Update

The indexes just keep moving higher..... That was expected, but no pullback no nothing. It does not feel very "natural" this move. I prefer to see a pullbacks along the way, such vertical moves are not stable.
Counting waves and indicators looks useless but I will try:) - I think this is some sort of an impulse which is wave a of B of an expanded flat. The intermediate term outlook stays the same for now pullback and another move higher.
The McClellan Oscillator moved to very overbought territory above 80 and now is making a lower high. The futures are sharply higher playing with the last ATH 2019. I think we will see an exhaustion gap and a pullback wave b of B.

Weekly review

Short term view - pullback before FOMC.
Intermediate term view - more to the upside for another 3-4-5 weeks , we will see.

I was expecting the low to be retested before a strong move higher.... I have never believed in impulse, wave 4, but I was surprised by the strength which we see. It is not an easy marker with sharp reversals.

What we have - corrective move lower (impulse on other indexes and markets) followed by another corrective move higher... strong move, but corrective if you look at other markets it is definitely corrective.
The bullish herd is singing kumbayaa again(great news for us:) and some EW guys, which I respect, expect the next wave lower to begin soon. I think the truth i somewhere in the middle.
I think we have a correction of a bigger degree and there will be one more leg lower before it is over. BUT if you throw cycles and market breadth in the mix I think the current move higher has more to go before it reverses.
Cycles - we have at least 20 week cycle low or it could be even 40 week cycle low. I do not expect to see a turn lower after only one week.
Market breadth - is showing strength and longer term indicators has turned up pointing to a intermediate move higher.
It is not only 1-2 days short covering it is something more. The week closed strong, no signs for reversals. Weekly charts - momentum turned up and the last two candles are bullish.

I think we are now in the middle of a wave B or X. SP500 is the strongest index and we can even see a new high for an expanded flat... other indexes which a weaker like DAX for example will make lower high.
If I am wrong strong sell off will start next week.... I doubt it but we will watch for this possibility. It is important to keep an eye on scenarios in the opposite direction so you do are not get caught unprepared:).

We have FOMC next week. I think we will see a pullback before that, but I do not expect a serious sell off to begin before that. Watch the price action before Wednesday - if it corrective and stays above support 1925 expect FOMC to be a bottom and more to the upside. If I am wrong we should see an impulsive move lower.

TECHNICAL PICTURE
Short term - I expect to see a pullback before Wednesday which stays above 1925 than the move higher to continue(red). If I am wrong we are watching the white scenario.

Intermediate term - SP500 is testing the broken trend line and MA50, so expect a pullback to support/MA200. SP500 is the strongest among the indexes and could even make a higher high for an expanded flat.

Long term - bounce as expected. The short term moves do not change the big picture.

MARKET BREADTH INDICATORS
The Market Breadth Indicators - look at the McClellan Oscillator is not just short squeeze it is strength... and other indicators are turning up from oversold levels. I think we will see several weeks higher.
McClellan Oscillator - two peeks in overbought territory - this is strength. But this means expect cool off.
McClellan Summation Index - buy signal after reaching very low levels last seen in 2011 after the plunge.
Weekly Stochastic of the Summation Index - buy signal. The next swing higher should have begun.
Bullish Percentage - turned up and buy signal.
Percent of Stocks above MA50 - above 50 already.
Fear Indicator VIX - turned sharply lower. I expect another higher low after the current move higher is over.
Advance-Decline Issues - near to the overbought levels... the move higher shows strength.
NYSE New Highs-New Lows - another indicator showing strength.


HURST CYCLES
Given the strong bounce I think we saw the low for the current 40 and 80 day cycle and the next one has begun.

This was a 20 week cycle low and the next one has begun. I think we will see 3-4-5 weeks higher before a reversal.
There is a possibility that this is a 40 week cycle. I am not a fan of this count but we will see.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
The countdown has not been finished as I have expected. Now we are at 6 of a sell setup and if I am right (only a pullback) it will be finished.

