Weekly preview

Short term view - Monday should begin higher, but eventually prices should move lower.
Intermediate term view - I think a more complex move is running there is more upside, but the low will be tested and exceeded.

Monday was the "15 minutes of fame" for this move, a lot of media coverage, my colleagues explaining me how bad it is:) and as always when all media start talking about a decline/rally the move reverses and moves in the opposite direction.
Now long term it is not over, I think the big picture points to a bigger correction continuing at least until mid 2016, but it will be more complex than the most expect. It will not be so easy - crashing and continue crashing, or we have 10% sharp correction time for a rally and new highs.

- EW - it easy to say sell off wave 3 this is wave 4 and now wave 5 lower to follow.... I think it is not so easy "wave 4" does not look finished and if we see another 20 points higher on Monday to finish the move up it will hit 61,8% Fibo from "wave 3". This is not normal for wave 4 especially after such a plunge, it is rather a-b-c moves... see Russell 2000 below too.
- Cycles - usually help us to find out where we are in the picture... but now there is different options not only for the long term but for the intermediate term too. I am reading different cycle guys and they have different views too. For the moment we should follow only the daily cycle until we have more clear picture.
- Technical indicators weekly pointing to a bottom of a higher degree. We need time... months for the oscillators to turn up, test of the bottom, than to turn positive.
- Market breadth - with the price action from Monday market breadth joined the TA indicators and the move is comparable with the two sell off from the bear market in 2008, the flash crash 2010 and the biggest correction so far 2011.
- Tom Demark - the setup lower was aborted at day 7 and we have price flip... another red flag that this is not wave 3 lower.

It is not easy to make a forecast in this environment crazy moves everywhere - stocks,forex, PM, crude oil... but let's go through different scenarios:
- full crash mode - plunge, pause, followed by crash and burn f**king bulls:) I know many bears are pissed off and the "bear prophets" are out there again explaining me about the end of the world.... you will say why not - see China. Well the difference is vertical move up is followed by vertical move down. The US indexes do not have vertical move up, we had distribution for 8-9 months and when it is over follows the sell off to finish the move because no more buyers are left. I do not think that we will see something similar like in China more likely a correction in a bull market.
- correction is over now or after a retest of the lows and happy times ahead buy the dip - yes minimum requirements were met, but I think the long term cycles has topped out and this correction will take time to play out and this should be only the first leg. Although at this point I can not exclude the option that some strong indexes like Sp500 or NASDAQ could make higher high, but it should be a corrective wave for expanded flat nothing more.
- complex corrective wave which will take more than a year - this is my preferred scenario. We already have 8 months distribution and stealth correction since May, now with the three days plunge it is just visible for everybody. I expect the lows to be tested in October before the second leg higher of the correction begins.

Strong moves crude oil and gold miners. Important low is expected, but the strange is that the USD has begun daily cycle higher and I think there is one more leg higher before turning lower again. The question is, is this wave 4 crude oil and gold miners wave b/5 for the wedge which I have shown???? They will look better with one more small wave lower.... but there is no guarantee.



TECHNICAL PICTURE
Short term - this "wave 4" takes too long and it is too deep so I think we have a-b-c w-x-y moves.

Intermediate term - I think we have an A-B-C move, the break lower 2044 will be tested and than one more leg lower in October to finish the whole move from the top. The alternate scenario is that we have impulse lower... next week we should see confirmation for one of the scenarios.

Long term - significant correction with target MA200/the support zone/the start of the wedge - completed this week:)
I have circled moves lower which I think are similar to he current one. If history repeats we should see up and down for weeks and intermediate term bottom in October followed by the second leg of the correction.

