Weekly preview

Short term view - one more minor high and lower next week.
Intermediate term view - the markets are close to a top and we should see a few weeks lower.

Higher as expected, but not convincing despite the "strength". On the hourly/daily charts are shown all possible scenarios which I see so you can pick your favorite. I think the triangle is dead it takes too long and diagonal has the same trading pattern anyway so I removed it.

Why I am not bullish - because when I look at cycles,indicators and market breadth I do not see a move which is beginning I see a move which is finishing. It took two weeks for a sell off and 17 weeks so far to retrace half of it.... very bullish. When an index is strong it will just make a new high RUT/NDX made it already twice.
Cycles and indicators are pointing to important low early April and one move which begun early April not three different waves(wave E, w1 and w2). Because of this and the mature cycles the scenario with third wave has very low probability and in the bullish case we have diagonal for wave 1 of V or in the bearish case wave 2/B/X or what ever it is.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - one more high is needed for a finished impulse from the last low. RSI is showing the typical pattern for a finishing wave - trend line break/test/divergence. All scenarios so wee can build our trading plan.
- very bullish 1-2 i-ii green labels. For me low probability. The price should pullback for 2-3 days and blast higher above 2900.
- bullish the top of a diagonal yellow labels. The price should drop with a corrective wave to the lower trend line of the channel
- bearish case - big bearish flag for wave B/X/2. We should see impulsive decline at least to the lower trend line of the channel.

Intermediate term - the same on the daily chart. For me RSI says we have one wave from the April low and not three distinct waves.

Long term - I think there is a danger that we are seeing the last rally higher, which I am talking about all the time. Again RSI is not behaving like broken trend line and retest with the final high, it behaves so far like the trend is over.

MARKET BREADTH INDICATORS
Market Breadth Indicators - nothing new Advance-Decline Issues and McClellan Oscillator with several lower highs, VIX below 12 a lot of complacency again.... I do not see how this is the beginning of wave 3, this is the end of a move.
McClellan Oscillator - several lower highs with divergence.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal in overbought territory.
Bullish Percentage - in the middle of the range.
Percent of Stocks above MA50 - heading higher nearing the overbought level.
Fear Indicator VIX - readings below 12 and a lot of complacency again, it does not looks like the indexes just starting the strongest wave higher.
Advance-Decline Issues - several lower highs with divergence.


HURST CYCLES
Day 8 of the next 40 day cycle.

Week 9 of the 20 week cycle. I think the important low was in April(40 week cycle with average length 33 weeks) that is why we have 9 weeks "rally". It is consistent with the daily chart above. One 20 week cycle consist of two 40 day cycle and second one is running now.
Cycles are the main reason because I am not bullish. It will be very unusual if we see suddenly the price shooting up vertically at the end of a cycle after months doing nothing at the beginning of the cycle.
- the top-to-top 20 weeks cycle which I have shown last week is 19 weeks old nearing the top. We have 2 weeks lower and 17 weeks trying to retrace. This is not a bullish behavior.
- we have the current 20 week Hurst cycle at week 9. The average length is 14-18 weeks so 2/3 to 1/2 is already behind us. The strongest part of a cycle is the first half of it and not the second half or the last 1/3.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Week 8 of a sell setup. Probably it will be finished it is important what happens after that, how deep the decline will be.

Weekly preview

Short term view - higher I think.
Intermediate term view - the indexes are close to intermediate term top.

Volatile week sharp sell off to the support level and bounce higher... at the end more sideway price action.

To sum up all scenarios:
- the bullish case - wave 3 running. I do not see how this mess is a third wave. I do not see neither indicators nor market breadth nor cycles or something else to support this idea.
- the less bullish case diagonal or wave E triangle. From trading perspective they are the same - deep retracement, higher low and strong rally.
- the bearish case - 1-2 i-ii lower. I do not believe it and indexes like RUT/NDX do not support it.
- the less bearish scenario - much bigger corrective pattern is running. I have already mentioned it a few times.
All I see is corrective price action in the last two months, strength is missing. The scenarios which are probable for me are the the less bearish/bullish pattern shown on the daily chart. Maybe RUT looks strong, but if you see NYSE/XLF there is no strength only weakness... even the triangle looks too bullish.


TECHNICAL PICTURE and ELLIOTT WAVES
Short term - support tested and a bounce.... only a-b-c so far. Around 2755 wave c=a so probably a few more days higher. Unless we see strong rally above 2760 the pattern is diagonal or D from a triangle and the next move is 100+ points lower.

Intermediate term - just waiting to see which one will play out. If we have a diagonal or triangle(green) MA200 will be tested one more time and finally strong rally begins. Or we have bigger corrective pattern(red) and wave X is running followed by another zig-zag lower.

Long term - nothing new the sideway price action continues which is not bullish. From 9 weeks "rally" we have 5 green and 4 red weeks. For DJI it is 4 green weeks and 5 red weeks and for NYSE 3 green and 6 red weeks. That is why RSI is just flat and testing the broken trend line. That is why the histogram is already close to zero and the price is doing noting. That is why the angle of ascend is small. I do not know how to call this bullish... after 2 months I would call this bearish.
Unless we see 100 points higher in the next 1-2 weeks it is what it is - crap.

MARKET BREADTH INDICATORS
Market Breadth Indicators - are weak, looking at the VIX, Advance-Decline Issues and McClellan Oscillator I see intermediate term top even if we see higher high. I do not see conditions for strong rally wave 3.
McClellan Oscillator - series of lower highs.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - buy signal in overbought territory.
Bullish Percentage - in the middle of the range.
Percent of Stocks above MA50 - in the middle of the range .
Fear Indicator VIX - do not expect levels 9-10, I think the VIX is making a low and the indexes a high.
Advance-Decline Issues - series of lower highs.


HURST CYCLES
Day 40+3... 40 day cycle low is possible.

This is the chart with cycles counting top-to-top/bottom-to-bottom(not Hurst cycles), which I have shown once.
We have now 4 consecutive weeks closing above MA10 which means the top-to-top cycle is now rising heading for the next 20 week cycle top. The problem with the bullish case is that the cycle spent most of the time moving lower and it is already 18 weeks old, which is weak cycle. The behavior matches corrective move and not the beginning of a rally(wave 3 rally another 1-2 weeks higher to finish corrective pattern is ok) .

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Week 7 of a sell setup. Maybe it will be finished with a diagonal/triangle... or negated. Both cases are not very bullish