Intermediate term view - we will see something to the the downside, but I do not think this is the top.
Nothing new the mess continues.... the last two months even in a tighter range with slightly upward slope. I think the whole move will continue longer than I have expected:( probably till mid June... more patience is needed.
There is two scenarios - the wedge will top after one more ATH or this will be only point 3 with 4 and 5 to follow - see the last chart NASDAQ the wedge is more clear.
Technical analysis, EW, Market breadth can not help us to say unambiguous there is one more wave 4 and 5 left or not. The cycles will look much better with move lower for 1-2 weeks to finish the current 40 day and 40 week cycles and than higher again.
So I looked at the other indexes. Russell2000 shows impulse lower and the NASDAQ broke the trend line and is testing it from below - that means for me do not expect a rally higher rather marginal new ATH(SP500/DJI) followed by a move lower.
When an ED/Wedge is finished a sharp move lower begins... look at now the NASDAQ again.If 5 is behind us I expect to see a strong move impulse lower to the support level. Instead the move was corrective three waves. So this should be rather an a-b-c for wave 4 of the ED than a bigger correction. In Europe the DAX and CAC40 look like one final wave 5 is missing and I doubt that we will see 10% correction in the US markets and Europe moving 10% higher at the same time.
Based on the thoughts above the plan is - marginal new ATH, move lower (4 of the ED) and another move higher to finish the wedge. All this will last probably one month.
If we see a strong move lower impulse than we will switch to the scenario that the wedge is finished.
TECHNICAL PICTURE
Short term - I do not know if the indexes will just continue higher the a-b-c or make something more complex the w-x-y. But I think they are not finished to the upside.
Intermediate term - changed the plan, now it looks like this will be only point 3 of the wedge and we will keep an eye on the move lower when we see such.
Long term - no change.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - neutral or bearish... I think short living move lower is to be expected.
McClellan Oscillator - positive(but lower high)... rebound after oversold levels.
McClellan Summation Index - sell signal
Weekly Stochastic of the Summation Index - sell signal
Bullish Percentage - sell signal
Percent of Stocks above MA50 - neutral in the middle of the range.
Fear Indicator VIX - long term higher lows... wedging too
Advance-Decline Issues - neutral in the middle of the range.
HURST CYCLES
There is different ways to count the cycles with the flat move in the last two months.... the best look will be to see a move lower to finish the 40 day/20 week/40 week cycle.
A move lower for 1-2 weeks will look perfect to finish the 20 week and 40 week cycle. P.S. probably I will have to change the count with the next low only as 40 week low and not 18 month low.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Nothing interesting with this mess for months....
RUSSELL2000 - impulse lower to support and 50% Fibo retracement testing MA50 from below, expect more to the downside.
NASDAQ - broken trend line, but the move lower is only a three wave corrective. Probably wave 4
Krasi, great posts as always! Any thoughts on TLT? Where do you think it will bottom? 117ish? Thx.
ReplyDeleteThere is support around 118 and at 117 the second leg lower will be equal with the first one so yes some where there we should see a an intermediate term bottom.
ReplyDeleteI am watching for an entry once we see a low below the last one 118,64