MARKET BREADTH INDICATORS
The Market Breadth Indicators - serious plunge lower to levels which we usually see close to important lows. Now it will take time for the indicators to turn up for a while than to test the lows with divergences.
McClellan Oscillator - seriously oversold and moved above zero. The relief rally is not a surprise.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - sell signal.
Percent of Stocks above MA50 - seriously oversold and move up from the bottom.
Fear Indicator VIX - with move to 53 this is not only a correction it is a deep correction in a bull market.
Advance-Decline Issues - seriously oversold and move up from the bottom.
Put/Call ratio - a lot of bearishness.


HURST CYCLES
There is discussions if October 2014 is 9 or 18 month cycle low and now where is the current intermediate cycle low? Some says it was this week and we have the low for the year others it will come in October when the low is tested. So I will concentrate on the daily cycles until we have clear picture.

After such plunges the cycles are shorter(compressed in time). With 33 days it is long enough(even for a normal cycle) so the probability is much higher that we have already daily cycle low and much lower that we will see lower low next week.
I suspect the next daily cycle is running already with expected low in October. I am curious if it will be lower low or higher low.

I have reverted back to my old chart. Now waiting to see where to put the low for the year.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Price flip and setup higher... the setup lower has not be finished which is a big red flag that the move lower is not a wave 3.

Russell2000 - in contrast to SP500 it has finished the small ED v/C and we can count perfect finished wave lower. What I see is two waves lower with roughly the same size. The odds are much higher that we have corrective move and not an impulse. This is another hint that we do not have "wave 3" on the SP500 only a-b-c. With impulse from the low(should be a) we should see b and c testing the break out lower 2044.

DAX update

Everybody talking about crashes, bear market, impulses expecting wave 5.... I think it is not so simple and we have series of a-b-c w-x-y as a part of a complex correction with the first leg lower.

Basically the same chart which I have shown already, just the speed and the plunge surprised me. I am not sure if we will see a lower low or higher low as a test of the "crash low".

I would like to see one more move higher to test MA200 and finish c=a. This will mean the probability is much higher that this is a different move and not 4 and 5 from a wave lower.

Update

We have now this wave up which should be wave 4.... but much stronger than expected. We should see a test of the low, but I am asking myself with a lower low or higher low???

Day 25 GDXJ is close to daily cycle low. Ideally we should see one more push below the last low to finish the move.

UPDATE - The problem is USD hit it's minimum target lower with the crazy moves on Monday DXY 92 and and EURUSD 1,17. Either wave 4 is over and wave 5 higher begins(very bad for precious metals) or we can hope the zigzag is part of a bigger corrective move so the PM could rally in the next 1-2 months. Anyway short term I think there will be one more leg lower to EURUSD 1.10 so be cautious and patient.

Update

The 10 min chart - I suspect SP500 is working on wave 5, overlapping so far.... maybe an ED. Than we should see the waves 4 and 5 of a bigger degree the hourly chart see my post from the weekend.
We need a bounce for a few days so that indicators and market breadth turn up than test of the lows for divergences before a move higher begins.

Update

Is this the beginning of a bear market or sharp correction in bull market to purge greed?
My opinion such moves do not last for too long. They are not sustainable because market players get scared way too fast and way too early for a bear market. Bear markets does not start with 15% for three days. Such moves appear in the middle of a bear market not in the beginning. This is the behavior of a furious correction in bull market, which punish the bulls getting too greedy - three years without 10% correction is too much greed don't you think?
With the price action today 144 points drop (the maximum) and VIX 53, the probability that we are near to important low is even higher and I think we are close to 40 week and 18 month cycle low (this should be the low for the year when we see it:).


Obviously counting crashes is not easy. Watching the next support level and the begging of the wedge.. some FIBO retracement. A few more days with this speed and 1800 as a target at the moment.

Here is visually what I am talking about. If history repeats - a bottom this or next week, sideway move for 2 months, move higher(the second leg of a bigger correction).

Weekly preview

Short term view - oversold bounce and lower again.
Intermediate term view - intermediate term low in a few weeks.

