Short term - the first leg lower looks like impulse to me with extended fifth wave. Wave 1 of an impulse does not fit - neither time nor price targets. I think we have a-b with c to follow. The most common measurement is c=a and it is getting interesting:) - this will hit the trend line connecting the lows from March and June(see daily chart).
As long as the resistance zone around 2960 holds the move lower continues. Above it and we have something else.
Intermediate term - so far the price action confirms the expectations from last week - zig-zag lower testing the last two lows slightly below MA200 which should be the low of the daily cycle. MA10 and MA50 has been tested, the move continue to follow the script from October 2018 even the candles and indicators look the same, so next we should see wave c lower. Now we wait and see if the pattern plays out next week.
Long term - I expect decline in three waves with the first important low in October - a/C/IV and 40 week cycle low.
MARKET BREADTH INDICATORS
Market Breadth Indicators - some were close to oversold levels, but not really oversold or something to suggest a low.
McClellan Oscillator - oversold level, reset and turn lower again.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - sell signal.
Percent of Stocks above MA50 - retraced in the middle of the range, I want to see oversold level for a low.
Fear Indicator VIX - resetting lower after explosive move higher.
Advance-Decline Issues - in the middle of the range and turned lower again, I want to see oversold level for a low.
HURST CYCLES
Day 48, with this strong bounce it looks like possible daily cycle low, but this time I will follow the pattern and wait for one more decline.
Week 10 for the 20 week cycle. If you look at the DAX or EEM you will see the following:
- the current 20 week cycle made a top at week 5/6, which means bearish left translated cycle and it is declining already.
- it broke below the low of the previous 20 week cycle, which is confirmation that the cycle of higher degree(40 week) made a high and it is declining.
Short said forget about new highs before the 40 week cycle makes a low in October/November.
On the surface the US markets look stronger moving higher for 8 weeks, but in reality it is just sideway move in July and 10 points higher in week 8 above week 6. So in theory stronger in practice the same like DAX and EEM.... I can not imagine how the US markets will decouple and suddenly make higher highs now or in September.
Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
The setup was negated at day 7, which is another sign that we do not have an impulse structure rather corrective decline.
Hi Krasi, great work! I have been thinking about the last two drops in this whole correction and one thing that doesn’t seem to fit is the symmetry of the expected low with your 4 year cycle low expectation. The last two drops took 2 and 3 months respectively so one should expect only slightly longer drop given the longest fall expectation in this coming wave down. Possibly up to 4 months. November at the latest. This length of time would ensure the symmetry is maintained with those previous drops, regardless whether it’s an expanding triangle or expanding flat. But it would also contradict your 4 year cycle low expectation which you think will be in Q2 of 2020. It appears you have maintained this expectation. How do you reconcile these two very different timings?
ReplyDeleteI do not have idea why I should satisfy some imaginary symmetry....
DeleteFor starter most likely this declines are part of bigger pattern wave A lasting 11 months.
When you say corrective decline rather than impulse are you saying this in relation to the long term view rather that the short or immediate term view?
ReplyDeleteThe decline now in August is expected to be a zig-zag.
DeleteIf we do not see impulsive break below minor support around 2885 than we have bigger b wave, which should test important resistance - https://imgur.com/a/YAB0plP
ReplyDeletelooks like we have a clear break on large volume thru that level.
Deletehas the C wave started at that 2940/61.8% retrace level? the move has started to make new monthly lows?
thanks!
Waiting to see impulse for confirmation.... still skeptical.
DeleteMy suspicion was confirmed:) Initial thoughts - bigger b wave and likely daily cycle low behind us.
DeleteOverlapping so it is not an impulse to the upside either.
nice call!
Deleteso looks like market is headed in a larger b wave up to around 2960 or so at which point the market should turn back down to a c wave lower targeting new lows below the a wave low of 2775 into the end of august? is this your expectation?
also, your thesis of an abc would be invalidated above 2960? what would you expect if it exceeds that level.
thank you!
At the moment I expect two zig-zags, around 2990 we have two Fibo measurements a=c the current move up and A=C both zig-zags will have the same size.
Deletehi krasi
Deletetoday's action looks like the start of the c wave of wave B. possibly a 1-2 off the test of 2820 and working on the 3rd wave into the close? if this is correct, we can reach 2900 or above? what do you think?
in short- i think the ST low is in. where do you think this c wave can head to?
thanks for ur collaboration.
At the moment it looks like flat pattern so resistance around 2960 should be tested.
DeleteTrump family office must be raking it in with all the heads up on tweets.
ReplyDeleteThankfully we can follow Krasi's views and play legally :)
How many days going up for the next daily cycle?
ReplyDeleteThis is the wild card at the moment - time... I wish I knew for how long it will move higher:)
DeleteIf 6 August was daily cycle low then the 40 week cycle low will be in september instead of october
ReplyDeleteNot necessary, even shorter cycle like 40-45 days is the first week of October.
DeleteSince 2016 the cycles run with nominal length or longer which is mid-October or later.
