Long term update

Something to read with a lot of charts if you have time and you are bored:) This is what I see for the long term.

Here it is what I think is going on - stocks deep correction to begin in autumn and accelerate in 2016, bonds will continue to sell off, FED will raise rates and liquidity will dry up. Like in 2008 all assets will start moving lower because the most wanted asset will be USD and everything else will be sold off. The CBs will freak out and make something crazy. They must safe the bond market the stock market is a side effect... the bank cartel will not give up so easy and it will try to safe the system at any cost.
This will cause inflation phase, real bubble in most asset classes - bonds final move higher(rates lower) should begin, stock final bubble phase, precious metals much higher wealth preservation... and the USD will be thrown under the bus multi year decline will begin. This will work for a while until all start falling apart and natural forces win.

I am paying more attention to gold, because commodities and miners stocks should outperform and I think this is were you have to jump when we see the final bubble. Stocks will make nice gains too, but I expect miners x5 to x10 times higher.

I think we are in the eye of the storm, it is calm for very long time especially the last 7 months, but it think this will change after the summer and crazy ride is upon us in the next several years.


- STOCKS
Distribution is running for a long time, the EW patterns are finishing, the long term cycles look ready to roll over, market breadth long term divergences... the stock market looks ready for a correction after several years only up... up... up.
There is two scenarios - this is the top of the bull market or deep correction followed by another move higher. EW and indicators can not give us definitive answer, the long term 9 years cycle is right translated and another high will fir better. I think the central banks will try to save the system and we will see one final hurray...

Long term cycles SP500 - correction to finish the current 7 year cycle. I expect the breakout to be tested and bubbles, bubbles flying everywhere....

EW DAX is a little bit easier to read, the idea for the US indexes is the same. Both scenarios are shown. I do not believe that a new secular bull market has begun. There is no sound base for that only covering problems with paper.

- BONDS
Last time I wrote that I do not know if the bond bull is over or not. Most of the guys which I follow think it is over... honestly I do not think that the charts can give us clear answer. Personal opinion - I think we will see one more high in bonds/low in yields. The bond market is the one which banks and politicians care about. If the yields start rising it is game over. The world is drowning in debt it could not be repayed. So they will try to save it at any cost and then we will see the side effects.

The last time I wrote the yields have more to go higher and they are doing exactly that... I think they will continue moving higher at least until the end of the year.

Long term three waves lower and one final move higher.

Intermediate term EW and cycles are pointing to a move higher, but after that the move lower should continue.

- FOREX
I think the USD has one final move higher alternate the top is behind us. After that a multi year decline should begin
The charts have not changed since last time. EUR/USD hit the trend line and reversed, probably there is one more move lower for a long term cycle low.

The USD index one more move higher to around 102 to finish multi year counter trend move.

Intermediate term corrective wave 4 should be running.

Cycles are pointing to September this year for a bottom of wave 4. Long term waiting for the top of the 3 year cycle

EURUSD perfect hit of the trend line and reversal. I expect a lower low with divergence and sharp reversal.

USDJPY moving higher as I have shown last time... but we are close to an important top.

- GOLD/SILVER/MINERS
There is so many opinions... but I think I am right:)))) As I wrote I think since November 2014 a correction is running and I was surprised a few weeks later to see for the first time descent EW and cycle analyses from David Chapman which confirms my view. It is worth to read the article.
Now there is different options, but I compare the price action for gold in Euro and add cycle analysis. Taking in account this factors I think the most probable scenario is a rally higher in autumn and another move lower before major low.
For trading it does not matter even with the more bearish scenario there should be a rally so precious metals are a buy late July early August. Even if I am wrong you will make more money, so who cares:)


I think this chart is a very important clue - clear impulse followed by three waves higher, three waves lower with lower low and impulse higher.... what should I say clear corrective pattern expanded flat. After impulse and corrective pattern another impulse lower follows.

Long term cycles average 7,5-8 years... If we see a bottom now it will be too early. It is not impossible, but shorter cycles compensate with sharper moves lower in price. It is a simple psychology fear is very powerful and you can not have plunging prices for years, sellers are exhausted fast.
Good examples are the previous cycles 2000-2001 longer and rounding bottom, 2008 shorter cycle and sharp decline 33% and reversal.
For a bottom this summer the cycle will be shorter than 7 years and rounding bottom for two years since mid 2013 does not fit at all.

EW what I see is that A-B-C correction is running since November 2014. It should stay below 1450 if it is expanded flat...

