Weekly preview

Some selling, which is not a surprise, but messy pattern and no confirmation for reversal so far. I think the alternate patterns 4/X are dead and now there is a battle around the MAs:) the first dips will be bought - this is how topping works.

Waiting for further price action to confirm or not reversal. In both cases expect something bigger to the downside after another higher or lower high around the elections in the USA.

Glenn Neely - "War Of The Waves" the game is afoot:)
First we have to say the most EW guys have no clue what they are talking about. There is one orthodox EW guy I know counting corrective pattern from 2000(from 2009 is B wave) Peter Temple, but he sees the end of the world DJ from 30k to 3k mega wave c/4 in 2-3 years...
With so many corrective waves in the last few years I will not be surprised if Neely is rigth. This is not how major top and reversal looks like.


TRADING
Trading cycle - sell signal, the declining phase of the third daily cycle is running. It should not last very long, we have rigth translated cycle and 10w low is expected in the next 2 weeks.

TECHNICAL PICTURE and ELLIOTT WAVES
Short term - messy pattern, more price action is needed to make some conclusions. For now it looks like leg lower a/1 and sideways correction b/2. The decline does not look completed. The only way I see to construct impulse somehow is diagonal in white on the chart.

Intermediate term - so far finding support at MA50 as expected. Waiting to see confirmation or not for reversal. If Y is not completed probably more complex Y and this is b/Y

Long term - I think the bull market completed in 2018. Since then a bunch of corrective waves. Currently I think this rally should be a corrective wave of a bigger pattern flat/triangle or x wave. With corrective waves often you have to adjust so stay open minded.
Two weeks in a row selling this happens for the first time since March and the indicators are showing that something is going on. Topping and transition into the down phase of the 40w cycle has begun.

MARKET BREADTH INDICATORS
Market Breadth Indicators - pointing lower in sell mode.
McClellan Oscillator - below zero.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - sell signal.
Percent of Stocks above MA50 - sell signal, in the middle of the range.
Fear Indicator VIX - cooling off as expected.
Advance-Decline Issues - the trend line connecting the lows has been broken and tested now we should see something lower.


HURST CYCLES
Short term cycles - this week should be 20d low as expected. Next week we should see a bounce higher for 20d high.

More about this tricky 20w low - I would say SP500 is the wrong place to watch for it. DJ shows more clearly the idea which I mentioned weeks ago low in mid July. I think the pattern low is on 10th of July trinagle X wave(important cycle lows are at pattern lows), you have 4x20d cycles instead of 3 nothing missing and 20w cycle with length 16 weeks consisting of two symetrical 10w cycles. This is waaaay better than counting a low end of June, which has none of this.
SP500 is wannabe NDX, but it is just a distorted version of DJ/NYSE. Even the NDX has a clear low on 24th of July for 20w cycle with length 18 weeks so a low in June is not very likely.

Week 9 for the second 20 cycle. The 40w high - something is going on RSI is breaking below the MA, but the price is still finding support at MA10. On the other side the sequence is 20w high - 20w low - 10w high(not 20w/40w) - 10w low, which means the 40w high is in two months. So still waiting for confirmation or not for a 40w high, which could be impulse lower or move below the previous 20w low.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Continue to work like a clock for three weeks in a row - setup completed last week and now we have the price flip.

Weekly preview

The market never makes it easy - we saw w4 as long sideways move and w5 as expected to complete a pattern and then big decline, which is not an impulse so far.

From EW perspective - either the decline continues or if it is completed as a zig-zag than it should be w4 from a bigger impulse or another X wave.
Simple TA perspective - look at RSI and MA50 the price does not crash with this setup(strong RSI and well above MA50). If you compare the indicators with Jan-Feb we saw the January high and declne so we should see a second high... higher or lower high is another story.
The trading cycle - we have strong right translated cycle and the high should be tested... lower or higher high what ever.

My conclusion - patience, let the pattern play out and for trading we will have our low risk setup later with a second high. With that said do not get fooled this move from March is completing, the time to take profits is already running. It has begun with the blow off on Wednesday and it will contine with this second high.
To clarify the move lower I expect should be long and corrective nothing to do with the March decline. The EW theory says the waves alternate in time and complexity so do not expect the same outcome.


TRADING
Trading cycle - we have clear sell signal with huge red bar closing below MA10 and RSI clear break lower. Now it is waiting for the current cycle to make a low and for the next one to make a high. The next cycle should be weak and left translated.

TECHNICAL PICTURE and ELLIOTT WAVES
Short term - my primary scenario is completed w-x-y(red). For confirmation we need impulse lower, which we do not have for the moment.
Until then alternate patterns are possible like w4 of a bigger impulse C(white) or another X wave.

Intermediate term - clear MACD divergence, RSI broke the trend line so best case one more high with divergence. On the other side RSI moving too fast too vertical close to 50 already so worst case test of the high to establish new down sloping trend line. Look at how in January MA50 was tested -> bounce -> divergence and then lower. We should see something simmilar with ot without higher high.
I am sticking to my primary count W-X-Y. I do not like how this supposed waves X or 4(which is lower degree subwave) are braking the base channel - this is no go.

Long term - I think the bull market completed in 2018. Since then a bunch of corrective waves. Currently I think this rally should be a corrective wave of a bigger pattern flat/triangle or x wave. With corrective waves often you have to adjust so stay open minded.
The odds are shifting into favor of Neely's pattern - triangle. For NDX this leg is bigger than 161% compared to the previous one so X or b flat is not working, what left is b wave of a triangle.... and I do not think SP500 and NDX have different patterns.

MARKET BREADTH INDICATORS
Market Breadth Indicators - weak pointing lower with divergences for a very long time so nothing new.
McClellan Oscillator - below zero.
McClellan Summation Index - sell signal and divergence.
Weekly Stochastic of the Summation Index - sell signal and divergence.
Bullish Percentage - sell signal with divergences.
Percent of Stocks above MA50 - turned lower below 75 with divergence.
Fear Indicator VIX - spike higher, cool off should follow and higher again.
Advance-Decline Issues - broke the trend line connecting the lows and now testing it, the next move up will be the top or we already saw it.


HURST CYCLES
Short term cycles - it looks like we are close to the next 20d low. The two posible 20w lows accordingly this should be 5w or 10w low.

Week 6 or 10 for the 20w cycle. For now I follow both counts and watch the further price action. We are close to 40w cycle high or we saw it this week.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Setup completed on the weekly chart price flip is close below 3372.