Yes, i am thinking in 8 october. It will be 15 days going up( 27 August ) and 30 days going down( the 8 october ) for 45 days of daily cycle
DeleteKrasi, do you maintain that view based on where futures are now? Would you cover shorts here?
ReplyDeleteThe two options are continuation lower or we have bigger b and this is just a flat in the middle of it.
DeleteIf I have to bet I would say the second one.
If already short wait and see how it develops the day. The first half should be lower and see what happens after 14 o'clock.
Thanks for the advice!
DeleteIs this 1/c now, target 2700 by Sep?
DeleteSeems tricky price action still.
I have been short via Sep puts, trading this August move has been tough regardless.
I think it is one big corrective pattern, c wave lower just does not fit.
DeleteI expect today the move lower to be finished and 2 weeks higher.
Personal opinion it is time to take profits.
I think i was wrong and 6 august was not a daily cycle low. I think 2780 for the daily cycle low
ReplyDeleteNot so fast it could be 1/c or it could be just a flat and the indexes are still in the middle of b wave. If you expect 15 days up it should spent this time somehow and flat is the perfect pattern for wasting time.
DeleteHi Krasi, what is your take on 10yr yield?
ReplyDeleteWave c or 3 finishing and we should see something higher. If it strong we have reversal, if it is corrective it is w4 and we will see one final move lower.
DeleteKrasi, How do we play the C wave with good risk/reward from here? You say it could still be a flat or 1/c but when is that no longer the case and safe to pound it on the short side with these 3x levered short ETFs? Thanks!
ReplyDeleteI do not see 1/c any more. I think it is big corrective pattern. The move lower should be soon over with daily cycle low, then 2-3 weeks higher and then comes the c wave and the time to pound it with the 3x levered short ETFs:)
DeleteThe more I watch the charts the more I think we have both - daily cycle low and big corrective pattern.
ReplyDeleteFirst - indexes like RUT,NYSE,DAX made lower low, DJI like double bottom, SP500 the lowest close yesterday plus we never saw new daily cycle triggered. So we are close to the bottom of the current daily cycle.
Second - if we are close to a bottom acceleration lower in third wave does not fit at all and this is the same message from the indicators and the pattern - time for a low.
NDX made higher high, SP500 double top and you can try to count yesterday as the first wave lower, but what to do with NYSE or RUT which made lower high and lower low? Count different pattern? No, I think all indexes have the same pattern - flat.
NYSE chart - how to count third wave when we have zig-zag lower with divergence - https://imgur.com/a/JVB9MMt
All indexes are bouncing between MA50 and MA200 and I think it is time for daily cycle low and the next bounce to MA50 to finish corrective pattern flat followed by the next sell off for 20w/40w cycle low.
nothing is bouncing. just more sellers. i am long.
DeleteHave patience it will take some time... bottoming is possible with one more lower low.
DeleteHey Krasi, I agree I think this is one big corrective pattern in the form a flat since May, I think we bottom early next week then rally. My question is when do you see the next peak? If Jan to May is A. Then this is B, we still have C coming up, that could last the whole rest of year, right? This is one big corrective pattern and therefore we should expect a big fall or a large corrective afterwards. Which leads me to my next question, What is this a correction of? COuld this be one large expanded flat from Oct last year be a correction of 2011 till 2018 or is it a correction of all since 2008? Thanks.
DeleteGreat analysis Krasi, now begs the question how to trade this. Can we say 1) if not already short, wait for next low to position long for rally to year end?
Delete2) if short, think about locking in gains?
How does current price action stack up with your earlier analysis of a cycle low close to 2700 in Sep/Oct?
We haven't seen that move yet in time or space.
Anonymous 1
DeleteI meant something different - bigger corrective pattern and flat for this b wave form the first hourly chart. The Indexes have reversed and there is no more new highs.
The correction begun in Jan.2018 and corrects wave three from 2011.
Anonymous 2
DeleteThe next short entry is around resistance and MA50 2950-2960. Nothing changed this b(first chart) will take longer and it should be bigger flat, but this does not change the levels and the bigger picture.
Minimum target is around 2730, I think we should see 2600 in October.
if sp goes down for 3 weeks more to beginning of September, is it possible that it is a daily cycle low of 60-65 days and 40 week cycle ?
ReplyDeleteNo...
DeleteIt feels like crash is coming..
ReplyDeleteBullish at a top and bearish at a low..... start reading charts and not relying on feelings:)
DeleteI have been bearish for quite some time Krasi, especially at the top..:) the downside forces will finally drive the markets down to clear the path for the bulls again.
DeleteKrasi, can you see positive diversion in the dayly rsi of s&p500?
ReplyDeleteYes, it looks like divergence.
DeleteTo me the spx chart looks exactly like mid-May, we are in second leg lower
DeleteSee closely the corresponding days 21.05 and 13.08
DeleteI was looking the same, but Tuesday made higher high which changes completely the pattern.
You can not have w2 and continuation lower any more like in May.
If you follow the pattern today should be gap lower... and we have the opposite gap higher.
You're talking 5pts higher...that seems dramatic to me to change pattern. It closed lower that day, closing price more important to me. Guess we will see. Thank you for your response
Delete