Weekly preview

Short term view - topping to start and a pullback lower.
Intermediate term view - a few more weeks before we can think of a top.

Nothing new just the charts updated. If this is a wedge from the February low a top should be imminent. Looking at the technical indicators and market breadth I do not see such outcome at the moment. So either the topping will continue for several weeks or it is the pattern which I am following - a wedge but from the June low.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the move from the November low looks like A-B-C to me.

Intermediate term - the two scenarios. Red is a wedge from the February low and this should be the last wave 5.

Long term - no change.

MARKET BREADTH INDICATORS
The Market Breadth Indicators - is resetting higher, but it is visibly much weaker. Expect divergences and important top... but there is a few more weeks.
McClellan Oscillator - well above zero.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal.
Bullish Percentage - buy signal.
Percent of Stocks above MA50 - nearing the upper range.
Fear Indicator VIX - building multiple divergences for the next important top.
Advance-Decline Issues - nearing the upper range.


HURST CYCLES
Day 14 from the 40 day cycle. At least a pullback for 20 day cycle low is expected.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
The move is strong enough not to expect sudden reversal. We have finished setup and countdown is running.

Silver - the same pattern as Gold. We have 5 waves lower which means the correction which begun is not finished. There is two options - this is wave A and we should expect B and C(red) or we need 7 waves for finished corrective move double zig-zag W-X-Y(green). I thought the USD is still in the triangle in this case A-B-C(red) was looking great... now not so much.
In both cases bounce higher is expected because from the November top we have 5 waves lower with divergence followed by one more lower low. I can not see a finished pattern at the moment.
MA50/MA200 are resistance now. If the bounce higher hit them with a zig-zag than watch the green scenario. If the bounce hit them with an impulse than watch the red scenario.

Update

SP500 is catching up making new highs after DJ and RUT already made new highs. The pause which I was expecting is behind us and this high is the one with the red arrow from the daily chart. Reaching it so fast makes my preferred scenario one more high more probable.
Two different Fibo measurements point to a top around 2207-2208:) curious if will see a top today or tomorrow at this level.

Strong wave A and weak wave C with divergences

I do not expect sudden reversal and a plunge lower. MA20/MA50/MA200 starting to converge. Any move lower should bounce from the MAs and than we watch lower high or last marginal higher high. Patience no need to hurry.

Weekly preview

Short term view - small pullback is expected.
Intermediate term view - a few more weeks higher before we can think of a top.

The indexes moved a few points higher SP500 17 points DJIA 20 points... nothing so interesting, but nothing is information too:)

First 7 trading days after the huge bar the indexes are doing practically nothing so forget about iii of 3 to the moon. This is not price action in iii of 3, you should see a pause one day max two before the indexes blasting higher and this is not happening.
Second SPX500 managed to squeeze 5 waves higher and finished TomDemark setup higher. This means the move is strong enough and not to expect sudden reversal and plunge lower.
This confirms the two possible scenarios wedge or huge zig-zag from the February low.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the move looks tired so I expect a pullback to support and MA200 around 2145.

Intermediate term - the two options which make sense. Patience the market will reveal it's intentions. The indicators are pointing higher no signs to expect sudden reversal.
Pullback to MA20 and MA50 looks probable.

Long term - the indicators are pointing higher. It will last a few weeks before we see a top with divergences.

MARKET BREADTH INDICATORS
The Market Breadth Indicators - moving higher, but the strength is missing... this is what we expect to see.
McClellan Oscillator - above zero, but not really strong.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - turned up from oversold level.
Bullish Percentage - buy signal.
Percent of Stocks above MA50 - around the middle of the range.
Fear Indicator VIX - building multiple divergences for the next important top.
Advance-Decline Issues - heading higher.


HURST CYCLES
Day 10 of the 40 day cycle.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Sell setup finished the market has enough strength despite only crawling slowly higher.... there is no sellers at the moment.

DAX - this is a nice looking wedge not like the US indexes:) The same message pullback and one more higher high will look great.

And TNA as a proxy for RUT - either finished impulse from February or more complex expanding wedge. At the end similar picture like the major US indexes.

Update

We have now five waves from the low and 5 waves for the fifth wave with divergences. It is time for a pullback. Target MA200 and the congestion zone around 2145.

We have 5 waves higher for the RUT too hitting the upper trend line. MACD and RSI vertically higher and far above MA50. This means to expect pullback, but no plunge lower. The high should be tested
Similar to the major indexes there is too options - simple impulse from February(red) or it is a little bit ugly expanding wedge(green). When we see the move lower we will know - if it is an impulse expect lower high(red), if it is a corrective move expect zig-zag for a wedge (green).

Weekly preview

Short term view - short pause and continuation higher.
Intermediate term view - if this is the right pattern we should see a lot of volatility and it could stretch until Christmas before we see the top.

So Brexit the "bad news" was bad 1-2 days, US elections "bad news" is bad a few hours... good luck trying to find logic. The market has it's own path and does not care about news, they cause only volatility.

