I will definitely take profits if SP500 open bellow 1980.
TECHNICAL PICTURE
Short term - this is how it should look like if one more push higher is left and the count is right. Divergences on the hourly chart, 38,2% Fibo for wave 4... it looks ok for one more push higher.
Intermediate term - if I am right after last final high we should see serious correction... but first a bounce from MA50.
Long term - no change. A bounce from MA50 and near the upper trend line with a lot of divergences... it looks dangerous.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - we are seeing now divergences which were missing before. This is in sync with the EW count point to an important top. Short term we are near to oversold levels on Advance-Decline Issues and McClellan Oscillator and I expect a move higher.
McClellan Oscillator - nearing oversold levels and outside the BB. We should see a move higher.
McClellan Summation Index - sell signal with divergence.
Weekly Stochastic of the Summation Index - still a buy signal.
Bullish Percentage - divergence... sell signal... this time the rally is weak.
Percent of Stocks above MA50 - divergence at 55%... very weak internals.
Fear Indicator VIX - another indicator with divergence...
Advance-Decline Issues - not far from the oversold area...
HURST CYCLES
We either have the top for the current 40 day cycle behind us or we will see it very soon.
The move higher is taking tooooo long so I think we saw the 40 week cycle bottom at 1904 and the next one has begun. The first 20 week cycle was very short only 10 weeks, but it is what it is.
A move bellow 1904 will confirm that the current 40 week cycle and the 18 month cycle have toped out... The picture looks much more bearish now and supports the EW count calling for a serious correction.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Sell setup finished and countdown is running....
Countdown on the monthly chart finished. The price is crawling on the upper wedge trend line. If you exclude the shadows the wedge trend lines are converging together... and there is no more room for the price to move inside the wedge any more. Lets see in which direction it will break out:)
Intermediate term view - when the current move is over we should see a serious correction like in 2011.
Another choppy week... the move lower still looks corrective, but we should see a move higher soon or this is not wave 4 of 5. The move is taking too long so I have changed the cycle count which in fact looks more bearish now and is aligns now with the EW count that a correction of a bigger degree is comming.
What we have now are market internals which are near to oversold levels and indicators reseting while the price is moving sideways....
Most of the time this is bullish, we have FOMC next week, the move lower looks corrective, the plan is working for months so far and I think one more push higher has the highest probability.
The problem is we have weekly bar closing bellow the previous two weeks with weekly MACD and RSI divergences, there is a way to count this move as finished, and it happens a correction to begin slowly reseting indicators and near to oversold levels to plunge into very oversold territory... so careful next week. I have not seen a top before FOMC so far but who knows.
Monday we should see SP500 start moving higher. If the top is in the choppy move should be some kind of a 1-2 1-2 and we should see gap lower and strong sell off. I will definitely take profits if SP500 open bellow 1980.
TECHNICAL PICTURE
Short term - this is how it should look like if one more push higher is left and the count is right. Divergences on the hourly chart, 38,2% Fibo for wave 4... it looks ok for one more push higher.
Intermediate term - if I am right after last final high we should see serious correction... but first a bounce from MA50.
Long term - no change. A bounce from MA50 and near the upper trend line with a lot of divergences... it looks dangerous.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - we are seeing now divergences which were missing before. This is in sync with the EW count point to an important top. Short term we are near to oversold levels on Advance-Decline Issues and McClellan Oscillator and I expect a move higher.
McClellan Oscillator - nearing oversold levels and outside the BB. We should see a move higher.
McClellan Summation Index - sell signal with divergence.
Weekly Stochastic of the Summation Index - still a buy signal.
Bullish Percentage - divergence... sell signal... this time the rally is weak.
Percent of Stocks above MA50 - divergence at 55%... very weak internals.
Fear Indicator VIX - another indicator with divergence...
Advance-Decline Issues - not far from the oversold area...
HURST CYCLES
We either have the top for the current 40 day cycle behind us or we will see it very soon.
The move higher is taking tooooo long so I think we saw the 40 week cycle bottom at 1904 and the next one has begun. The first 20 week cycle was very short only 10 weeks, but it is what it is.
A move bellow 1904 will confirm that the current 40 week cycle and the 18 month cycle have toped out... The picture looks much more bearish now and supports the EW count calling for a serious correction.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Sell setup finished and countdown is running....
Countdown on the monthly chart finished. The price is crawling on the upper wedge trend line. If you exclude the shadows the wedge trend lines are converging together... and there is no more room for the price to move inside the wedge any more. Lets see in which direction it will break out:)
Sep 6, 2014
Update
Choppy week, it looks like wave 4 and wave 5 should follow. We know now the line in the sand is 1990.
It was easy to trade so far, but when this wave up is over I think we will see significant correction. I think at least 15%-20% and the other option is - this is the top of the cyclical bull.
Even the most bullish case should not be underestimated - this wave(from the low in February) is roughly 300 points and if we see simple correction 50% or 150 points expect a low around 1850.
So plan accordingly, if you see the price moving bellow 1990.
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