I always fall in the same trap around tops:) It looks like a corrective move is running and one final move is missing... and than boom!!! I fell in the trap again:)
But do not say I did not warn you. I wrote several times to take profits like in May(the best one at the top:) and the rest is short term trading.

The ED is now history, the last "bullish soldier" SP500 has fallen:) As I wrote below 2044 is bad, open space and you see what happens with air pockets....
I am sure a lot of bears are celebrating... but why did you kill all the bulls for two days. Such moves are not sustainable and they get exhausted very fast.
Now instead a nice correction running for a while I see a bottoming in the next 1-3 weeks and intermediate term low. I think this is the "15 minutes of fame" for this correction.
It smells like stretched 40 week cycle and the next shorting opportunity October/November this year. DJT correcting for 9 months, Europe for 6 months and US stealth correction since May. For me this is not a move which have just begun it is the end of the first leg of a much bigger move lower. It has the necessary DNA - moving lower for a while -> panic sell off (wave 3/c) -> fear -> exhaustion(waiting). You need this around intermediate lows.

But let us concentrate on the presence - of course the correction is not over, from EW perspective it has to work on 4th/5th waves of different degrees and panic lows are not THE LOW.

TECHNICAL PICTURE
Short term - we have to start with the shorter time frame 10 min... waiting for the never ending 3 to finish. You have to admit 1-2/1-2/1-2 counts perfect.

Than longer time frame 1 hour - 4/5 of higher degree.

Intermediate term - It does not matter where you put the 5th, we are just tracking the move lower.

Long term - significant correction with target - MA200/the support zone/the start of the wedge.
Oscillators pushed to extremes at the weekly chart. Expecting intermediate term low in the next few weeks.

MARKET BREADTH INDICATORS
The Market Breadth Indicators - the beginning of the end of an intermediate term correction. Wait a few weeks for reversal/divergences. The same levels like the October 2014 correction.
McClellan Oscillator - oversold waiting for bounce and divergence.
McClellan Summation Index - sell signal, bottoming??
Weekly Stochastic of the Summation Index - sell signal, higher low??
Bullish Percentage - sell signal, levels where usually intermediate term corrections end.
Percent of Stocks above MA50 - oversold waiting for a bottom/divergence
Fear Indicator VIX - levels where usually corrections bottom.
Advance-Decline Issues - higher low so far, divergence developing??
Put/Call ratio - the lowest level since the corrections in 2011-2012
NYSE New Highs-New Lows - extremes like Oct. 2014
DAX Stocks above MA50 - 2SD nearing a bottom.

HURST CYCLES
Cycles usually help us to find the right EW count and the magnitude of a move/low... but after such a long and crappy move it is difficult to spot important lows and there is only confusion now.
First the cycle guys are arguing if October 2014 is 40 week or 18 month cycle low - both counts has problems. I have swapped my chart, but now the old one looks better.
Now confusion about the 40 week cycle low - was it in July or the low of the current move when it is over. It is important to know what to expect.
I have to rely on EW/TA for a while until the picture is clearer. At the moment I think to count the next low as the 40 week low and I will revert to my old chart for the 18 month low. This way the cycle count will fit better with EW/TA and expected important low 9 year cycle low next year.

The two options are shown:
- July as a low and the current 40 week cycle toped out very early which is very bearish. This way the length of the previous cycle is perfect, but only 5-6 days higher from 40 week low... and in hindsight this is not an important low just something in the middle. Somehow it does not look right.
- the next low will be the bottom of the 40 week cycle a little bit longer, but not something extraordinary.

I prefer the second option at the moment - it fits with technical indicators and market breadth.

I think my old count looks better.... I will wait for a while until we have clearer picture.

GDXJ finished it's five waves now it is time for a correction. Around 20.30 looks interesting 50% Fibo/gap/support/MA200. Gold made 5 waves too, but now Silver is weaker and making only corrective waves. It is not a problem for me because my forecast is that this is not the low for the bear market anyway.

