Weekly review / Седмичен преглед

Short term view - still working on short term bottom followed by relief rally
Intermediate term view - lower low and intermediate term bottom second half of June

TECHNICAL PICTURE
Nothing interesting this week. As expected bottoming process. Some relief as expected, but not much strength. Probably the traders are cautious because of the long weekend.
Short term the picture is unclear and with the long weekend its difficult to predict something. The formation looks like a triangle. The price is bellow the EMA50. The MACD is at the zero line and it looks like it want to plunge lower. The Histogram is not looking better either. Best guess - move lower with divergence before the expected relief rally. Lets wait for the opening on Tuesday for more information.

The Histogram is moving higher so any move lower should be short living and make a divergence. So I will stay with the prediction that we will see at least 1340 before any serious sell off.

MARKET BREADTH INDICATORS
Nothing changed.
The momentum indicators like McClellan Oscillator are working out the oversold conditions. The Trend following indicators are telling us that the move is still not over.
McClellan Oscillator - working out the oversold conditions.
McClellan Summation Index - the move on the downside is not over.
Weekly Stochastic of the Summation Index - the move on the downside is not over.
Bullish Percentage - the move on the downside is not over.
Percent of Stocks above MA50 - working out the oversold conditions.
Fear Indicator VXO - pullback
Put to Call Ratio - working out the oversold conditions.

CYCLES (TD - trading days)
Short term - probably bottom next week, which will mark the end of the 20TD cycle and the beginning of the next one. That will fit perfect with relief rally.
The bigger picture - 3 to 5 weeks to reach a 20 week and 40 week cycle bottom. The previous 20 week cycle lasted longer - 23 weeks, so I expect this one to be a shorter one. Currently its 12 weeks old so something between 15 and 17 week to see an intermediate term bottom.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Nothing changed - Countdown is at 5 now and Combo is at 10.
If the indexes move lower next week we could see Combo count marking 13.

Weekly review / Седмичен преглед

Short term view - relief rally
Intermediate term view - lower low and intermediate term bottom second half of JUNE

TECHNICAL PICTURE
I was expecting a move lower for 2-3 days but not so much. SP500 hit the first target ~1290. I thought this will happen in June... but it is what it is!!!
So whats next? - When I look at the McClellan Oscillator and the Put to Call Ratio(see the links bellow) I see a lot of bearishness. When this short term indicators reach such extremes the result is always relief rally and a lower low, which marks THE LOW for a particular move.

Short term - no signs of a reversal.Probably 2-3 days bottoming process and a relief rally. Targets are ~1340 resistance and 38,2% Fibo retracement, ~1360 resistance and 50% Fibo retracement.

Intermediate term - SP500 touched 38,2% retracement for the move since October 2011. I think in June we will see lower low. The next levels are ~1270 and ~1250 which is support level and 50% Fibo retracement.

Long term - On the weekly chart the indexes have reached my target the EAM50. Lets see where we will find a bottom. If SP500 stays above 1250, the bullish scenario is still possible. If not the target is 4 year low in Q1 of 2013 reaching at least the October 2011 lows.

MARKET BREADTH INDICATORS
The momentum indicators like McClellan Oscillator are screaming that the rubber band is too stretched - expect a bounce.
The Trend following indicators are telling us that the move is still not over.
McClellan Oscillator - take a good look at the chart. Always when such levels are reached a bounce is following. Another important thing - that is not the low. Expect lower low
McClellan Summation Index - the move on the downside is not over.
Weekly Stochastic of the Summation Index - the move on the downside is not over.
Bullish Percentage - the move on the downside is not over.
Percent of Stocks above MA50 - it's time for a bounce
Fear Indicator VXO - pullback and a move to 28-30 will mark the end of this intermediate term move.
Put to Call Ratio - crazy levels, everybody are on the bearish side of the boot

CYCLES (TD - trading days)
I am not showing a daily chart of the smaller cycles. I think that there is cycle inversion, but I am not a "cycle guru" so I prefer not to comment something that I do not understand:) The 20 day cycle is moving for 7 days lower instead higher. Probably for the second half of the cycle we will see the prices moving higher, which will correspond to relief rally.
The bigger picture - 4 to 6 weeks to reach a 20 week and 40 week cycle bottom.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Sequential has been completed last week. Countdown is at 4 now and Combo is at 10.
My interpretation:
- Combo finishing next week and a bounce, Countdown finishing later in June. That means three days with lower lows.
- continue lower to finish the Countdown. That means continuing lower with pauses for a day or two.