Short term - the obvious pattern is zig-zag up and zig-zag down with the same size which is flat correction and the next move should be final rally to resistance for b. As I said I am open for surprises like one more lower low for slightly different flat (red a-b-c).
Intermediate term - the price is bouncing between MA50 and MA200. If I am right about the flat, resistance and MA50 will be tested one more time and then the direction should be down until we see 40 week cycle low in October.
The indicators are turning positive so the most bearish outcome which I see is one more lower low(see above), but I do not expect the (c) wave.
Long term - I expect decline in three waves with the first important low in October - a/C/IV and 40 week cycle low.
Two bullish weekly candles in a row bouncing from MA50... this does not fit with another plunge lower more like something higher is expected - this is exactly what the shorter term charts daily/hourly are saying.
MARKET BREADTH INDICATORS
Market Breadth Indicators - signs for short term bottom, but nothing suggests intermediate term low.
McClellan Oscillator - oversold level,divergence and now close to zero - short term bottom expected.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal, in oversold territory.
Bullish Percentage - sell signal, in the middle of the range.
Percent of Stocks above MA50 - close to oversold level for second time - probably short term bottom.
Fear Indicator VIX - up and down, it should reset before continuation lower.
Advance-Decline Issues - turned up and in the middle of the range, it has not even reached oversold level so this should be just short term bottom.
HURST CYCLES
Day 1? Last week it was too early for a low and it was not confirmed. Now we have probable daily cycle low at day 52 and waiting for confirmation or final low next week. Price is still below MA10 and RSI below the MA so no confirmation so far.
Week 11 for the 20 week cycle, time for mid-cycle bounce.
Thanks Krasi, to me this downward action is a correction of the Jan to May move, in other words this is only b of B. I think we will have one more rally into October/November after we bottom near 2720. After that we will have C wave down.
ReplyDeleteb/B is long dead... for that you need impulse because your pattern is expanded flat, than count is 1-2 i-ii with target 2550, second daily cycle already running lower and plunge iii of 3 next week.
DeletePattern and time does not fit.
If we see shallow zig-zag to 2720 and new highs it is not B any more. If we see impulse to 2550 it is not b/B.
You are trying to fit the pattern to your expectations, without any evidence for that.
Thanks for the response, I'm not fitting anything. I'm just telling you what happened so far. Actually it is not b/B because the pattern is more complex, it is a WXY pattern and we are finishing X currently. My main point was that the corrective rally from Janaury isn't over.
DeleteYour top of W is in May quote "correction of the Jan to May move", which makes X expanded flat(higher high in July) which does not work as explained above.
DeleteTiming does not fit October/November is a important low not a high. The only way to make it fit is again second daily cycle already running lower and it should plunge lower in the next 3-4 weeks to finish 40 week cycle, in this case the counts point much lower.
You are betting on rare double zig-zag corrective pattern which makes several new ATHs target 3300-3400 with major discrepancy in time..... good luck with that.
You are not telling me what happened so far you are explaining me what the market should do according your imagination ignoring the price action and time.
After looking at the chart again, you may be right. I think we can head down in 3 zigzags, right now we are in c of 1, basically a diagonal. I think we test June lows, then head back up to test 2920 again for 2 then drop in 3 during sept/oct. This would be C of an expanded flat. Thank you.
DeleteDJI makes a lower low on 15th August so it is more likely we have already seen daily cycle low
ReplyDeleteIn tradingview sp does not make a lower low on 15th August so the daily cycle low was on 5th August and now it is day 7 of the new daily cycle
DeleteThe low was not on 5th of August, it has not been confirmed and many indexes made lower lows.
DeleteI mean on your first chart 5 August made a low lower than 15 August, The daily cycle would have started 5 instead of 15
DeleteIs this the top of the flat? It looks like it.. what do you think Krasi?
ReplyDeleteIdeally we should see waves 4 and 5 to finish c... impulse is needed. The futures show more clear picture.
DeleteBut the pattern develops too fast and I think the next leg lower will be the daily cycle low.
Market breadth and the indicators will need a few weeks to reset.
What would this look like? Does this imply the next leg lower will not reach last week's lows?