In both cases I knew that the moves lower are only corrective and the next move should be higher, but this time I really messed up.
Almost 4 months watching a mess lower and I thought we are already in wave 2 because it is lasting for too long... well I was wrong.
Long term - no change I still think this final wave V of the bull market will be an ending diagonal.
Intermediate term - from the June low we need one more impulse higher to finish the first zig-zag from the ending diagonal. We have overlapping waves, the move should not be too bullish and we need time at least 4-5 weeks so that market breadth could reset from oversold levels. The perfect pattern is a wedge, but from June not from February. If this is the right pattern we should be in the middle of wave 3 of this wedge.

What if I am wrong? Other "popular" patterns?
- this is wave 5 of a wedge which begun in February.... I do not see waves getting shorter or getting longer so that we have a wedge or broadening wedge. Even if this is the pattern the indexes will move higher for a few weeks, finish the move from February and reverse. So not much different for trading. The problem with this pattern is that 1-2 weeks are not enough time for market breadth to reset.
- 1-2 i-ii and now iii of 3 to the moon - the only argument which I see for this pattern is.... it is easy you do not need to think much.
I do not see other indexes to support it - DAX,EEM and most important Nasdaq are telling another story. We had important 7 year cycle low and the first half of the cycle(18 month) should be very strong not the second half when it should make a top and move lower.
This scenario creates only more contradiction and questions without answers.... I would say this rally is bullshit (unless you ride it:)


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the rally so far is corrective two legs higher with the same size and small pause in the middle - this is a-b-c. If we have a wedge no matter from February or June we need one more leg higher to finish a zig-zag.

Intermediate term - this is from daily perspective. Moving higher for another 2 weeks, than lower until 14.12(FOMC) and higher until Christmas. This is roughly the path we will adjust it when we see how the moves develop and if the pattern plays out.
The green arrow is this iii of 3. It must shoot up higher... I do not think this will happen.
The red arrow is wave 5 of a wedge which begun in February. The top should come earlier.

Long term - no change, just wave 1 is not finished.

MARKET BREADTH INDICATORS
The Market Breadth Indicators - are pointing to an intermediate term low, but despite the vertical move, they are not really reacting and moving strong higher. Something is not right, probably the rally is not broad based. One more reason no to trust this rally. Despite this we should see them trying to reach overbought levels.
McClellan Oscillator - no bullish reaction so far around zero.
McClellan Summation Index - still sell signal.
Weekly Stochastic of the Summation Index - sell signal, oversold for months.
Bullish Percentage - turned up from the middle of the range, buy signal.
Percent of Stocks above MA50 - in the middle of the range.
Fear Indicator VIX - as expected building divergences for the next important top.
Advance-Decline Issues - turned up from slightly oversold level.


HURST CYCLES
40 day cycle low and a move higher currently day 5 of the next 40 day cycle.

With the strong move from the low only 40 week low makes sense. It is longer than the average length so the next 40 week cycle should be shorter 25-30 weeks (you can see it from previous occasions). This pushes the low for the 18 month cycle to second the half of April/first half of Mai.

GOLD - We are at 40 week cycle low, lower low with divergences, seasonality is bullish for PM making intermediate lows around the end of the year, the USD should be finishing wave D of the triangle and move lower for 2-3 months, selling climax.... it looks good for intermediate term low.
Gold is doing exactly the same what I have posted in the last "Long term update". I receive often questions about Gold probably expecting a low and the next huge rally higher from mega bull market. I think commodities made secular top and now we are seeing cyclical bull market until 2019 so no mega bull market and gold 5000. The correction should continue in the first half of 2017 and than another leg higher 1-1,5 years.
P.S. wait for a few days bottoming and divergences on the hourly chart.

Plausible idea?

I am in the camp that the 18 month cycle is topping. I do not believe that we are in wave iii of 3 to the moon. I do not see the different indexes to support this idea - SP500 despite the strong rally it is only a-b-c from the bottom. The DAX needs to touch 11k and we will have finished wedge(diagonal 5th wave) from the bottom. Emerging markets best case are in wave 4 and rally higher for the last wave 5.

For months I am thinking that the last wave V of the bull market should be a diagonal because I do not see the impulse. We need A-B-C for wave 1 of V.
Market breadth indicators need at least 4-5 weeks to reset. So we need a move higher for several weeks, but no too bullish.... I was scratching my head for two days after this sharp move and this came out. The wave from June to August is way too short compared to the wave from February to April... and you need two impulses with similar length. The pattern below looks perfect - EW, cycles, market breadth everything fits perfect. Now everything makes sense.... I should have spotted the pattern much earlier.

Update

What should I say... the pattern was right as always - relief rally and more to the downside. Do not listen to the "experts" explaining you how the market was wrong about Brexit or the elections.
This rally which started 3 days before the elections was a bad sign for H.Clinton - to repeat for n-th time when the market pushes in one direction before news/event it moves in the opposite direction after the news.