The shorter cycles - the article from David Chapman make me look at the internal three cycles of the 8 years cycle. The first important bottom was in December 2011 the second in November 2014(the red arrows). Both consist of 7 smaller cycles 20-25 weeks and lasted relatively long 3 years each.
I expect the last one to be shorter 2 years roughly respectively the internal 7 cycles to be shorter 15-20 weeks and the price to move sharply lower in its final stages of the decline. Autumn is favorable for precious metals and the previous two important bottoms were in November and December. So I expect the bottom between August-December 2016.

EW wave Silver it looks like a triple zig-zag... most of the silver miners have similar counts.

GDX it looks like expanded flat wave C should be an impulse and develops like an impulse.

GDXJ and silver miners the EW counts look like zig-zag.

- CRUDE OIL/NATGAS
- Cycles - important bottoms in 2001 and 2009 that makes me think we have 8 years cycle in play, the next bottom should be in 2017.
It looks like every 2-2,5 years there is an important bottom. The next one should be later this year.
- EW - it looks like we have an impulse which is not finished. The difference between the two scenarios(red/yellow) is part of what structure is this impulse. Taking into account cycles and if stocks move lower next year which translates in problems in real economy the yellow scenario looks more probable.
For trading intermediate term there is no difference in the next 1-2 years for both scenarios, so do not think about it too much.

I wrote that natgas probably bottomed, since than it did not rally but made higher low. I still think the next bigger move is higher.

Update

The European indexes are doing what they should do, but the US indexes... I wanted to see this levels at the end of the week not now and this way.

The technical indicators look bad, the move from the last top looks like an impulse now, the cycles topped out early at week 3(?). As long as the price stays below 2090 we have to assume that a bigger move lower has begun. If this is the case until the end of the week we should see one more bar lower 20-30 points. There is no signs to suggest bullish case only speculation with no confirmation at the moment.
In the next few days we should know what is going on. I still have some doubts, but we trade what we see.

Update

How low? How scared? were the questions... EURUSD is not impressed after initial drop is now 0.80% lower around 1.1090, US indexes 1.2% lower. The big hit took the European indexes.... ok I admit the gap is nasty, but do not tell me that the charts did not warned us.
Overall I do not see a lot of drama about the "Greek drama".

Here it is what I think - scared sellers, huge gap, oversold bounce, grinding slowly lower for the rest of the week, bottom for the correction/40 week cycle low, at the weekend Greece is saved, final move higher begins.

Here is updated chart of CAC40 - the path and EW count which I have shown last week worked perfect. At the moment the red scenario looks more probable.

And here possible interpretation of the mess which the US indexes are.... below 2060 and the pattern is questionable, below 2040 is wrong.

Weekly review

Short term view - again waiting for the market reaction on news, I think the direction will be lower.
Intermediate term view - I do not see a top, I expect final move higher before a significant correction.

Optimism on Monday the indexes squeezed higher high, and after that they are following the paths which I have shown - US indexes lower, CAC/DAX sideway move wave 4. If you look at the bigger picture it is more of the same from the last seven months - choppy three waves moves.

I was not interested about the Greek theater in the last six months, but now we are in the final stage and the news could alter the short term moves, but not the bigger picture.
The news so far look bad, the charts are not bullish either. US indexes - I think any move higher will be only a retracement and European indexes have finished or will finish an impulse and move lower should begin. How low? it depends on how scared the market participation will be about the "Greek drama". The more bearish scenario for US is lower low around 2065 double zig-zag, Europe lower low for a triple zig-zag(see previous post).

I do not see signs for a top, cycles and market breadth are pointing rather to a bottom than a top. So I expect any weakness to be short living before moving higher for the final top. I will be very surprised if the the top is behind us.... DO NOT FORGET it is not the time to be complacent, topping process is running for months it is time to pull your money out of the market on a rally and not looking for profits.

TECHNICAL PICTURE
Short term - with the news around Greece the red scenario looks now more probable.

Intermediate term - there is many different interpretation of the wedge..... it is better just to follow it's development until we see signs of a top. I do not see such at the moment. Three waves higher and lower.... when it is finished you will see a strong impulse lower.

Long term - significant correction after the move higher is over. Target - MA200/the support zone/the start of the wedge.