DeleteKrasi, What is the next more important hurst cycle above the 9 year cycle?
ReplyDelete18 years cycle.
DeleteWhen started the last one ?
ReplyDeleteI think 2009.
DeleteIndicators and market breadth are saying that a reset for a few weeks is needed. If we have a daily cycle low the price should decline for 2 months. So either the market crashes to ignore the indicators (crashes do not last 2 months) or we have not seen the daily cycle low and the next one will cause move higher for a few weeks.
ReplyDeleteThe pattern develops too fast, that is why I think we still have not see the daily cycle low and the EW count should be adjusted as shown on this chart - https://imgur.com/a/C2N4Syg
I like very much this last option
Deletepossible we crash... fed day tomorrow..
DeleteFor how long? - a few days which is what I am expecting.
DeleteHi, Krasi, can you help explain "a reset for a few weeks is needed. If we have a daily cycle low the price should decline for 2 months.? By reset do you mean indicators move up to middle/zero? And why "If we have a daily cycle low the price should decline for 2 months" Maybe you can post a picture about this path/possibility? Thanks.
ReplyDeleteIf the first daily cycle is finished the second one is running and when it turns lower which should happen soon according to the pattern it should run another 40-50 trading days lower or 2 months.
DeleteNeither the pattern nor market breadth and indicators look like we will see two months steady sell off.
The opposite is the case - nearing a low and reset is needed which usually takes a few weeks.
Based in this information the first daily cycle has not bottomed and the indexes should take the path shown above.
nice reason! I think that's related to hurst cycle picture 1 above. About "crashes to ignore the indicators (crashes do not last 2 months)", if crashes quickly, how to fit the daily cycle pattern since they don't take 2 months? Does it mean that several days crashes would be the real first daily cycle bottom and after that several weeks reset still fit the daily cycle picture?
DeleteYes, another week lower is not a problem. The only significant move higher before the 40 week cycle low is this the second daily cycle.
DeleteI don't know why you think we are making a zigzag yet. It's still too early to call, this next drop could be a wave 3 and not a C wave, we could be making a diagonal for wave 1 in that case, wave 4 and wave 5 may be truncated or short. then we rally in September for wave 2, then drop the rest of fall. This whole move from October last year can be an expanded flat. imo, that is still possible until the pattern is complete.
ReplyDeleteBecause pattern and time does not fit with impulse.
DeleteWhen September is wave 2 how long it will take for the impulse to be finished? This year and the 4 year cycle low in at least Q2 2020.
Actually I'm not sure anymore, we might be in wave 2 rn, and the next drop is wave 3 going to 2400. It is very hard to say. I think the impulse can complete by Nov/Dec. All I can confidently say is that we topped. I'm tracking TVIX, and if we drop below 2800 we would break the descending TL from 2011, that fits with a wave 3.
DeleteThis is the problem - according cycles Nov/Dec is just a low on the way lower and not THE LOW.
DeleteThat is why I have to adjust the pattern to be in sync with time.
There is plenty of shares which finished their third wave from 2009 now.... I do not expect them to correct for 3 months with impulse.
But, really if we break through June lows it will be a waterfall and feel like wave 3. The only way to know is to see how the pattern develops in this next move down.
Deletewas today a w4 move, then w5 to reach 2940-2960? or do you think the move down has started already at 2932 to below the 2775 low?
ReplyDeletemarket couldnt get anything going today... fed tomorrow is gonna be interesting.
There is only zig-zag lower so far - w4 until we see something else.
Deleteone more high to ~2960...maybe overnight? to finish the wave c of B of wave a? then start the bigger C of wave A into september? or did wave C already start with this morning's false breakout above 2930?
Deletewhat are we thinking here krasi?
The 10-min chart looks like impulse lower and corrective move higher, but reversal must be confirmed with another move lower below 2900. Until than some kind of flat w4 is still possible.
DeleteIt's looks like we are going to see the top or more again
ReplyDeleteIt's looks like by the deep
krasi uvxy target 40?
ReplyDeleteQuestionable, I do not see much to the downside, even if we see lower low for the indexes VIX should make lower high.
DeleteI am not sure how this will translate for UVXY... maybe 38.
