Intermediate term view - the final move higher is running.
On Monday the futures moved lower to 2160 but reversed higher after the news(Greece) and the cash index moved higher to my target 2120-2125. Well obviously cycles and market breadth are working:) showing us the the right path when most of the traders were bearish.
Nothing new since last update I think the indexes will burn time in corrective choppy move for the next 5-10 trading days and we will see a move lower.
I suspect the next low will be around FOMC 29.07.
More interesting is now the precious metals sector - a lot of emotions. If you are precious metals/gold miners trader - the time has come to watch closely for a reversal. The last ingredient which was missing to see fear and panic selling especially miners. The gold bears are out explaining how low the gold will move and how smart they are:) That is exactly what you want to see.
Short positions are at all time highs gold is testing the lows, silver making higher low so far. When you have extreme it is inevitable to see mean reversion - ask a successful options trader:) When a trade is so overcrowded there is no more buyers/sellers and it reverses. Remember EUR/USD - I have posted at the end of February a chart with simple trend line and to expect reversal I supposed no one believed me. Three weeks later the trend line was hit USD reversed and since than is correcting for months - it is the same.
EW patterns,cycles,market breadth, sentiment are pointing to a bottom. It is the same like stocks a week ago - let's see if it works again:))
Here is some info about the extreme short positions and statistic. A lot bla bla he is a gold bug focus on the facts - all time high for short positions, extremes are followed by mean reversion, it lasts 9-10 weeks to unwind short positions(remember what I wrote about cycles - summer rally second half of September?), 15%-20% moves - the last important high around 1320 should be tested.
TECHNICAL PICTURE
Short term - choppy week followed by a sharp move lower for 2-3 days around FOMC. As long as price stays above 2075 support and 61,8% I am bullish.
Intermediate term - main scenario wave 5 of the wedge. Alternate scenario we saw the first corrective leg of a bigger correction and the retracement... I do not believe it, but we always keep an eye on the other camp.
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 - indicators are bullish now. Market breath did an excellent job and warned us that a bottom is coming.
McClellan Oscillator - time for some retracement.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal.
Bullish Percentage - still weak.
Percent of Stocks above MA50 - back to the middle of the range, after oversold levels.
Fear Indicator VIX - plunging lower...
Advance-Decline Issues - moving higher after oversold levels hit.
HURST CYCLES
Day 9 of the current 40/80 days cycles.
The new 20/40 weeks cycle is running.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
On the weekly chart the setup was aborted and we have price flip which does not support the bearish scenario.
On the daily chart we have a setup at day 6.
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