MTU Weekend Ed. - Hope Rally Update (8/31/12)

A potential near term consolidation as discussed in Reaction (8/24/12) has continued over the past week.

It appears that the stage is being set for the market to reach the black point number 5 once the current consolidation is over, based on our Hope Rally model (Chart 1). As discussed in past weekly editions, a potential timing of the black point number 5 is likely early October.

Interestingly, the SP500 A/D tally is now showing a potential bullish triangle (Chart 2, green lines). If so, the red line marks a key pivot for the SP500 A/D line.



Chart 3 presents the top tracking counts for the very near term.
green - bullish LD in progress following an ABC decline
blue - bullish terminal triangle
red - bearish "flat" or "triangle"

Market Timing Update (8/31/12)

[1110am]SPX update -
primary bullish (green) and bearish (red) near term count. See chart. The rise off the low is yet to appear impulsive. Odds favor the bearish count at the moment.










[8am] ES update -
Month end. Full moon. Blue moon. Watch the bearish purple descending triangle (Chart 1) should sentiment turns down. Chart 2 shows how it can fit the larger count.

Market Timing Update (8/30/12)

[EOD] Stocks -
A small-degree 5th wave (red) or [c]-wave(blue) down is likely in progress going into the close. Chart 1 shows squiggle counts and Chart 2 tracks the larger counts.
Volume appears to be lower than the initial decline, favoring an ABC structure or a 1/2/[i] structure.


[915am] ES update -

Market Timing Update (8/29/12)

[EOD] Stocks -
From a near term bullish perspective, the decline into the close is testing recent trend line support (Chart 1). From a bearish perspective, a potential bearish triangle is completing (Chart 2, purple).


[250pm] SPX update -
Keep on wondering if we are looking at a bearish triangle (purple).

[910am] ES update -
Potential triangles at several degrees.

Market Timing Update (8/28/12)

[EOD] Stocks -
Selling into the close, ahead of tomorrow's GDP report. Today's afternoon high has satisfied the requirement of a small degree B/2nd wave (Blue), while several near term options exist (Green).
Again, see Reaction (8/24/12) for discussions on the larger count.

[855am] ES update -

Market Timing Update (8/27/12)

[EOD] Stocks -
On the bearish side, SPX has satisfied the minimum requirement of a rebound (Chart 1) while squiggle level ambiguity remains (Chart 2).
See Reaction (8/24/12) for discussions on the larger count.


[735 am] ES update -

MTU Weekend Ed. - Reaction (8/24/12 Close)

SP500 made a marginal new Hope Rally high on Tuesday. The new high was not only unconfirmed by other indexes (with the exception of Nasdaq 100), but also quickly reversed. SP500 lost its gains since Aug 9 at Friday’s low, before staging a 15-point rebound.

From a big picture perspective, it is likely that the U.S. stock market is making a typical reaction after SP500 had registered a fresh Hope Rally high but had been accompanied by mediocre technicals. On a monthly scale, SP500 is still consolidating above its decade-long support/resistance zone (Chart 1).

We observed in New 2012 High (8/17/12), “Will there be non-confirmation among indexes? It’s certainly probable given the associated lackluster volume and market internals, until technical profiles turn more favorable.” The current reaction would give time for other indexes to “catch up”.



For the near term, we look for clues about how this reaction can take shape based on EWP (Chart 2).
[green, most bullish] An ABC correction ended at Friday’s low.
[blue, bearish] We have a three-wave rebound following a three-wave decline so far. The most likely structure would be a sideways triangle or a forceful flat decline. Friday’s low holds if it is a triangle and fails (meaningfully) if it is a flat.
[red, most bearish] A meaningful trend change begins with a leading diagonal triangle. Last week saw wave [a]-down and [b]-up. Look for wave [c]-down to commence once [b]-up ends.

Chart 3 shows how these near term counts can fit into the larger count. And Chart 4 updates the advance/decline profile of SP500.

Market Timing Update (8/24/12)

[1255pm] SPX update -


[845am] ES update -

Market Timing Update (8/23/12)

[EOD] Stocks -
Primary tracking counts are the bullish blue and purple counts. Squiggle count suggests an ABC decline approaching its end.




[1245 pm] ES/SPX update -
ES shows a respectable zigzag decline from its high (Chart 1) and SPX has satisfied the minimum requirement for a zigzag decline (Chart 2)although the final small-degree 5th wave could extend. Subjectively tracking the blue [a] and purple wedge discussed in yesterday's EOD update (this chart).


[905am] ES update -
The decline after the initial claims number is again approaching potential trend line support. The current decline is a small degree 2nd/B wave based on the bullish count, and a C/3rd wave following an expanded flat rebound based on the bearish count.

Market Timing Update (8/22/12)

[EOD] Stocks -
Chart 1 updates the larger tracking counts. Subjectively speaking, I find the purple wedge (wave B?) and the blue sideways consolidation (wave 4/2?, triangle?) appealing. Chart 2 updates the squiggle count highlighted in the 210pm entry


[210pm] SPX update -
squiggles











[740am] ES update -
Overnight low around ES trend-line support as well. Potential expanded EDT in ES to wrap up this leg or a larger sideways consolidation on the bullish side. The bearish count is straightforward at the moment.

Market Timing Update (8/21/12)

[EOD] Stocks -
The decline from today's high can be counted as a zigzag (with A roughly equal to C, Chart 1-blue) or a five-down (with an extended 5th wave, Chart 1-red).

The market found trend-line support going into the close (Chart 2, green and red lines).



Subjectively speaking, today's decline appears to be a 4th wave of some sort - see tracking counts below - until additional bearish development materializes. 

Confirmation is needed for the following top tracking counts (Chart 2).
[green] [iii] of 3 or [c] is extending. Today's sell-off is (iv)-down of [iii] of 3 up.
[blue] A larger wave 4 pullback has started.
[red] An ABC rebound since the June low is complete at today's high.

It should be noted that on a squiggle level, the bearish topping count can accommodate one more moderate high (Chart 3 to the right).

 [8am] ES update -
Chart 1 shows the 3 large wave up from the June low to date. Chart 2 Shows a small degree 4th wave potentially ended on or about Aug 10th. Chart 3 counts the squiggles since the black wave (4) in Chart 2, suggesting wave (5) is approaching the end of 3 of (5) or (5) itself.