MCM Newsletter – Outlook for Week 19-23 of June

The market pulled the old “W” pattern last week, making a low on Monday, then bouncing back up to test the ATH (which it missed by 3 points), then moving in lower again to (barely) take out Monday’s low before bouncing once more. From an EWT standpoint this sideways action might be a wave 4, which means the bull count is still alive and well and still the favorite. That continues to be the case until the market will overlap the 2398-2402 area (depending on which high you consider the top of nested wave 1).

Same as for quite a while now, the weekly cycles do not show any significant change. However it is interesting to note some aspects. Namely, the mcm-MA on these cycles provided support several times when it was tested from above. Also, both YM and ES are in up impulses which are now firmly established so would normally need a regular unwind, with a bullish support (BR) and corresponding END resistance to dissipate the up energy.

Weekly Cycles

The daily cycles are also in nested up impulses and recently broke yet again above resistance, breakout which would soon turn into another nested up impulse, unless the market reverses strongly. In fact YM will confirm in the next few days, as the mcm-MA is now crossing over resistance.

Daily Cycles

The 288 and 480min cycles    
You need to be authorized or upgrade to see this content. Please go to http://mcm-ct.com/membership-signup-dev-2/ to sign up.

MCM Newsletter – Outlook for Week 12-16 of June

The market moved mostly sideways (with a light down bias) last week, before putting in some fireworks on Friday. The action on the last trading day of the week deserves more careful analysis, as the market made a new ATH at the opening of the session, but which was then strongly sold off with a 30+ points decline, before bouncing back in the last hour before the close. This type of action, with a strong and fast reversal after a new high would normally point to at least some kind of short-term top, corresponding to a 5th wave in EWT. Currently the bear (EWT) options are not obvious, and this apparent top might be very short lived and be overtaken soon, but it just might be something more. 2398 is the first level to watch for an overlap on the way down.

Weekly cycles didn’t change much, except the directionality line on YM also started to move up like we were expecting last week.

Weekly Cycles

The daily cycles are still above the resistance levels, but didn’t significantly breakout just yet. As the market moved quite near them on the lows from Friday, this can qualify as a back-test, so what the market does next week will be important for the intermediate term also. If it holds the lows and bounces, then the breakout over resistances might become another up impulse. If the market breaks below the resistance levels, then it means the initial breakout was just an overshoot and more bearish resolutions are possible.

Daily Cycles

The 288 and 480min cycles    
You need to be authorized or upgrade to see this content. Please go to http://mcm-ct.com/membership-signup-dev-2/ to sign up.

MCM Newsletter for Week 17-21 Apr

After moving sideways 2 weeks ago, the holiday shortened week brought a clearer direction, which was down. The market was weak in all 4 trading days and finished at the lows on Thursday. The short term EWT scenario we kept referencing is very close to a resolution now. The low close to 2320 is all important and the separation line between the bullish and the (very) bearish scenario. It did not get taken out yet, so the bullish scenario is still preferred. However the market came quite close and is still too close for comfort for the bulls. Which is why Monday is likely to bring a resolution, one way or the other. Both scenarios point to a strong next move, so the action from here will likely affect the intermediate term trend.
No big change on the weekly cycles. ES is now testing the mcm-MA again and will be interesting to see if this will provide support again. Directionality continues to move lower.

Weekly Cycles

The daily cycles saw an interesting development last week. ES triggered already an END resistance, which had shifted the expectation down once it confirmed. YM did not trigger one yet, so the support on daily YM is still valid. Directionality is still stuck at the minimum level, and is getting a bit long in the tooth for a bounce.

Daily Cycles

The 288 and 480min cycles
You need to be authorized or upgrade to see this content. Please go to http://mcm-ct.com/membership-signup-dev-2/ to sign up.

MCM Newsletter – Outlook for the Week 10 – 14 Apr

The market didn’t do much of anything last week, probably trying to prove that sideways is also a direction. We did get a higher high vs the previous week on Wednesday, but still finished the week lower. No change in our EWT (short term) scenarios - we still have a 3 wave correction from the ATH and the current bounce overlapped the 1st wave low, so the current move should continue to new ATHs, unless the bears turn this into a nested move down. The low close to 2320 is the level to beat for bears, while overlapping 2390 would more or less guarantee the bulls that new ATHs are coming.

No change on the weekly cycles. Directionality continues to move lower.

Weekly Cycles

The daily cycles have the bullish retrace (BR) supports in place which have held the decline so far. Directionality is still stuck at the minimum level, so once it bounces we would be on the look-out for an END resistance higher.

Daily Cycles

The 288 and 480min cycles    
You need to be authorized or upgrade to see this content. Please go to http://mcm-ct.com/membership-signup-dev-2/ to sign up.

MCM Newsletter – Outlook for the Week 3 – 7 Apr

The last week of March saw the bulls come back from being a bit on the run the week before. Monday saw the market make a new low and spiked below the 50 day MA. However the bulls quickly recovered and not only did they win back the 50 day MA on an intra-day basis but the market rallied the next 3 trading sessions. Only Friday saw the bulls give back a bit. Continuing our EWT (short) analysis, the larger 3 wave correction we were mentioning got the new lows and then rallied, as warned. The rally overlapped the 1st wave low, so unless the bears turn this into a nested move down, the current move should continue to new ATHs.