Update

I have never believed in an impulse lower now it is official - it is not an impulse. The EW logic says this should be some sort of B or X and another move lower should follow.
I am skeptical... I think we saw 20 week or 40 week cycle low and market breadth is pointing to a move higher. I am thinking of August 2007 - sharp 10% decline (check) sharp reversal (check) now a pullback lower for 1-2 weeks should follow (FOMC in 7 trading days - a low?).

If this is B/X and another wave C lower should start any moment, until the end of the week the market should lose most of the gains so that we do not see a bullish weekly candle.
If we see the index wasting time with small pullbacks it is August 2007 again(it is not necessary to see a new high - playing with 2000-2020 for some time is enough). Remember kill the bears, than kill the bulls, than a top:)

Weekly review

Short term view - revisiting the low
Intermediate term view - after that a move higher for several weeks

I was expecting a bottom earlier... the problem is the dynamic of the market has changed. Two years with shallow pullbacks every time when the indicators hit oversold level we had a reversal - normal for a bull market. But now the indicators need more time, more oversold levels, divergences and panic sell off before we see a bottom - typical for down trend. Two years trained like Pavlov's dog I knew that we have a top but I have forgotten that the dynamics of the market in a down trend is little bit different.
The daily updates were spot on, weak bounce suggesting more selling, the panic sell off finished near to support as expected than we saw strong move higher to the middle of the resistance zone 1885-1905. I hope I am in sync with the market again.
For those with strong nerves that was a great trading week:) I am still working on that....

For the SP500 EW pattern could be argued if it is an impulse or corrective structure, the DAX and Russel2000 look to me like they finished 5 wave impulse lower. It is irrelevant who is right. It is important to be on the right side. My experience says after a panic sell off the low is revisited.
Market Breadth - before the correction I has said this time is different, the indicators were much weaker. Now they need more time and move to more oversold levels before a bottom is hit. This is a confirmation that the market has changed and I think the prevailing trend now is down.
Cycles - at week 11, average length 14 so another 1-2 weeks to revisit the low will look perfect.

To sum it up - I think the indexes will revisit the lows, than a move higher for 3-4-5 weeks should begin (the traders must forget the pain), but the prevailing trend is down now and we should see a lower high and another move lower.

TECHNICAL PICTURE
Short term - one scenario as an impulse, infect the proportions are perfect so far:) But if the indexes do not reverse on Monday and we see another green candle higher, than this is definitely not wave 4(we have already 50% retracement) and probably we will see higher low. This will not surprise me at all.

Intermediate term - my target was the trend line and support.... SP500 hit them but took another path without a bounce first.

Long term - the forecast plays out so far... The indicators still point down no reason to change it.

MARKET BREADTH INDICATORS
The Market Breadth Indicators - beaten down, at levels which we have not seen since the plunge in 2011. I think this time is not the time for buy the dip and expect new highs.
McClellan Oscillator - moved above the zero line.. confirming that there is buying.
McClellan Summation Index - this levels we saw in 2011 at the bottom.
Weekly Stochastic of the Summation Index - sell signal, but in the oversold zone. The time for a swing higher is coming.
Bullish Percentage - the lowest level since 2011... something has changed.
Percent of Stocks above MA50 - moved to levels which are typical for down trend. Usually when the stocks are so beaten down you wait for divergence.
Fear Indicator VIX - moved much higher compared with the last several highs. >this correction should be bigger.
Advance-Decline Issues - several lows - we should be near to a bottom or even we saw it.


HURST CYCLES
The indexes should visit the low to finish the cycles 40 and 80 days.

Week 11 - another week or two lower two finish the cycle will look perfect.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Countdown at 8.... with this huge candles I am not sure it will be finished.

Update

The wave lower finished close enough to support and bounce up has begun as expected. There is already 3 wave structure in place and the bounce could be over but looking at the last two daily candles with very long tails(there is buying) we should see more to the upside. In this case we saw wave A and B and C to the previous support now resistance 1885-1905 should follow.
Just watch the price action today - the market should drift lower in the morning session and should not move below the 50%-61,8% retracement zone. In the afternoon session reversal up should start.
If the market start moving impulsive lower with the opening than wave 4 is over and 5 is running.