Last week I was talking about the indicators on the weekly chart of DJI. Now look at the chart and the indicators for the DAX. It is clear it is bearish, but watching the indicators what would bet on - continuation or oscillators reset? It will last months the oscillators to be reseted. I would rather bet on that the first leg of a much bigger correction is nearing a bottom. The alternate scenarios full blown market crash.

Update PM

UPDATE - DAX no buying switching to bear for Europe. The bearish chart which I have posted a few weeks ago is working perfect so far.


UPDATE - added DAX it looks like it is finishing the move lower.


I was posting that I am not sure gold will manage to print an impulse... silver was looking stronger, but it hit it's target 15,60 with only three waves and reversed. It will be very unusual if silver and gold move in different direction so with very high probability gold will print only three waves too. Silver/GDXJ and Gold/GDX have slightly different patterns the first are in the timing band for a daily cycle top day 18 (silver definitely has a top) GDX made lower low and it's daily cycle is at day 9 so gold and gdx could squeeze one more move higher for a few days, but than they should turn lower too.

I wrote that triangles are usually wave B and not 2 and I think we will have soon confirmation that this is only a corrective move higher. The targets were 1122 and 1128 gold hit 1126... even if it moves one more time higher it will run into strong resistance 1130. So impulse and break out higher has very low probability at the moment.

Target hit with three waves, impulses lower "a" and "c" so it is clear move lower.

As long as the price stays above the last low there is a chance for one final move.... if gold squeezes one more move higher and silver moves higher for wave B this is a possibility.

I think this is wave 5 of ED which should finish 5 waves from the top. Minimum retracement the beginning of the wedge/the lower boundary of the gap and the upper boundary of the gap.

Weekly preview

Short term view - move higher...
Intermediate term view - there is more to the upside...

The week started higher, but than three days in a row China was "playing" with it's currency which caused a lot of volatility. The short term pattern has changed, but I think the bigger picture stays unchanged.

I see a lot of bearishness, wave 3 lower impulse around the corner and talk about H&S finished.... I have looked the charts closer and in my opinion the indexes has finished stealth correction which begun in May. DJIA is more easier to show what I mean(see weekly and cycle charts) - ew pattern I see two zigzags lower with the same size, cycles one more daily cycle finished, indicators pointing to a low, market breadth pointing to a low.
Of course the low SP500 2044/DJIA ~17060 should hold if I am right and next week or two we should see a move higher. If I am wrong and wave 3 lower is just around the corner we should see only a short living pop 2-3 days... ooo wait we have it already:) than next week the indexes should start plunging lower heavily. I doubt it, but let's see what happens.

PM/Miners waiting for the market to reveal it's intentions. I think we will see one more wave higher at least miners to finish an impulse... gold not so sure.


TECHNICAL PICTURE
Short term - expecting to see something higher... honestly at the moment I have no idea for the short term squiggles. The price is above MA50 and MACD is trying to break higher from the triangle so the odds are a little bit higher that we will see green Monday.

Intermediate term - the pattern has changed and I think it is an a-b-c lower part of a bigger move higher. Break below 2044 will change the picture and it will look bearish(red)

Long term - significant correction after the move higher is over. Target - MA200/the support zone/the start of the wedge.
Look at the oscillators and all significant corrections since 2009(we are expecting significant one right?). The corrections do not start when the oscillators are oversold, they start from overbought levels. Looking at the indicators the message is correction is running for a long time, the oscillators are in oversold territory and it is time for a bounce. Take the worst case that a top is behind us - than I expect the scenario from 2011 deep retracement for 3-4 weeks,oscillators reseting and touching overbought levels followed by plunge lower.