MARKET BREADTH INDICATORS
The Market Breadth Indicators - market breadth is hinting that we are close to a bottom(short term bottom).... but long term the first cracks are visible(see last two). Only 50% of all stocks are above MA200 when the indexes are close to their ATH(the move higher is not broad based) and cumulative AD is not following the indexes higher for the first time in years.
McClellan Oscillator - I expect to see a divergence on a new low for the indexes
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal but oversold waiting for a bottom.
Bullish Percentage - sell signal.
Percent of Stocks above MA50 - in the middle of the range...
Fear Indicator VIX - long term higher lows... wedging too.
Advance-Decline Issues cumulative - I expect divergence when the indexes make the final high.
Percent of Stocks above MA200 - does not keep pace higher with the indexes.


HURST CYCLES
Day 13 of the current cycle.

Week 3 of a new cycle, but if we see a new low we will move the low for the 40 week cycle and reset the count.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Another price flip lower this time nothing interesting.... because of the extremely choppy moves in the last seven months TD Sequential does not help us much.

European indexes

The move lower is corrective structure so the top is not in. I was expecting a bottom and 40 week cycle low... the move higher looks great(with the move higher today an impulse), but the choppy moves before the bottom leave the door open for another scenario expanded flat X and last final wave Z to finish triple zig-zag.

In fact this is the same story like the US indexes. If SP500 stays above 2090 we are following the bullish scenario. If some bad news hit the market we can see a move lower to 2065 for Y double zig-zag(see previous post). The only catalyst which can cause such move lower at the moment is negative outcome in the "Greek drama".


Green is the bullish scenario the move lower has finished as a zig-zag and red is the more bearish scenario a triple zig-zag.

Update

A lot of euphoria especially in Europe, but if you look at the chart nothing has changed..... the move consists of three waves so far and exactly the same picture in Europe for DAX,CAC,EUROSTOXX50 three waves higher with a=c even with the huge moves today.

If the indexes do not blast higher again tomorrow to mutate the "c" wave into "3" and clear the MACD/RSI divergence, we will end with a lot of euphoria and just corrective move higher.

Weekly review

Short term view - it depends on the "Greek drama"
Intermediate term view - I do not see a top, I expect final move higher before a significant correction.

Another week another choppy moves down and up. The bottom was tested before FOMC and than higher as expected... one more week and we will celebrate 7 months chopsville:)

Three waves corrective moves up and down, cycles point to a 40 weeks cycle low clearly visible on the DAX and DJT not so good visible on DJI and SP500 because of the mess which is running for so long, market breadth pointing to a bottom rather to a top.... so I do not see signs of a top.

Another three waves lower and higher and the ED should be finished... it looks too easy. What are the alternate scenarios:
- Short term - negative news about Greece could cause another leg lower with target around 2064 (see the first chart).
- Intermediate term - if I am right about the 40 weeks cycle low and European indexes make new highs this should pull the US indexes too and stretch the move in time and price(see the second chart).

If I am honest the alternate scenarios short and intermediate term will fit much better, but I do not have prove on the charts to show you something.

TECHNICAL PICTURE
Short term - as long as the price stays above the broken trend line and 2090(last low) I expect another move higher. If there is negative news next week(the Greek drama) the pattern could mutate to a double zig-zag (W-X-Y red) which will not change the big picture.

Intermediate term - the ending diagonal and alternate scenario ED stretched in time and price.

Long term - significant correction after the move higher is over. Target - MA200/the support zone/the start of the wedge.

MARKET BREADTH INDICATORS
The Market Breadth Indicators - there is no strong buy signals... but the indicators are pointing rather to a bottom than a top.
McClellan Oscillator - higher low and moved above the zero line.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal, but in oversold territory. We should be close to a bottom.
Bullish Percentage - buy signal but still to early.
Percent of Stocks above MA50 - in the middle of the range after higher low
Fear Indicator VIX - long term higher lows... wedging too.
Advance-Decline Issues - in the middle of the range...


HURST CYCLES
Day 8 of the current 40 day cycle.

Week 2 of the current 20 week cycle.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Another price flip nothing interesting.... because of the extremely choppy moves in the last six months TD Sequential does not help us much.

Update

Now it looks more like an impulse. If this is the case any pullback should stay above 2085... if we see the price moving lower probably the double zigzag(red).

Update

Some guys are arguing that the wedge is finished and what we see is impulse lower.... sorry but I can not see an impulse in this overlapping mess. The last two waves lower are three waves structures - two legs lower of the same size with a pause in the middle(the green arrows).

Is there a risk to the downside? Yes it is possible that we see one more leg lower. The current wave higher is three wave structure so far too. If we do not see a follow through higher today it is probable that the first zig-zag is part of a a bigger zig-zag. Around 2053 Y=W a=c and we have MA200 on the daily chart around this level, so this should be the target for another leg lower.

