Weekly preview

Short term view - we will see 10-20 points higher, but than we have to wait and see what happens.
Intermediate term view - higher in the next 6-8 weeks.

One more leg higher as expected. Short term waiting for confirmation to see which pattern is playing out, but intermediate term the indexes should be higher in the next 6-8 weeks.

So far the move is only three waves and it is difficult to say what pattern we have.
If it is only corrective a-b-c than it should find resistance around 1950-1960 and turn lower.
If it is an impulse we should see the price in the 1980-2000 area next week.
I think we will see a top next week for a-b-c, but that is just a feeling no prove at the moment. Wait for confirmation if you want to short.


TECHNICAL PICTURE
Short term - the bearish scenario(red) the price will test MA200 for a-b-c and turn lower to test the low. The bullish scenario - the price continue higher above MA200 and reaches the resistance zone.

Intermediate term - the both patterns. Next week we will know more, but in both cases I think there is more to the upside in the next several weeks.

Long term - another bullish week, the weekly chart does not look bad at the moment. No change - expecting move higher for at least several weeks.

MARKET BREADTH INDICATORS
The Market Breadth Indicators - turned up from very oversold levels. They are sending bullish message. Worst case the indexes making lower low and the indicators higher low with divergences.
McClellan Oscillator - strong move above zero.
McClellan Summation Index - buy signal.
Weekly Stochastic of the Summation Index - still in oversold territory, but ready to turn up.
Bullish Percentage - turned up above oversold level 25.
Percent of Stocks above MA50 - turned up above oversold level 25.
Fear Indicator VIX - turned lower and we have lower top with SPX making lower low.
Advance-Decline Issues - turned up from extremely oversold levels.


HURST CYCLES
It looks like we have 20 week cycle low. If this is the case than the next 40 day cycle has begun.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Buy setup has been finished on the weekly chart. If next week we see a close above 1920 we will have a price flip to confirm bullish outlook for a few weeks.

The monthly chart and the comparison with the previous two bear markets. It develops exactly like in 2000 and 2007 - first leg lower, rally higher to test MA20(red arrow), second leg lower(green arrow),a pause for 2 months, than the real bear starts.
The differences - the weekly indicators are correcting lower for a long time saying we are in a mature correction not at the beginning and the moves lower are much more shallow. In 2000/2007 the two moves lower are 18%-20% now we have 12%-14%. You can see that the price could not move much below MA20. That is why I think this is a huge correction, but not a severe bear market which will cut the prices in a half like 2000 and 2007.

When I watch the charts EW,market breadth definitely we will see a move higher for two months like 2000/2007, so even if you are a big bear just have patience and wait until March.

Weekly preview

Short term view - more to the upside.
Intermediate term view - higher in the next 6-8 weeks.

We saw up and down days finishing a diagonal followed by a reversal, so no surprises. The big boys as always pushed hard lower more than 60 points before reversal. This is typical shaking weak hands. I hope you stayed calm and did not turn bearish at the lows - the pattern and market breadth were clear that we are close to a low.

I think the indexes hit an important low. We have reversal candles and divergences on the weekly charts. Probably February will be choppy so that the oscillators on the weekly chart turn up, for an example the histogram still points lower. The most bearish pattern I can see at the moment is a retest of the low with lower low even than a multi week move higher should follow.

The question is if we have correction single zig-zag and a move to new ATH should follow, or we will see something more complex - combination correction. I do not know what will happen at the moment, but in both cases we should see a move higher for 2-3 months so that the traders forget the pain from August and January.
My preferred scenario is a complex correction because looking at the DAX it looks like in the middle of something... it does not look like finished pattern.
Keep it simple trade on the long side and we see what happens and how the charts look like later in March.

Below you can see charts of the NIKEEI and DAX indexes. Again like Russell2000 I can not be bearish looking at this charts and market breadth hitting extremes(not just oversold) at the same time.

P.S. Crude Oil and emerging markets EEM/EWZ/RSX made an intermediate term bottom. It is very difficult to say if this is the BOTTOM or there will be one more move lower. Several weeks higher and one more push lower will look better. If you are interested in long term you can open some positions and add on the next lower/higher low(or take profits and enter again on the next low).


TECHNICAL PICTURE
Short term - I expect at least one more leg higher. Red is the bearish scenario with a lower low. Even in this case short term we should see one more leg higher for an a-b-c.

Intermediate term - I think the indexes will move higher in the next 2-3 months. Than we will see which pattern is playing out - X for complex correction or just continuing higher.

Long term - no change. Bullish reversal candle from MA200 expecting move higher for a few weeks at least.

MARKET BREADTH INDICATORS
The Market Breadth Indicators - hit extremes and turning up.
McClellan Oscillator - sharp reversal from oversold levels.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - in oversold territory, ready to turn up.
Bullish Percentage - turning up from oversold levels.
Percent of Stocks above MA50 - turning up from extreme lows.
Fear Indicator VIX - turned lower and lower high compared to August
Advance-Decline Issues - turned up from extreme lows.


HURST CYCLES
There is a lot of room for interpretation so I am showing the big picture. I have shown this charts already so nothing new - the two scenarios which make sense for me and the cycles match the average length of the 7 year cycle for SPX.

It is possible, but it does not feel natural...

It looks better and because of the DAX pattern this is my preferred scenario.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Week 8... the buy setup will be finished, I doubt that we will see a close above 2045 next week.

The previous three "crashes" - sharp reversal with bullish candle hammer followed by lower low, V shape bottom, higher low. It is never the same, but usually the bottom is tested. Given the very negative sentiment V shaped bottom has the lowest probability.

NIKKEI - like Russell2000 I can see only A-B-C...

DAX - looks like unfinished pattern. I think we are in a huge X wave. The index made lower low this week so you can not count 1-2 from October 2015 for the bullish scenario. I think it is a flat correction.