MCM Newsletter – Outlook for the Week 15 – 19 Feb

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): neutral/down
- (new) Short-Term Trend (480&288min): neutral
- Very Short-Term Trend (60min&135min): up

Details:
As mentioned in the previous newsletters, the weekly cycles are still just oscillating, with support having triggered at 1804 ES and 15364 YM. As anyone familiar with our newsletter figured out by now, the weekly cycles do not impulse very often. However, when they do, it’s a big deal. That being said the market was close to starting an impulse down in the past week, as the market visited the support level again. It bounced for now, but going forward it’s critical to watch if the support will hold (at least until a resistance level is triggered).

Weekly Cycles

Weekly Cycles

On the daily cyclesYM is in a confirmed down impulse while ES also moved below its support level and could confirm the impulse down soon (by having the MA move also below the support level) if the market doesn’t continue to bounce. If the market continues up, the 1.892.25 level is still the big line in the sand for ES, while for YM the trigger of a bearish retrace (BR) resistance would be important. If the market turns down a confirmation of the down impulse would be important on ES and although no formal support (in the form of a cyan line) can trigger, the dotted lines are important historical levels. Also worth mentioning is that the 2 LREs (lower risk entries) for shorts which triggered on YM (highlighted on the chart) worked very nicely, since the market retreated quite substantially from there.

Daily Cycles

Daily Cycles

An important addition was made to the mcm tools in the past week, with the streaming of the new 480 and 288min cycles. These had very clean signals and going forward will replace the 60 and 135min cycles in our weekly newsletter (since the 60 and 135min are faster cycles and change more often during a week’s time). This week, however, both will be included.

Both 480 and 288min cycles broke into down impulses at the beginning of January. And as it can be seen in the highlighted zone at point 1, the 288min had a classic full unwind of the down cycle with a 3rd END which was only briefly spiked below with 1 bar, that was also a capitulation bar. The 480min behaved a bit differently. As shown at point 2, while 288 was finishing the unwind of the down impulse, the 480 hadn’t began it yet (although it also had a capitulation bar at that low). After that point, the 288min started to oscillate, while the 480min started to unwind the down impulse and finally triggered a 3rd END at 1843.5 . At point 3 we see that although 480min cycle was hinting at a possible nested impulse down, the 288min triggered a very clean support which held and the market bounced nicely from there. At the moment, it is important to be on the look-out for a resistance level which could trigger on 288min and is not unreasonable to expect it to trigger on 480min too once the market turns back down (either from here or slightly higher). Also important to mention is that 288min had a LRE (lower risk entry) for shorts trigger at the last bar. Although this could be spiked slightly, it is a warning for longs.

480&288min Cycles

480&288min Cycles

The 60 and 135min cycles fully showed the strong whipsaws of the market. After impulsing up, both started impulses down. 60min fully unwinded the impulse down (with a 3rd END) and then started a new one, but which was later reversed and it is currently in an up impulse. The 135min also started a nested impulse down after having a bearish retrace (BR) and an END of it’s initial down impulse by breaking below that END. However that nest was also reversed and after triggering a resistance level above, the price broke above and also 135min is impulsing up. Going forward it would be important to see if these impulses will unwind in a regular fashion (with BR and ENDs) or will be reversed. The normal expectation is for a regular unwind, but the market has whipsawed resistances and supports a lot lately, so it wouldn’t be surprising if also these impulses are reversed.

60&135min Cycles

60&135min Cycles

2 replies
  1. Jimmy Joyner says:

    It appears that February monthly option expiration is influencing the markets this week and the turn date will be delayed until Friday or early next week. Technical indicators do not support a serious decline at the end end of the month.Yes maybe a decline but not below the 1801 cash level on SP500. I noticed the SP500 200 Dma is 3 points from falling below the 400 DMA and looking at 2000 and2007 the market did decline. Time will tell what happens when these averages crosss.
    Just my observation.

    • mcm-Alex says:

      Thank you for your comment.
      It does seem the normal expectation for a regular unwind of the up impulses on 60 and 135min cycles played out and those impulses were quite strong. It remains to be seen what happens this week.

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