If we assume that the top of the market is ahead of us (~1,750), then we are in one of the last legs up.
This last wave then began at the low of June 24 (1,560).
Wave-1 ended on July 1 at 1,626.
Wave-3 ended on July 23 at 1,698.
Alternatively, it ended instead on Aug 2 at 1,709.
This is where the dichotomy is:
If Wave-3 ended at 1,698 (this is where our indicators point to as well as the Fib ratios), then the run up to 1,709 is a Wave-5 that failed prematurely. In this scenario, the market drop since the 1,709 top is bearish, and the a-b-c correction we spoke about yesterday is valid. To this end, we have a 75% retracement of the 1,709-1,627 drop, which is adequate in terms of correction. Therefore, we should see the market unfold downwards in impulsive waves. That would be if for example the tapper is going to happen and at a larger degree, which will signal that the FED is pulling away the juice and the 1,709 top is very significant.
But what if the FED proceeds with tapper light or no tapper at all?
Then we are looking at the bullish scenario introduced above:
Wave-4 ended on Aug 28 at 1,627 (no overlap with the top of Wave-1).
In this scenario, we are in Wave-5 of the uptrend that began on June 24:
This smaller wave-1 ended on at 1,664 during the first few minutes of the Sep 6 trading day.
Subsequently, we have been in wave-3 during the last few days, which is about to end (has a target of 1,702-1,703, but it may have ended already).
Interestingly, in both scenarios (bullish v.s bearish), we are expecting a drop here very soon, as deep as 1,665.
So, until we have clarity of the situation, like I have also heard some big boys say, we should just wait and see how next week will unfold.
Personally, I favor the bearish scenario, but because I am cognizant of my bearish predisposition, I am forcing my self to keep an open mind to the bullish scenario.
Saturday, September 14, 2013
Friday, September 13, 2013
Market at crossroads
What we have is either
1) an a-b-c corrective wave up (of larger wave down),
OR
2) a new 1-2-3 wave structure up.
There is no way to tell which one it is right now - we have to wait for next week.
It just happens that the FED meeting will take next week, and depending on their decision and market perception, the market will either go down impulsively, or after a few days of uncertainty, resuming going up towards 1,750 on $SPX, making a new all-time high.
1) an a-b-c corrective wave up (of larger wave down),
OR
2) a new 1-2-3 wave structure up.
There is no way to tell which one it is right now - we have to wait for next week.
It just happens that the FED meeting will take next week, and depending on their decision and market perception, the market will either go down impulsively, or after a few days of uncertainty, resuming going up towards 1,750 on $SPX, making a new all-time high.
Monday, September 9, 2013
our downwards count in jeopardy
Today's close at 1,671 puts our projections at jeopardy.
Tomorrow will be the telling day, as to whether this is a head fake or we will resume downwards.
The reason we are skeptical about this leg up, despite its impressive strength over the last few days, is that the market is still positioned in a downwards view and is short-term overbought as can be seen from RSI(5) on the daily (not overbought on the hourly however, thinking maybe a higher high first tomorrow before any change).
On the hourly, since the low of 1,627 on Aug 27, we have had an a-b-c up to 1,646, b wave down to 1,628, followed by a five wave c up to 1,672 today. If this count is accurate, it looks like a corrective (upwards) a-b-c of a larger declining wave.
On the daily, so far it looks like a larger A wave down to 1,627, a 50% correction or so to 1,672 so far, and it this is correct, then an anticipated wave down. If the market breaks below the recent 1,627 level, then it will likely test 1,590 or so.
Alternatively, we have an new wave 1 upwards unfolding that may reach 1,690 or so, and which means we should see a precipitous drop of about 50% after it tops off.
Tomorrow will be a telling day.
Tomorrow will be the telling day, as to whether this is a head fake or we will resume downwards.
The reason we are skeptical about this leg up, despite its impressive strength over the last few days, is that the market is still positioned in a downwards view and is short-term overbought as can be seen from RSI(5) on the daily (not overbought on the hourly however, thinking maybe a higher high first tomorrow before any change).
On the hourly, since the low of 1,627 on Aug 27, we have had an a-b-c up to 1,646, b wave down to 1,628, followed by a five wave c up to 1,672 today. If this count is accurate, it looks like a corrective (upwards) a-b-c of a larger declining wave.
On the daily, so far it looks like a larger A wave down to 1,627, a 50% correction or so to 1,672 so far, and it this is correct, then an anticipated wave down. If the market breaks below the recent 1,627 level, then it will likely test 1,590 or so.
Alternatively, we have an new wave 1 upwards unfolding that may reach 1,690 or so, and which means we should see a precipitous drop of about 50% after it tops off.
Tomorrow will be a telling day.
Tuesday, September 3, 2013
a-b-c bounce up
From Aug 28 low of 1,627 at the open, we have observed on $SPX an a-b-c structure up: 1,646 - 1,628 - 1,651, with a=c.
On $RUT, the down-trend is more evident with a lower low and a lower high registered today.
On the daily charts, we are observing consolidation of a mid-term down market below the 50 DMA.
AAPL failed to close above $500 again today.
Tomorrow? Hard to predict as volatility is increasing
On $RUT, the down-trend is more evident with a lower low and a lower high registered today.
On the daily charts, we are observing consolidation of a mid-term down market below the 50 DMA.
AAPL failed to close above $500 again today.