MARKET BREADTH INDICATORS
The Market Breadth Indicators - moved lower for weeks saying we are in a correction, than the indexes has bottomed and moved higher, but the indicators do not really gave a buy signal. I was confused from the "strange" behavior. Now we know why - the correction was not finished SP500 made higher low, but other indexes like NYSE, DJI, RUT made lower low this week.
I still think that market breadth points to a low and now McClellan Summation Index and Bullish Percentage have divergences and early buy signal.
McClellan Oscillator - positive despite the sell off.
McClellan Summation Index - small divergence and early buy signal.
Weekly Stochastic of the Summation Index - sell signal, but it is in the middle of the range and I think it will reverse.
Bullish Percentage - small divergence and early buy signal.
Percent of Stocks above MA50 - stayed in the middle of the range despite the sell off.
Fear Indicator VIX - nothing interesting.
Advance-Decline Issues - in the middle of the range.
Put/Call ratio - a lot of bearishness the lowest level since the corrections in 2011-2012


HURST CYCLES
DJIA has a little different count - I think it has finished one more daily cycle.
I use the chart to show the H&S pattern - there is one smaller H&S pattern and many are bearish saying move lower has already begun. I think that if there is a H&S this is the bigger one shown on the chart. The head has been finished and now we should see the right shoulder.

Week 5 of the current 20/40 week cycles.

At the moment there is no reason to think that we will not see one final move higher to finish an impulse. GDXJ is at support MA50/MA200, the gap, RSI/MACD back to the trend line... only the final move higher is missing for a perfect picture:)

Update

I have posted DXY charts expecting a turn lower any moment. In comments I wrote that the USD is the joker referring precious metals, but obviously the impact is much bigger.
What happened - China announcing currency devaluation and enters the currency wars. Add to this weak economy and for the FED will be difficult to raise rates in September(now higher probability it will not do it) USD is tanking, yields lower, bonds higher, stocks lower, gold/silver/miners higher.


Last chance for the bulls is this count below. The indexes should just turn up and not look back. A move under 2044 and it is game over... open space below to 1980.

DAX the same story bullish only if it turns higher and finish the move as a-b-c. Only a retracement and move below the chanel will be bearish.

GDXJ has just gapped above the gap 21(my minimum target) and continued higher. We know now, how the move up looks like and it looks bullish. I think that an intermediate term bottom hit has higher probability than another lower low(of course I want to see 4 and 5). It should continue climbing the support/resistance ladder to confirm an strength and impulse from the bottom.

Update

UPDATE: Closer look of the triangle... I am curious if it will work out. Anyway a long trade around 2070 and stop is below the yellow line less than 10 points... good risk reward for a short term trade I think.

Higher yesterday, but the move lower today is too deep for the bigger triangle which I was showing.... I see another triangle:) five waves for wave "b" triangle and a-b-c zigzag to finish the last leg for an ED. With a=c the upper trend line will be hit and as long as the price stays above 2068 the scenario is valid. I think this is a good risk reward setup with clear defined stop.
If SP500 moves below 2063 I will start looking for another patterns... I wrote that there is plenty of them at the moment:)

Update PM

I have forgotten our friend the US dollar:) I think it gave now green light for a move higher in PM

It has squeezed one more high that is why the delay two weeks in PM/Miners:).

The longer cycle on the weekly chart looks ready to roll over too... if this is the case it should move lower for 2-3 months and PM higher.

Gold and Silver broke out higher as expected.... gold is still very weak silver looks much better. I can imagine that we have already a bottom in silver.
Again everything is about the trading plan I wrote about that last week - you must have one for both cases bottom or not.
It is early to call the bottom without confirmation.... my feeling at the moment tells me it looks like a bottom for silver and gold will move lower one more time.

Silver moved above resistance,it looks like impulse. Next resistance level and Fibo (see below), impulse and move with the same size from the range all pointing to around 15,60$ as the first stop for this move.

I wrote the weekend about MACD/RSI and trend lines - here it is one more time RSI broken and tested trend line plus divergences. We have a new move higher which is an impulse. The EW structure looks finished and the cycles are favorable so it looks good for a bottom in silver.

