MCM Market update for week 43

Happy Halloween weekend everyone.  This weeks update is going to take a top down approach in an attempt to ground everything and get a good look at the forest and focus a little less on the individual trees that comprise it.  On our run up from the 2009 lows you can see that we've broken from the sustained uptrend at magenta which gave us our first substantial correction since the 2011 lows.  The vast majority of analysts are quick to declare a new trend is under way after a rally or decline begins simply as a function of near term price action.  This is a mistake.  Large trend moves take time to consolidate as expectations change among investors.  These periods last just as long as the trend periods if not longer.  At present, we are about half way through such a period as we traverse across the blue channel from the upper bound to the lower.  Now while the 400 point range from 2200 to 1800 seems massive on an intraday basis, it is relatively minor in the grand scheme of things.  The cyan cross sectional channel is important as we cut across the larger blue channel because it defines price zones.  Maintaining trade above the upper level lets you know that buyers conviction in future prospects of higher prices is strong.  A failure of the upper bound of this channel is a hint that conviction is likely in the process of waning and a larger move back through the previous consolidation zone is likely underway.  Since price has traversed this cyan channel area multiple times in the past it acts as a vacuum because all the levels but the most recent have been broken through and resistance to price change is weak.  With that being said, it is a reasonable assumption that any sustained trade below the upper bound has a high probability of price finding the lower bound in a relatively short period of time before making its next trending longer term decision.

SPXLT

S&P 500

Taking a look at the closer term picture via the cycles, we can see that the market has not decided yet which way it wants to go. The weekly cycles show supports triggered, which have a bounce as normal expectation, while the daily cycles show broken support on ES and a fresh resistance on YM, which point down. The triggered levels on both time frames are critical to watch therefore since whichever break first will likely indicate a bigger move.

The weekly show a change compared to the previous week. The supports which triggered on ES and YM were reset and are now triggered again. This is a very rare occurrence and it happens only when a level (support or resistance) is triggered and something changes at the end of that bar, before confirming, that makes it not confirm. This only appears when the charts are reloaded which is why it was not seen immediately. In any case, the currently triggered support levels do not change the picture. The only difference is that the support triggered by ES is higher and is a bullish retrace (BR), meaning the impulse up is still valid. Also, because it is close to the break-out level it has higher odds of holding, but the conclusion is the same: a bounce is the normal expectation.

Weekly Cycles

Weekly Cycles

As mentioned, the daily cycles are showing exactly the opposite. ES broke it’s support level and although it didn’t break down and the impulse down wasn’t confirmed, it is a sign of weakness. YM is in a confirmed impulse down and it triggered a 2nd bearish retrace (BR) resistance level which normally would need a 2nd END support lower.

Daily Cycles

Daily Cycles

 

S&P500 Expert Lounge Update –October 27, 2016

Good morning everyone,

These are key timing for today: 1:00PMEST

These are key MA levels:  5EMA 2144, 10DMA 2140,  20DMA 2146,  50DMA 2156, 100DMA 2145

These are key Fib Levels: 2148, 2156

These are key primary and intermediate levels:  2176(intermediate minor), 2160(intermediate minor), 2148(intermediate minor), 2131(intermediate minor), 2126(primary major), 2115(intermediate major)

Here is today's market look at the S&P 500 for Thursday, October 27, 2016

Present price action is pointing to magenta as the odds on favorite so we should be in store for a trend day.  Data wise we have the Bloomberg Consumer Comfort Index at 9:45AMEST, Pending Home Sales at 10:00AMEST, EIA Natural Gas Report at 10:30AMEST, and the Kansas City Fed Manufacturing Index at 11:00AMEST.

2016-10-27_4-46-13-intradayMSP

MSP

From a technical standpoint we will open above the intermediate minor level at 2145 which opens the door for a clear shot to the next intermediate minor level at 2157 level and the 50DMA.  Above that sellers need to be careful because a huge rift opens up to the next intermediate major level 2177 which is only divided by declining resistance that has sustained price since the all time highs.  Good luck today and trade safe.

Primary and Intermediate Levels

Primary and Intermediate Levels

mcm Market update for week 42

More sideways action the past week, as the market didn't move much in terms o price, but was again range bound. After putting in a low on Monday, the market gaped up on Tuesday, but the up movement was short lived as the last 2 days of the week saw the market retreating again.

This choppy back and forth finally triggered a change in the weekly cycles - both ES and YM triggered new support levels. This fact has 2 important implications. First, the previous impulse up on ES is reversed, both ES and YM being in normal oscillations now. And 2nd - the new support level is now the critical one to watch. The normal expectation is for the market to move up until a new resistance level is triggered. The directionality tool continues to move down so it will be important to watch how it acts going forward. If the market can’t bounce and the support gets broken directly, that would be very bearish.

Weekly Cycles

Weekly Cycles

The daily cycles also have supports in place. ES did whipsaw its support level, but the market didn’t break down, so a down impulse was not triggered. This also points to up movement as the normal expectation, same as the weekly cycles, and here also the directionality tool is moving up so it would be interesting to see if it continues to do that.

