Saturday, October 27, 2018

MTU Weekend Ed. - Odds (10/26/18 close)

Odds favor further weakness in SPX.

SPX has now lost its 200 DMA support by a meaningful margin.

The up wave from the Feb 2016 low likely either topped in Jan 2018 or Sep/Oct 2018.  The current pullback is unlikely part of wave [iv]-down since the Feb 2016 low due to degree violations in price and/or in time.  In other words, this is likely a larger degree correction in SPX.


From a longer term perspective, nearly four out of the six surviving EW counts since the 2009 low (4 bullish counts and 2 bearish counts) suggest that further a decline is likely.

Near term, despite the presence of oversold indicators in various time frames, it's prudent to monitor the following most bearish short term scenario ([iii] of 3 down)  while be cognizant of various scenarios of a larger potential upswing.   Near term dynamic support is around 2558, 2493, 2423, resistance is around 2726, 2821.


Update - 10/29/18
In the short term chart above, 
Potential blue [i]-down morphed from a potential contracting DT to a potential expending DT.
Potential red [ii]-up may or may not be finished (expanded flat? with today's drop as its (b)-dn). 

 

Update-11/1/18
For the short term, a parsimonious count for the potential [i]-down shown in the following chart captures the recent price actions well, without degree violations in price  (yet).

2 comments:

  1. Agree with MTU's assessment - as I said about 2 mths ago final wave up was possible. Its my belief this leg down could take quite a while to unfold. To late Feb min.

    The only proviso is if an extnd wave 3 of the 5 from the Feb 2016 low is running this could be a distorted wave 4 but the odds are low.

    I would ask MTU to check whether there are now any DJIA component stks that their counts still show more trend in ST MT as they will hold up the index if so. Same for SPX but its a bit hard to look at all of them. If 90% have complete their 5 wave counts then the index will be very soft.

    True position of mkt is shown on NYA chart.

    I would not be long stks in this mkt unless very solidly hedged.

    The orthodox LT count still is cause for concern when we a do a DJIA EW count back to 1932 & 1982 and 2009 as there are 3 sections up - possible min req for 5 waves. World is in chaos - China & EU is in trouble - eco and war tensions. An unexpected event could happen. Is Prechter's crest of tidal wave finally ready to burst over the next few years ? Esp. as a lot of the gains have been due to tech stks based on assumptions of great earnings and p/e expectations that may not be realized in the next few yrs. The only inversion of the orthodox view is if some mega extended up wave is running (this is the Neely & BC view).

    I did a calc on the US mid term elections and results are not clear but I would ask what would happen if neither parties had a majority ?

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  2. 30 Oct 2018 -

    Many indexes show small deg min possible ? req for 5 waves down from the late Sep - Oct high to last friday. The question is whether an extnded neg wave is running and the current approx levels will not hold (being in wave C or i of 3 from the Jan top), or the price will stall close to this level and remain in trading range for wks and mths.

    The MT view on a orthodox view indicates trading on side is not likely. But if the LT trend remains up per the Neely or BC view then price will hold here.

    An interesting fact is the mkt in 2018 did approx balance out the 2000-2009 sideways net downtrend. Approx 9yrs down then 9 yrs up. And there are min req for 5 waves from 2009.

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