Update

As I wrote yesterday the bullish action was missing - no impulse no close above resistance/MA50. Today looks like a panic sell off.
The bottom of a panic sell off is not THE bottom. It is followed buy some short term relief because there is no sellers left than another move lower follows.
The ewavers will call it wave 3 and waves 4 and 5 should follow:) The move so far was not looking much like an impulse but this should be wave 3 I do not have another explanation.
Now watching 1815 for possible bottom.
P.S. we are still waiting the current wave to finish it could be wave 3 which bottoms at 1815.

Update

Here is a close look with the 10min chart - simple technical analysis.
Yesterday action was not an impulse the price could not move above MA50 and could not hold above resistance.
If you are a bull you want to see the price above 1884 last minor high(gap if possible) and start a strong impulse moving above MA50, resistance 1890 and staying above this level.
If you are a bear you want to see the price continue drifting lower... negating possible double bottom.

Update

The moves today were pretty close to what I have shown on the weekend, but a little bit surprised that we moved bellow 1885. Now Y=W and this is the last chance for the bulls to reverse or it becomes 3 or 3 than next target 1825.

Odd is - SP500 moves 32 points lower and the DAX is 100 points above the low, McClellan Oscillator moved only 6 points lower, New Highs-New lows moved up, declining issues moved down and advancing up. McClellan Oscillator and Advance-Decline Issues still show positive divergence.
Was this an exhaustion bar? If you see a sharp reversal staying above 1885 I think it was. But careful do not get bullish until we see something to the upside.

Weekly review

Short term view - some small waves up and down to finish the current move lower before a move higher.
Intermediate term view - correction of a bigger degree is running. 1-2 weeks relief and another move lower.

Last week was "complex" this one has been just crazy. Till now I have not seen so many reversals in a row. The ugly price action should be some kind of a corrective move. DJ and SP500 are the strongest among the indexes, but look at other indexes Russell2000 DAX they remind me of the tops 2007 and 2011. So I think that a correction of a bigger degree has begun.

What we have:
- A lot of technical damages the weekly charts does not look good at all. The positive - SP500 is near to MA50 weekly, MA200 daily and support zone.
- EW - I think the indexes have already toped out. If you look at DAX, FTSE, Russel2000 and many others the picture looks clear - impulse. DJ and SP500 show some messy price action which should be a corrective wave. The positive -it looks like the move is near its end and should bottom soon than a move higher should follow.
- Cycles - at week 10 of the 20 week cycle(average 14 weeks) and with this weekly chart I would say we already saw the top for this cycle.
- Market Breadth Indicators argue that we are near to a bottom. Some with divergences other at levels which usually mean a bottom.
- Tom Demark - see the last chart monthly, I have already shown it for several weeks the big picture says we have already started a correction of a higher degree.

When you sum it up - overall picture bad, but some signs that we could see a bottom(market breadth, near to important MAs/support) I think we will see soon a short term bottom and relief for a week or two, another sell off and intermediate term bottom followed by the "Christmas rally".
The alternate scenario if I am wrong is some ugly 1-2 1-2 1-2 and series of wave 3 begins which means serious plunge and mini crash. Does not make sense, but in panic mode there is no place for logic and indicators.This is the scenario if the indexes does not find a bottom in the next 2-3 days and SP500 moves bellow 1885.


TECHNICAL PICTURE
Short term - a bottom will probably look something like that.... Watch on the daily chart the support levels - 1904, MA200 1905, previous highs at 1897 and 1885.

Intermediate term - At the moment the move does not look finished and there is no signs for reversal. But I think the move lower will find support between 1897 and 1885. The histogram looks oversold. The next move should be retest of the broken trend line and previous support now resistance. Look at how MA50 was resistance many times that is bearish. It should be a resistance for a relief rally.

Long term - The bullish candle from the last week has not been confirmed and we saw bearish candle this week closing at the low. Momentum(histogram) looks bad. The MACD divergences start playing out.