Gold broke higher from the triangle as expected, but still not showing impulse or strength fighting with the next resistance level 1103.
A move with the same size from the triangle points to around 1128.... the problem there is no clear impulse so far. Fibo 38,2% is at 1222 and there is strong resistance from the previous low in November 2014 and the plunge around 1130(see below).

Gold - RSI has not reached it`s trend line, no divergences, EW looks like one more wave is missing, no impulse higher so far... overall it will look much better with one more move lower.

Weekly preview

Short term view - move higher...
Intermediate term view - there is more to the upside...

Move lower as expected, of course stretched so that there is confusion and different scenarios. Overall the different indexes have different patterns and with zig-zags up and down for months we can argue about forecasts and top or not a top to eternity.
I say who cares - trading is not about the perfect forecast or nailing top/bottom. If we make a step back what we see - the moves lower are corrective so far, European indexes printing bullish waves higher, cycles are pointing higher, TA indicators weekly saying we are in a correction for a long time, it is rather time for a bottom than for a plunge lower. Even if you take more bearish looking indexes like DJI and DJT they are pointing to a move higher.
So short said - when you see a tradeable bottom go long and than we see how high the indexes will move and if the top is behind us or not.

Take DJI and DJT for example, they look bad, DOW theory divergences bla bla - even if you are bearish and the top is behind us the next move is higher. I have posted this chart DJT on the 5th of July when everybody was talking how bad it is... well a month later we have an intermediate bottom the trend line is broken and tested and we should see another leg higher. Below is a chart of DJI with some thoughts and it is the same story - for me the next move is higher even with a bearish pattern.


PM/Miners another week of choppy sideway action. Nothing has changed the price action confirms so far my preferred scenario for corrective move higher and one more lower low. Gold looks like a triangle the first wave from the bottom was a five so it should break higher and silver continues with the A-B-C. I suspect a little bit higher left. But no bottoming signature so far and I think any move higher should be short living before one final flush lower.


TECHNICAL PICTURE
Short term - the current move lower could be over as a-b-c and c=1,618xa (white) or we can see one more lower low for A-B-C (red) to finish another leg of the triangle and just redraw it's lower trend line... anyway expect a bottom.

Intermediate term - I am staying with the triangle as long as the price stays above 2044.
MACD and RSI are great indicators and you can draw trend lines which show you when a move is over. Usually when a move is over the trend line is broken and tested. Look at now MACD - for me a new move higher is running.

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 - again nothing useful
McClellan Oscillator - below zero, if we see a lower low we will have a divergence.
McClellan Summation Index - sell signal, but bottoming?
Weekly Stochastic of the Summation Index - sell signal, but it is in the middle of the range.
Bullish Percentage - sell signal, but bottoming?
Percent of Stocks above MA50 - in the middle of the range.
Fear Indicator VIX - nothing interesting.
Advance-Decline Issues - in the middle of the range.


HURST CYCLES
Day 24 I suspect this is half cycle low.

Week 4 of the current 20/40 week cycles.

You can argue this is bearish 5 waves lower for leading diagonal "THE TOP" is behind us or bullish zigzag with W=Y and correction near it's bottom.
Take the worst case scenario the top is behind us - even in this case you must admit we have an overlapping moves lower and this should be a diagonal and after diagonal a deep retracement follows. Such retracement will make a nice symmetrical top and touching one more time the arc, the chart will look like "Mona Lisa" of technical analysis:)
Again for trading it does not matter - first both scenarios say something higher so buy a tradeable bottom and wait to see what happens and second you do not short a high hopping for a top, you are shorting a lower high or a higher high with divergences and this will be the next lower/higher high what ever comes.

And here it is DJT a month later. Everybody was talking about DOW theory divergences how bad it is and I have posted a chart to show that the index is close to a bottom and forget about all this bearish talk. The upper resistance line around 8800 is 61,8% Fibo too, so expect a move between this level and MA200. At the same time at this levels we will have two legs higher with the same size.