19 july cycle daily low of 35 days ?
ReplyDeleteThan this should be the 40 week cycle low, which does not make sense.
DeleteFeels like time to run lower now that monthly expiry out of the way
ReplyDeleteYes, something lower is coming, but it should not be important move lower more likely to test the lows for bearish monthly candle and higher in the first half of September.
DeletePlease let us know when it's 3x short time :) Powell on deck Friday AM, so no rush and maybe we need another week after that to crush vol?
ReplyDeleteI would say in September - then we should see low risk trade lasting longer for weeks.
DeleteNow we should see something lower and then higher with nice profits, but they are for experienced traders - part of corrective pattern.
Volatility is cheap, have been trading versus put options adjusting futures deltas .. seems to be more profitable than trying to predict short term.
DeleteAgreed that mid Sept seems time for acceleration to downside
This is funny - "Please let us know when it's 3x short time :)"
DeleteThat 3x stuff can make you a lot of money in a very little time and it is also very efficient at wiping you out in very little time. :-)
Trading indexes with triple ETFs is not so dangerous... I do it all the time:) Just size the position right and build it in steps not all in at once.
DeleteCommodities like Natgas or gold miners are dangerous, if you do not know what you are doing. There is 30% moves all the time and triple is 90%:) caught on the wrong side is not nice.
I do not see problem trading them too, just you must be experienced and have discipline.
I just know that's what Krasi uses :) I use futures. But just look at JDST, JNUG, SOXL, SOXS...in times when the underlying isn't going straight up or down, decay works in your favor being short the bull or bear 3x depending on bet you wanna make
DeleteKrasi, since you religiously follow 2% and 6% money management rules, it is quite interesting to know that you can use 3x ETFs and still be within the limits. But like you said, with right position size, it is possible to make a profit.
DeleteYou make a decision how much you are ready to lose. You look where you are wrong and calculate accordingly the size of the position. This has nothing to do with leverage 3xETF etc.
DeleteThis will work even with the most dangerous product:) all you need is discipline.
The negative is your position is smaller and you do not make tremendous profits - those who has problems with leveraged product understand only the "tremendous profits" part:)
What I do to maximize the result is trading a little bit more, but not too much - daily/20 week cycle lows which is something like every two months. And I do not go all in instead in portions this way I can build bigger position.
,krasi, when we finish 40 weeks cycles?
ReplyDeleteOctober/November
DeleteAbout the daily cycle of July 19 if we forget the ew count I think it's possible
ReplyDelete19 july 35 days, mid september around 2750 40-45 days of second daily cycle. Then 14-15 weeks of 20 week cycle and 37-38 weeks of 40 week cycle
It is not about EW count it is about that a new daily cycle was never triggered. The first possible low is 15.08. Anything else is "I wish I see a low and a new cycle because it fits my view".
DeleteKrasi,
ReplyDeleteWhat do you make of todays gap up of 2930 and big down move, only to close at 2926. Is it the start of decline from 2939 high or do you still see possibility to 2955 or more.
My answer to that question is that we broke the downtrend on Thursday, and then tested the downtrend line by closing right on it today - communicating to the market that the correction is over. We also have Powell speaking tomorrow at 10am and you can't start a huge sell off before a big event like that, he can literally create money out of thin air so mkt waiting to at least get that out of the way...Anything can happen, but personally I think if you are already short you need to at least protect yourself for a move 2980 in the near term. Lots of P/C options traded since selloff started, so we could also just trade sideways for a week as everyone takes profits on those. 2980 definitely in play here imo, or Powell can break the mkt tomorrow and his speech is the only thing holding this selloff from happening....good luck.
ReplyDeletesorry meant to say broke the downtrend on Wednesday
ReplyDeletealso depending on how you draw trendlines (to closing prices or high prices) it isn't necessarily broken...but open to Question and keeping things interesting... so seems like we gotta trade flat to lower tomorrow to me
ReplyDeleteQuestionable until we see confirmation - the 10-min chart looks like impulse lower and corrective move higher, but reversal must be confirmed with another move lower below 2900. Until then some kind of flat w4 and higher 2960-2980 is still possible.
ReplyDelete