MARKET BREADTH INDICATORS
The Market Breadth Indicators - are saying that we should expect a bottom. Some with divergences other at levels which usually mean a bottom.
McClellan Oscillator - multiple divergences.
McClellan Summation Index - sell signal. Pretty oversold levels since 2009 we saw the index at this levels only several times around important lows.
Weekly Stochastic of the Summation Index - sell signal, but in the oversold zone. It is time for a swing higher.
Bullish Percentage - sell signal. The lowest level since 2012. It tells us that this time is different,
Percent of Stocks above MA50 - reached the oversold zone and we see usually a bottom at this levels.
Fear Indicator VIX - at levels which usually mark the end of a correction.
Advance-Decline Issues - divergences.
Percent of Stocks above MA200 - pretty weak market.


HURST CYCLES
With the price action from this week obviously the bigger cycle has topped out. I have adjusted the daily cycle to reflect the change.
I think we saw short 40 day cycle(25 days) and the next one is running at day 15. Another 3-4 weeks lower will look perfect.

At week 10. Several more weeks lower to finish the cycle.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Countdown is running at day 4 at the moment.

I have shown the chart several times. It was flashing warning signs for a long time and now it looks like we have a confirmation that something to the downside has begun - the histogram is bellow the zero line and RSI broke its trend line.

Update

And today I just look stupid:) That is crazy shit five reversals for several days with each reversal/candle bigger and bigger..... I do not think that any one has predicted this whole mess.

From technical point nothing has changed. The indicators show the same as before. Look at market breadth just more divergences and many indicators reached levels which are usually a low.

The important is many indexes are at important levels/trend lines/support and if the buyers do not step in soon... bellow is only open space.

My thoughts - all this mess should be a corrective move.... this will be probably the ugliest impulse if the indexes continue lower. The DAX is finishing 5 waves at important support. The indicators are pointing rather to a bottom than to the begging of a move lower.
I think we will see a retracement and some indexes like DAX,Russell2000 will make lower high and other like DJ and SP500 probably higher high before a correction begins... serious correction like 15%.

Lets see if in several days I look even more stupid:)

Update

The bears were killed again. I told you we are near to a bottom and this was the second chance to close short positions and switch to the long side. I hope you did not fall into the bear trap.
What I notice is that my forecast are ok but the moves always stretch higher/lower than my targets. It is becoming a pattern so I will just raise my target from yesterday to at least 2000-2005.

I have looked at the Market Breadth indicators and they look bullish.... this move could last longer and higher than many expect.... including me:)

Update

The triangle was a hint that there is more to the downside.... I am not sure what is going on. I have just drawn trend lines and it looks like an expanding formation.
The two options which I can see are - wave 1 LD if we see a new low or wave c up if we see a reversal tomorrow.
First - too much weakness and I am skeptical about a new high now. Second - I do not think that we will see a waterfall, I still think the move lower is near to it's end.

Update

UPDATE: looks like triangle which usually means continuation...

Target hit - support, 61,8% Fibo retracement, three waves with a=c.... now it should be a rally time.

Weekly review

Short term view - short pullback on Monday and another move higher.
Intermediate term view - waiting 2 weeks to finish the move up and correction to begin.

Well the correction was much more complex and moved lower than expected but in the end it is a corrective move. Corrections are always very tricky.... After the last two trading days I think we can exclude impulse as an option.

On Thursday I have posted a chart and what I think is going on - the market from different angles. Since than nothing has changed much... Yesterday we saw the confirmation that we have a bottom and most of the loses for the week were wiped out so I switch back to the plan from last week that we will see a higher high. Lower high is still possible but I am not really convinced.
Trading - I would wait for a pullback on Monday and get rid of shorts if you still have some and open long position. All this moves are for short term and swing traders. If you are not comfortable wait for the bigger correction.