Now to the charts - it is very difficult pattern, but for the first time since the top it looks like something and it fits perfect with cycles. It looks to me like complex zig-zag W-X-Y - one zig-zag lower (the low early September),huge flat for wave X until yesterday, the plunge today is wave a of Y and we need one wave higher "b of Y" than drifting lower for "c of Y" for one more zig-zag lower.
If I am wrong Brexit will repeat - the pattern is finished and the market will turn higher. Of course everything is posible, but the pattern and cycles will look.... unfinished. For Brexit we needed an impulse lower and we had it. Now we need zig-zag.... if we do not see the market drifting lower the whole beauty will be gone:)

Very beautiful chart showing the psychology of a correction....
In a zig-zag(correction) you have two waves lower A and C with a pause in the middle B. One wave takes time(more often A) and the other... you can see the fear(more often C).
It is about psychology - the more common case the market is drifting lower for a while (wave A) no one believes in a correction, but than there is no more buyers and boom wave C bloodbath and fear.
The opposite case - the market is shocked bloodbath and fear (wave A) everybody is scared and sold, a bounce follows but the market continue drifting lower because there is no buyers they are still scared (wave C).

The first zig-zag from the August top illustrate the first case and now it should be the second case - bloodbath sellers already sold, but buyers are still scared which should cause a drift lower for a while.

P.S. the markets are faster than I write. Obviously this is not the end of the world:) and "b" is already running.

And as reference SP500 and the Brexit I think everything repeats so far.

Weekly preview

Short term view - bottoming and relief rally.
Intermediate term view - I have the feeling the market will make one more lower low after a relief rally.

I lost faith that we will see fear:), but there we have it the last missing component for an intermediate term bottom.
The pattern is still not 100% clear.... definitely a bunch of corrective waves up and down from the top. The different indexes look a little bit different for example DJ is much stronger and RUT/Nasdaq look completely different anyway.

So there is no point to speculate which is the exact pattern. More practical approach - we have fear, 9 days lower in a row, the price reached MA200, RSI plunging to 28 very far form the trend line so expect at least a relief rally for several days. There is no signs for a reversal all indicators are pointing lower so I think the bottom will be tested with higher low or lower low. We will decide this when we see how the move higher looks like.

Why one more lower low? The US indexes have shorter cycles and I believe that the 40 weeks cycle was in September and now we are seeing move lower into 20 week cycle for wave A of 2(I was discussing it last week). I could be wrong 19+19 for 40 week cycle is so easy and so perfect to count everybody is jumping on this... but exactly this I do not like, it is never so easy.
I prefer lower low as an option because the EW pattern will look better, the cycles will look better, we will have divergence market breadth/TA indicators and both bulls and bears will be confused - the bulls trapped after a short rally and the bears shorting the bottom. This will be the perfect bottom.

Many are comparing with Brexit trying to find some logic. My logic is always the same watch the pattern and the charts. The market has it's path and it does not care about events which are well known for months. They cause only volatility for a few days that is all. Brexit is typical example everyone was expecting "good news", but the corrective pattern was not complete. I was talking all the time about expanded flat, strong impulse lower was needed, suddenly we had "bad news". Two days later the pattern was finished, the market has forgotten the "bad news" and continued on it's path higher.
Expect the same - volatility, but at the end the market is in wave 2 lower until mid-March 2017 with a move higher expected for wave B after the current move lower is finished.... simple.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - the more bearish scenario from previous week is playing out.
There is many possible combination with so many zig-zags from the top in August... the count is not so important I am showing both ideas. A rally for a while does not mean necessary the bottom is behind us. It is possible to see one more low with divergences.

Intermediate term - look at the previous bottoms and the RSI levels. What do you think are close to a bottom or the move has just begun? Next RSI should try to snap back to the trend line. If we have V shape bottom the price should move above resistance(green) and RSI should reach the trend line. If we have only a relief rally with a lower low to follow(red) the price should find resistance around 2115.

Long term - the sell off this week strengthen the idea that we are in wave 2.

MARKET BREADTH INDICATORS
The Market Breadth Indicators - the indexes a nearing a bottom, but no reversal signs at the moment.
McClellan Oscillator - moving higher for 2 days from oversold level despite the red days.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - at oversold level for months.
Bullish Percentage - sell signal, at a level where a correction bottoms.
Percent of Stocks above MA50 - close to oversold level, expect either divergence or sharp move move below 25 and reversal.
Fear Indicator VIX - at last some fear, outside the BB for several days, pullback lower expected.
Advance-Decline Issues - at last moved to oversold level.


HURST CYCLES
I think the US indexes have shorter cycles and we need 2-3 weeks to finish 20 week cycle.

From peak-to-peak perspective - first we have 11 weeks lower which means the trend switched lower(wave 2 is running), second it is time for a few weeks higher to finish 20 week cycle from peak to peak.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Buy setup should be finished on Monday so at least a relief rally for a few days is expected.

Update

We have fear now:) we need it for a bottom.


Closer look from the end of October it looks like clear A-B-C with two impulses lower with the same size.

And the bigger pattern... the move lower overshot as I wanted, but now it looks more like triple zig-zag?!?!
This is the only pattern which makes sense at the moment. We should see a bottom today and around the elections it should be tested. If Trump wins expect something like Brexit sharp sell off with lower low and reversal.