When the ending diagonal is finished we will see a strong impulse moving lower fast. This is not the case at the moment - even if the prices move lower this is a corrective structure for me... cycles and market breadth are pointing to a bottom too, so even with another move lower I still think we have not saw the top.

Weekly review

Short term view - not sure... I suspect choppy action before FOMC.
Intermediate term view - final move higher before a significant correction.

Ok we had a move lower 7 points below my target area 2080-2085 and than higher. The plan has not changed - the move lower is not an impulse which means the pattern, what ever it is, is not finished... the ending diagonal which never ends:)

SP500 - the move from the low looks like an impulse. The same thing in Europe impulse from a low. I think a zig-zag from higher degree for wave 4 completed at 50% Fibo for the DAX and 38,2% Fibo CAC. Cycles for the DAX and DJT - it looks like we have a 40 week cycle low at week 35. DJI and SP500 cycles are not so clear because of the messy move in the last 6 months, but I think they are showing the same picture. The signs point to an intermediate term bottom.

Short term - some indexes are still below MA50(DJI,NYSE) on the daily chart. Market breadth - no buy signal, but pointing to a bottom. FOMC on Wednesday... usually around short term top/bottom.
No surprise the nasty move lower on Friday. I suspect the indexes will work on a bottom and revisit the lows and we will see a choppy price action before FOMC.

TECHNICAL PICTURE
Short term - I am not sure how it will play out. Some up and down so that the indicators and market breadth turn up.

Intermediate term - it looks like the ED is not finished. No impulse lower and I will be very surprised to see a plunge lower(red).

Long term - adjusted a little bit... three waves below the beginning of the wedge.

MARKET BREADTH INDICATORS
The Market Breadth Indicators - there is no strong buy signals... but the indicators are pointing rather to a bottom.
McClellan Oscillator - hit oversold level 60.. in previous occasions we saw a short term bottom.
McClellan Summation Index - still sell signal.
Weekly Stochastic of the Summation Index - sell signal but in oversold territory. We should be close to a bottom.
Bullish Percentage - sell signal but nothing really convincing.
Percent of Stocks above MA50 - in the middle of the range...
Fear Indicator VIX - long term higher lows... wedging too.
Advance-Decline Issues - close to the lower level but not really oversold signal.


HURST CYCLES
I think this is a low for the 40 day cycle and the next one has begun.

It looks like 40 week cycle low to me looking at DJT and the DAX... if we see 3-4 weeks higher we will have a confirmation.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Setup at 3 on the daily chart.... because of the extremely choppy moves in the last six months TD Sequential does not help us much.

Update

Short term charts.... SP500 moved a few points lower than my target, but I still think that the indexes are following the plan for one final high.... no change is needed.
For those who took the risk for an entry around 2080-2085 congratulations:) The next low risk opportunity is a pullback when the impulse is finished...

Gold/Silver

Gold makes me crazy I can not decide if this will be THE bottom of the bear market or just important bottom.
For a long time I thought that the scenario for a major bottom has higher probability, but after playing with the chart of gold priced in EUR I have changed my mind. A think both bull and bears will be surprised. Most of the analysis I read are - bear market lower 750... or what so ever, major bottom soon but first lower 950-1000. I think it will be something in the middle and mister market will screw both camps which makes me even more confident:)))

Main scenario is lower until end of July mid August but higher low for silver and for gold 1090-1100 surprising bull an bears, followed by another plunge lower catching of guard both camps. The move will be worth trading ~30% gold(~1420), ~50% silver(~21), 100%-200% miners so watch closely what happens when gold reaches around 1100.

The count is not important there is a lot of variations important is which idea is right final bottom or just important low. XAU/EUR and Silver are hinting that this is not the bottom.

If I am right early August the gold will be near 1100 and silver above the previous low. It will be a nice entry point to ride the rally...
I think seasonality is favorable for PM from August to year end which fits perfect with EW/cycles which I am presenting.

Clear impulse followed by three higher, three lower with lower low and impulse higher.... what should I say clear corrective pattern expanded flat.
After impulse and corrective pattern another impulse lower follows. The alternative is the gold bottoms but the euro shoots to the moon so that gold priced in euro sinks like a rock...

I expect Silver to make higher low this will confirm my plan.... the important is the moves will be three waves which is corrective structure.

Added charts Gold Miners