Weekly preview

Lower but no acceleration as expected. What happened this week - the patten is slowly taking shape and it looks like zig-zag, the monthly candle looks very bad - big red reversal candle... constant selling from day one until the end of the month.

The same thoughts - we need to see the indicators/market breadth reset first before continuation lower. What to do with this zig-zag?
- bearish we have reversal - the final wave lower(for wave IV weekly) should play out as a big zig-zag and the first wave itself is a zig-zag.
- bullish - zig-zag is corrective structure and the door is still open for another leg higher. In this case I would count it as b/B with another rally to 3040 for c/B and big expanded flat. With many shares which already reversed and this ugly monthly candle the odds are low, but who knows.

I will watch closely for a long entry next week. If we see the price 300 points higher great, if it is weak and we see only 100 points higher I can live with that:) This is simple trading plan with low risk.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - I see two legs lower with the same size or zig-zag which should be finished soon.... after that the target should be at least the resistance zone is 2860-2890.
The bearish count is 1-2 i-ii I am not big fan of this counts, never worked since 2009 it was always just that simple zig-zag.

Intermediate term - indicator which measures acceleration is the histogram. Examples of acceleration are the red arrows - the price just moves lower(or look what happens with crude oil). Currently we are seeing second higher trough with divergence which is the opposite of acceleration - it is slowing down. The price/indicator behavior is exactly the same like October 2018. The same setup has the DAX twice in 2018. In all three occasions the outcome is the same - the indicator has to reset(price higher) before continuation lower. I do not think this time will be different.

On the chart are shown the two options - bullish and bearish.
Bearish - if we see weak bounce for a few weeks unable to break above MA50 and resistance, pattern and time will look exactly like the Oct-Dec.2018 decline. June should be positive, but if the bounce is weak the next move will be lower to support and 68% retracement for 40 week cycle low - a/C yellow. The final decline for wave IV from 2009 should be one big zig-zag because of time and because it starts with corrective structure.

Bullish - second rally higher to finish wave B for huge expanded flat. It should continue until August, 1,38 Fibo extension for expanded flat points to 3040 as a target exactly where the trend line will be hit one more time. The Fibo measurements for wave B(1,38) and C(1,61) show perfect targets - the upper trend line and the 2150-2200 area, flat is more likely pattern than expanded triangle, so despite the lower odds at the moment I will not discard it until I see the bounce in June showing weakness.

P.S. for those trying to see H&S pattern I think the neckline is lower around the 2720-2730 area. H&S and a/C(yellow) targets are the same in this case.

Long term - one more leg lower to finish wave IV from 2009. If the decline already begun, zig-zag will fit better both time and pattern. The probability for wave B expanded flat(red) is still alive and can not be excluded at this point.

MARKET BREADTH INDICATORS
Market Breadth Indicators - in sell mode for a long time, some divergences(VIX,McClellan Oscillator), that is why it is more likely that the indexes are close to a bottom and not just starting with the third wave.
McClellan Oscillator - 7 weeks below zero with divergence.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - sell signal.
Percent of Stocks above MA50 - nearing the 25 level where corrections make a bottom.
Fear Indicator VIX - lower high and divergence, I expect one more low before exploding higher.
Advance-Decline Issues - nearing the oversold level.


HURST CYCLES
Day 57... second very long daily cycles which is unusual. It feels like we have the 40 week cycle high which I was talking about.... and the 40 week cycle(bottom-to-bottom) consisting of three long daily cycles instead of four daily cycles.

Week 23... this 20 week cycle is getting stretched, smells more and more like we have reversal.