Daily Cycles

Daily Cycles

S&P500 Expert Lounge Update –October 20, 2016

Good morning everyone,

These are key timing for today:  10:00AMEST, 3:00PMEST

These are key MA levels:  5EMA 2137, 10DMA 2141,  20DMA 2150,  50DMA 2161, 100DMA 2143

These are key Fib Levels:  2159, 2139, 2120

These are key primary and intermediate levels:  2176(intermediate minor), 2160(intermediate minor), 2148(intermediate minor), 2131(intermediate minor), 2125(primary major), 2115(intermediate major)

Here is today's market look at the S&P 500 for Thursday, October 20, 2016

10:00AMEST is going to be key for MSP as four of the five point down from that timeframe.  An upward move after likely progresses rather relentlessly for the remainder of the day.  8:30AMEST has Jobless Claims and Philadelphia Fed Business Survey releases.  9:45AMEST is the Bloomberg Consumer Comfort Index.  10:00AMEST has Leading Indicators and Existing Home Sales.  Lastly at 10:30AMEST is the EIA Natural Gas Report.  5 and 15 min cycles have dissipated and will either refresh or roll over going into the timing this morning as well.

MSP

MSP

Buyers have managed to close the market above the 100DMA for the first time in a number of days and the 5DEMA supporting price says they have momentum in their favor for the time being.  Levels are thin till at least the intermediate minor at 2160 so a swift move up through this region would not be surprising.  Good luck today!

Primary and Intermediate Levels

Primary and Intermediate Levels

MCM Market Update For The Week of October 9, 2016

The market continued to move sideways over the past week and despite the rather big intra-day fluctuations, remained range bound.

Considering such action, it's no surprise that no real development was registered on the weekly cycles. As previously mentioned the potential of a successful back-test of the 2105 break-out level is still there, but it's not a given at this point. The directionality tool continues to head down which is another warning that the market is not decisively bullish just yet.

Weekly Cycles

Weekly Cycles

The interesting development last week came from the daily cycles. After getting a 3rd END resistance on ES 2 weeks ago and marking the end to the up impulse, this past week YM triggered a bearish retrace (BR) of its down impulse. This BR is very close to the break-down level, which gives it higher than normal odds of holding. So the normal expectation is for some down movement, at least until the market can trigger and END support.

Daily Cycles

Daily Cycles

Turning to the Elliott Wave analysis, the preferred path lows still continue to hold on the NYSE Composite.  Price remained range bound for the duration of the week as buyers and sellers jockey for perceived trend direction.  A new development in the chart is the exit of price from the lower bound.  While this in itself is not an invalidation of the ending diagonal, it serves as a warning that buyers may not be willing to maintain the structure and a swift drop to the lower dotted cyan target path could take place.

NYSE Composite

NYSE Composite

Below is a zoomed in version of the current price action and the potential near term paths that we can take.  First is the dotted white  path structurally known in Elliott Wave as an expanded flat where the final leg returns near the point of origin of the correction start point before continuing on the impulsive path.  In this case down towards symmetry.  Path number two, the solid white path is known as a bear nest where bunching in trend takes place before a full release of the potential energy in the structure is unwound.  This particular structure has the potential to go far beyond the symmetry point towards lower Fibonacci targets.  Lastly is the cyan option which is known as an ending diagonal in Elliott Wave, or a falling wedge in traditional technical analysis.  While the paths vary greatly overall, the common theme between them is there should be at least one more low before the potential for a more sustained rally could ensue.  We will monitor this chart throughout the week in the Expert Lounge to see which path is tracking the best and what the potential outcomes for that path imply.

NYSE Composite Short Term

NYSE Composite Short Term

mcm Market Update For Week 39

Another week comes to a close and it seems that volatility is here to stay. All trading sessions had 20+ points from low to high, while the last 2 days had even 30+. Now that's a traders dream if he can be on the right side of the trades.

Coming back to the long term direction, last week didn't bring any significant change in the weekly cycles. The potential of a successful back-test of the 2105 break-out level is still in the cards. The market bounced from there but has yet to really take off which . YM continues to underperform and although it bounced, it barely got back above the break-out level. The directionality tool is still heading down which is also a sign that the back-test is not decided just yet.

Weekly Cycles

Weekly Cycles

The daily cycles had an important development last week as ES finally triggered a 3rd END resistance. That signals that the up impulse is now completed. That is a very important line in the sand going forward and the normal expectation is for downside to follow. However if the market manages to break above that level, against the odds, and turn this into a nested impulse up, then that would be very bullish and would signal a lot more upside to come.

Daily Cycles

Daily Cycles

While the week closed marginally higher, we still remain at a crossroads via our NYSE Elliot Wave count.  The rising support is key to maintaining the structures integrity.  Any sustained breach should be taken as a warning that the 'or 2' scenario could be in play in the alternated count and a dramatic decline could be just around the corner.  Seasonal expectations on the week are for more weakness which would imply overall chop assuming the rising support remains intact.  From everyone here at MCM we hope you all have a safe and profitable trading week.

NYSE