Few weeks ago I wrote expect correction and new high, the big boys like to kill bears and bulls that is the best way to make more money. Well we saw a pullback but much deeper than expected with fake break out many were counting already the new bear market... and the bears got shot,burned,killed,raped call it as you want. Now it is bull's turn I think we will see higher high before FOMC and the bulls will celebrate the never ending bull market... just to be shot,burned,killed,raped as the bears.

TECHNICAL PICTURE
Short term - the move up looks finished. I expect a pullback on Monday but this should be a buying opportunity.

Intermediate term - fake break out lower just for a day and back above the trend line. Bullish candlestick formation. The price will probably take a breadth just under MA50 and after that should move higher. The oscillators turned up, waiting for the MACD to do the same from the trend line.

Long term - no change just more divergences. The short term bullish forecast does not change anything.

MARKET BREADTH INDICATORS
The Market Breadth Indicators - short term it is time to reset from oversold levels. Long term thy look bad as last week.
McClellan Oscillator - divergence and move higher. Is one of the greatest indicators. It warned us not to trust the move lower. It did not lie to us... again:)
McClellan Summation Index - sell signal,still pointing lower.
Weekly Stochastic of the Summation Index - sell signal, but entered in oversold territory
Bullish Percentage - still sell signal. In an area where we see bottoms for corrective moves.
Percent of Stocks above MA50 - did not make it to the oversold level, but we have only a deeper pullback and this is normal level.
Fear Indicator VIX - after several days outside the BB plunged lower... I think we will see another higher low.
Advance-Decline Issues - turned up after a double bottom near the oversold zone.
Percent of Stocks above MA200 - 50 points below ATH and only 45% of the stocks are above MA200.... one word awful. I expect a lower high to signal the beginning of a very deep correction. In 2012 in previous such occasions we saw higher highs... not his time.


HURST CYCLES
This time we saw really a 40 day cycle bottom at day 38 and the next one should have begun.

Week 9 of the 20 week cycle... probably another 2 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.
Buy setup finished and the indexes reversed. After a pullback on Monday we should see a price flip and opportunity for an entry with low risk.

Update

Let us recap:
- EW - W-X-Y or impulse.... we should be in 3 of 3 the strongest wave and instead closing around the bottom we have strong intraday reversal. The impulse is very doubtful.
- Cycles - at day 39.... and we have bullish intraday reversal close to a 40 day cycle bottom.
- Technicals - looking bad at the moment no sign for a reversal
- Market breadth indicator - divergences and at oversold levels McClellan Oscillator/advance-decline, VIX reversal
- Bullish reversal candle
- TomDemark buy setup finished
- DAX three legs lower with the same size - looks like triple zigzag

So I do not know if I am biased but my feeling says this is a bottom.... with corrective move lower. Two options - this is either wave 2 of ED or part one of a much bigger correction.
Even if we have a bottom the technicals look bad and the indexes moved much lower than expected - look at a weekly chart. Taking this into account the main scenario is lower high and this is the first leg of a bigger correction. If next week is very strong and wipes out completely the loses from this week than we will think about 2 of ED and higher high.

How to trade - it is prudent to wait for a higher low... bottom/top fishing is never a good idea. If the next move lower can not take out the low I am long. Given the strength lower I think we will have a chance for a decent entry.

Update

UPDATE: I have looked at the DAX - three legs lower each 350 points... I can not see an impulse only triple zigzag.
Are we seeing 2 of an ending diagonal??? I am confused, the weekly chart looks awful the pattern on the daily chart says corrective move.
BTW. the EW targets worked great:) 13-14 points from the bottom so far.


I see this two scenarios... the next bounce will tell us what is going on. Weak one testing the 1950 - the red scenario. Impulse and strength above 1950 the white one.
We have technical damages so even if we see a bottom now, I do not think that we will see a new ATH.

Update

Is the reversal around the corner? See the daily chart from the weekly review - we are now at the trend line and support line with MACD divergence on the hourly chart. The forecast from yesterday is playing out so far. SP500 bounced exactly at the lower support line.
It is simple - the bears should move the price sharply lower through the support zone for wave 3. If they fail we will have a bottom.