Saturday, November 22, 2014

MTU Weekend Ed. - Gaps and Triangles Galore (11/21/14)

The 13.8% upswing in SP500 from its October low is ridden with unfilled gaps and triangles. Since gaps tend to get filled eventually and oftentimes “quickly” and triangles precede terminal moves or are terminal moves themselves, we monitor them with great interest.

Chart 1 highlights 7 unfilled upward gaps in SP500 for the current upswing. 3 of those 7 gaps produce non-overlapping daily bars and the rest 4 are on an intra-day basis.

Note the location of the 3 daily gaps in relation to Friday’s high of 2071.46: 2056.75 (-0.71%), 2001.2 (-3.39%), and 1909.38(-7.82%). Filling these gaps would require a deep pullback. At the moment, the primary support for this upswing sits around 1986.

Chart 2 highlights 3 recent potential triangles in SP500 that shed light on where this upswing may terminate.

The first red expanding triangle is likely wave (iv) of the upswing, also highlighted in Chart 1.

The second red expanding triangle is likely an EDT wave (v), also highlighted in Chart 1. If this is the case, Friday’s high of 2071.46 represents the typical overthrow of an EDT and marks the end of the upswing.

The third blue contracting triangle is likely an EDT wave (v), also highlighted in Chart 1. If this is the case, wave E-up of the EDT is still developing. However, wave E-up should be capped by 2087.72 since this is a contracting triangle.

Chart 3 presents yet another potential long-term expanding ending diagonal triangle discussed in Topping Squiggles (11/14/14). This expanding EDT spans the past 12 months, with the current upswing as its wave [e]-up. Note that wave [e]-up reaches parity with wave [c]-up in price at 2074.13 or 2102 and Friday’s high is 2071.46.

Near Term Wave Counts
Our base case near term scenario is that SP500 is in wave (v)-up off its October low (Chart 1, blue). It's possible that the week-long consolidation in mid-November is a 2nd wave or a B wave (Chart 1, green). In that case, wave 3 or C since the October low is in progress with (much) greater upside potential.

For longer term tracking counts, please see Topping Squiggles (11/14/14).

Friday, November 21, 2014

Market Timing Update (11/21/14)

[340pm] SPX update-
squiggles for weekend positioning . see charts.

[1005am] SPX update-
Tracking counts and a potential expanding EDT. See charts.

[920am] ES update-
New moon. Option expiration. Overnight macro - US, ECB, China. Potential overthrow in ES. See chart.

Thursday, November 20, 2014

Market TIming Update (11/20/14)

[EOD] Stocks-
Bearish squiggles against yesterday's high in Chart 2.  The bullish interpretation is likey E of (v) of an expanding EDT in Chart 1 (black count).

[815am] ES update-
The decline from the high so far is three waves. See chart.

Wednesday, November 19, 2014

Market Timing Update (11/19/14)

[215pm] SPX update-
bearish count against the AM high. see charts.

[1050am] SPX update-
First gap fill of the run. Tracking squiggles.  SPX testing potential support.  See charts.

[720am] ES update-
Potential overthrow, getting there. See charts.

Tuesday, November 18, 2014

Market Timing Update (11/18/14)

[1050am] SPX update-
7-th unfilled upward gap for this upswing. SPX broke above the diamond structure discussed yesterday, likely the blue or green fifth wave with respective upward potential as shown. See chart.
[740am] ES update-
let's see if an overthrow shows up on this run. see chart.

Monday, November 17, 2014

Market Timing Update (11/17/14)

[1125am] SPX update-
A potential diamond structure in SP500 raises the possibility of a fourth wave consolidation (which alternates well with wave two), if the market is not ready to roll over. See chart.
[815am] ES update-

Friday, November 14, 2014

MTU Weekend Ed. - Topping Squiggles (11/14/14)

Tracking counts are completing on the upswing.  Negative technical divergences have persisted since the mid-upswing.  Market breadth has lagged and may have rolled over. See details below.

Chart 1 - A five wave upswing from the October low in SP500 is ending. Negative technical divergences have persisted since the mid-upswing.
Chart 2 - Wave v of (v) of the proposed upswing is also ending. If this past week saw a completed wave iv-down of (v)-up, wave v of (v) either failed Friday or is likely capped at the 2053-2058 area where wave v of (v) reaches equality with wave i of (v).   Chart 3 updates price actions in 3M in comparison to SP500, which appears to support our topping squiggle tracking.

Chart 4 - Breadth, a measure of market internals, has been lagging and may have rolled over.

Chart 5 - We track the current upswing as wave (5)-up of wave [3] or [C]-up , or part of and expanding triangle wave [4]-down from the 2009 bottom.  It should be noted that in the first scenario,  while prices have satisfied the minimum requirement for wave (5), wave one-five equality offers room to extend in both price and time. If so, the pending top would count as wave 1 of wave (5).

Chart 6 - The following tracking counts on SP500 from its 2009 bottom are inspired by comments from our reader, Mkt Man. While the larger structure remains the same as that in Chart 5, the proposed wave [3] or [C] offers some appealing features such as
<1> the alternation between the blue wave (2) and wave (4) during 2012 and 2013
<2> the alternation between the blue wave 2 and wave 4 (of either the blue wave (5) or the gray wave 1) in 2013.

Note that the tracking counts in Chart 6 can accommodate an expanding EDT gray wave(5) or blue wave 5 of (5), a megaphone pattern,  in SP500 which has been frequently noticed.

Let's see if SP500 could deliver an immediate overthrow or manage one after a wave B pullback.  See Chart 7 above.  

Time-based relations offer some insight.  The second upswing of the proposed expanding EDT lasted either 5.5 months or 7.5 months. Based on the time dimension alone, the upswing off the October low could last meaningfully longer than 5.5 or 7.5 months if the blue count tracks, and meaningfully shorter than 5.5 or 7.5 months if the gray count tracks.