Tomorrow? Hard to predict as volatility is increasing
Thursday, August 29, 2013
Trend is down
We have experienced a 2-day bounce here, as the market relieves the oversold pressured from Tuesday's close (RSI < 30 on the hourly at Tue's close).
The bounce was 19 points on the $SPX, in an a-b-c manner: 1,627 - 1,641 - 1,631 - 1,646, with a=c= 14 or so points. This a-b-c pattern is clearly seen on the hourly using Stoch(14,3,3). Hence, the bounce is behaving so far as a correction of a down-ward wave.
So what is this down-wards wave?
We had a peak at 1,709 on Aug 2, followed by wave A down to 1,684 and wave B upwards to 1,700 on Aug 7-8. From 1,700 we had an 18 point drop to 1,682 (Aug 13) that we call wave-1 of C down, followed by an upwards rapid retracement to 1,697 (a 75% correction) on the same day: wave-2 behavior. Wave-3 ended at 1,660 on Aug 15, and after a very short wave-4, wave-5 reached the projected 1,640 target. That was Wave-1 of C.
Wave-2 (upwards) spans from 1,639 - to - 1,669 on Aug 22, a 30 point upwards correction, or 50% of Wave-1's drop from 1,700 - to - 1,640. Book perfect.
From that point on we experienced an impulsive drop to 1,627, a characteristic of wave-3 behavior. The 1,669 - 1,627 drop (42 points) is called wave-1 of Wave-3 (down-wards), followed now by an upwards wave-2 correction since Aug 28 of thus far 20 points (or 50% of the 1,669-1,627 Wave-1 drop). This wave-2 may have a little more upside, with a 75% of 42 or 1,659 on the $SPX.
To this end, the market turned down this morning after reaching 1,646 and touched 1,637. Hence this wave-2 may be over, may be not - we do not have confirmation that it ended yet.
All and all, our hourly and daily indicators point down and the weekly chart as well.
Next major down target is 1,580's.
A daily close above 1,670 invalidates our model and projection.
The bounce was 19 points on the $SPX, in an a-b-c manner: 1,627 - 1,641 - 1,631 - 1,646, with a=c= 14 or so points. This a-b-c pattern is clearly seen on the hourly using Stoch(14,3,3). Hence, the bounce is behaving so far as a correction of a down-ward wave.
So what is this down-wards wave?
We had a peak at 1,709 on Aug 2, followed by wave A down to 1,684 and wave B upwards to 1,700 on Aug 7-8. From 1,700 we had an 18 point drop to 1,682 (Aug 13) that we call wave-1 of C down, followed by an upwards rapid retracement to 1,697 (a 75% correction) on the same day: wave-2 behavior. Wave-3 ended at 1,660 on Aug 15, and after a very short wave-4, wave-5 reached the projected 1,640 target. That was Wave-1 of C.
Wave-2 (upwards) spans from 1,639 - to - 1,669 on Aug 22, a 30 point upwards correction, or 50% of Wave-1's drop from 1,700 - to - 1,640. Book perfect.
From that point on we experienced an impulsive drop to 1,627, a characteristic of wave-3 behavior. The 1,669 - 1,627 drop (42 points) is called wave-1 of Wave-3 (down-wards), followed now by an upwards wave-2 correction since Aug 28 of thus far 20 points (or 50% of the 1,669-1,627 Wave-1 drop). This wave-2 may have a little more upside, with a 75% of 42 or 1,659 on the $SPX.
To this end, the market turned down this morning after reaching 1,646 and touched 1,637. Hence this wave-2 may be over, may be not - we do not have confirmation that it ended yet.
All and all, our hourly and daily indicators point down and the weekly chart as well.
Next major down target is 1,580's.
A daily close above 1,670 invalidates our model and projection.
Tuesday, August 27, 2013
Short term reversal confirmed
Yesterday we said it was a reversal day
Today the down trend was confirmed
All is going according to plan, indicating the Aug 2nd high as significant.
In a provocative way, we had suggested that the April 11 high was a multi-year high, only to be followed by an extension.
Extensions are 5 wave structures: 1,541 - 1,597 - 1,581 - 1,675 - 1,560 - 1,709
We expect this down trend to extend about 150-200 points on the $SPX, reaching the 200 SMA or lower. It is calculated based on the 60 point drop from 1,700 (August 8) to 1,640 (August 21), which we call wave-1 of C, based on which we calculate a target of 1,500 on $SPX.
If our modeling is correct, this short term leg down will reach 1,580. At that lever it will bounce a bit, we will get oversold on RSI and then one more down rapid drop to our lowest target.
Today the down trend was confirmed
All is going according to plan, indicating the Aug 2nd high as significant.
In a provocative way, we had suggested that the April 11 high was a multi-year high, only to be followed by an extension.
Extensions are 5 wave structures: 1,541 - 1,597 - 1,581 - 1,675 - 1,560 - 1,709
We expect this down trend to extend about 150-200 points on the $SPX, reaching the 200 SMA or lower. It is calculated based on the 60 point drop from 1,700 (August 8) to 1,640 (August 21), which we call wave-1 of C, based on which we calculate a target of 1,500 on $SPX.
If our modeling is correct, this short term leg down will reach 1,580. At that lever it will bounce a bit, we will get oversold on RSI and then one more down rapid drop to our lowest target.
Monday, August 26, 2013
Reversal day?
Price action suggests reversal of short-term trend from up to down.
However, we did not have confirmation today - perhaps tomorrow.
However, we did not have confirmation today - perhaps tomorrow.
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