State of the Markets – Weekly Update

Executive Summary:
- Main Trend (weekly): down
- Intermediate Trend (daily): neutral (not confirmed)
- Short-Term Trend (60min&135min): up
- MSP for the week: up

Details:
The weekly cycle is in an impulse down which started in week 35 when the price sliced through the support level which triggered at 2061.75 ES and 17353 YM (point 1 on the chart). The MCM MA confirmed the impulse down in week 36 by also coming down the mentioned level. That means that the main trend is down. Usually the impulse is back-tested before picking up speed and the market is currently doing that, although it has come slightly above the break-down levels (point 2 on chart). The next 1-2 weeks will be critical in confirming the main trend, since if the market continues to move upward the impulses down will likely be reversed. However if the market reverses back below the impulse break-down levels then the current move up will qualify as a back-test and the market should accelerate to the downside. Interesting to note is also the fact that LREs (low risk entries) for shorts have been generated on both ES and YM at the current levels (the red rectangles).

Weekly Cycles

The daily cycles had started a main cycle impulse down back in August when the price sliced below the support level at 2051 ES and 17450 YM (point 1 on the chart). The cycle recently had a BR and an END (point 2 on the chart), which could mean that the impulse down finished at that END. Considering that the weekly cycle impulse down did not finish, the odds are that another resistance followed by at least a 2nd END lower could be triggered. We had a resistance trigger at 2015 ES and 17100 YM, but the market managed to break above it quite significantly. The MCM MA did not yet confirm this break-out. If it does, it will mean that the market will start an impulse up on the daily, which would point to a reversal of the (down) main trend. So just like the weekly cycles, the daily ones also point to the next days as being critical for the market.

Daily Cycles

The 60 and 135min cycles are currently in nested impulses up. This means that very short term it is expected for the market to go moderately up or at least side-ways to allow these impulses to finish. However the 135min new impulse up (triggered at point 2 on the chart) was not yet confirmed by the MCM MA. This means it can still be reversed if the market pulls back. The 60min impulse needs a BR (lower) and a subsequent END at a higher price to finish. So very short term the cycles point to moderately up or sideways, however the immediate next move might be down to allow a BR on 60min. The fact that the upper price of the last capitulation bars (red lines) was not taken out also points to first a retrace followed by possible moderate upside, once the BR on 60min triggers.

60&135min Cycles

 

The MSP for next week points moderately higher for the whole week. Daily MSP shows a top is likely to be found on Wednesday-Thursday. Interesting is that the long term MSP shows we are close to an important top. This should happen in the first week of November, after which there is bias for weakness for 3-4 months. The top could be triggered earlier, since 3-4 trading days earlier would be considered close enough.

msp_25.10._V2

Market Structure Projection

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