No real change on the weekly cycles, but an interesting fact - the mcm-MA provided support, just as it did on the daily when it was first tested. Directionality continues it’s move down and would be interesting to see how it behaves going forward.

Weekly Cycles

An important development on the daily cycles: a bullish retrace (BR) support triggered at Monday’s low, adding weight to the assumption that the said low is important. Normally an END resistance higher is expected but for where that might show up we need to take a look at the shorter term cycles.

Daily Cycles

The 288 and 480min cycles    
You need to be authorized or upgrade to see this content. Please go to http://mcm-ct.com/membership-signup-dev-2/ to sign up.

MCM Newsletter – Outlook for the 1st Week of 2017

Happy New Year!
The market action in the last week of 2016 was on the bearish side. After attempting to continue the pre-Christmas bounce when the market reopened on Tuesday, the market declined on all remaining trading days for an almost 40 points decline from Tuesday’s high to Friday’s low. The pattern of higher lows and lower highs which we were noticing a while back was broken to the downside.
The market’s decline was enough to finally trigger a resistance level on the weekly YM cycle. That is a big deal and an important line in the sand going forward. The normal expectation is for downside from here, especially since ES also came back below its previously triggered resistance which was a bit whipsawed at first.

Weekly Cycles

The daily cycles are in up impulses, however the directionality tool turned down and made it to the lowest level. Watching for a bearish retrace (BR) support to trigger and the market’s reaction to that would be important. If the market continues its decline it will be also important to see how it behaves when ES will back-test the break-out level at 2212.

Daily Cycles

The 288 and 480min cycles    
You need to be authorized or upgrade to see this content. Please go to http://mcm-ct.com/membership-signup-dev-2/ to sign up.

mcm Weekly Wrap_Week 36

After being range bound for quite a while the market finally broke out, or better said broke down. The brutality of the decline was surprising, the market losing approximately 80 points in just 2 days. As the readers of the mcm Weekly Newsletter know, we have been expecting a back-test of the 2105 level for a few weeks now and the market delivered just that, although a bit abruptly. Coinciding with the Weekly Newsletter, the Technical Analysis Lab weekly update has been noting since the start of August to expect weakness coming into the beginning of prime trading season with decade, presidential, and historical seasonality all aligning for the early fall season.

The weekly cycles show why the 2105 level is so important. It was a resistance level above which the market broke out and it became an impulse up on ES (after the mcm-MA also broke above that level). And usually, after an impulse is confirmed the market comes back to back-test the break-out level. An interesting fact is that YM has under-performed significantly on the rally and, although it also broke out above the resistance level, it was nowhere close to confirm the up impulse. Also, YM sliced right back below the resistance level on Friday's drop. The current back-test on ES is very important. Holding it and bouncing would be very bullish, while breaking back below would reverse the up impulse and cancel the bullish momentum.

Weekly Cycles

Weekly Cycles

The daily cycles show why we were doubting (and still are)  the real break-out into an up impulse on the weekly. They have been in a big up impulse ever since it broke out above resistance around 1950 ES. The impulse up has started to unwind with a bullish retrace (BR) and an END, then another and a 2nd END, so it was in a terminal phase, not supportive of a new big up move.

Coming back to the recent past, the daily cycles show nicely the brutality of the decline registered last week. The market basically lost aprox. 80 points in just 2 days and sliced directly through the support levels. In fact ES is now close to confirm a down impulse. As we were mentioning in the mcm Newsletter last week, breaking directly the support levels before resistances trigger is very bearish, although it depends a lot on what the market does in the next 2-3 days. If the break-down is confirmed and the market cannot manage to bounce back to or even above the support levels, then the bearishness will be confirmed. We do have to mention that both ES and YM triggered LREs (lower risk entries) for longs on Friday, so a near term bounce (maybe after a minor new low) would be normal expectation based on that.

Daily Cycles

Daily Cycles

There are a couple of options from an Elliott Wave standpoint that we are currently tracking. Although our primary focus is for the S&P 500 and its futures, we do track many other markets as well, one of the those being the NYSE Composite. Weighting a number of various items, expectations are for some near term weakness and then another run at new all time highs, but the depth of the correction currently underway can take a couple of paths as noted above.

NYSE Composite

NYSE Composite

 

 

 

Technical Laboratory Update For The Week Of August 21, 2016

Happy weekend everyone!  Finally our week of MSP timing is upon us, August 22nd to 23rd to be exact.  Looking at the longer term preferred path that was outlined in the first Technical Laboratory update (here) we found our near term target of 2191 and promptly reversed following the preferred path towards 'Diag 4'.  Also from that post we discussed how presidental election cycle seasonality coincides remarkably well with what we are seeing with the long term MSP.  This adds a degree of confidence to weakness beginning around this week into the first of September and running through to the first of November.  The secondary options are still structurally 100% viable but we will not concern ourselves with them, so long, or until price gives us reason to question the preferred magenta path.

SPX Intermediate Term

SPX Intermediate Term

The next chart of focus is that of the VIX.  For anyone not familiar, the VIX was designed to be a gauge of volatility expectations looking forward in time by 30 days.  On a longer time frame it becomes very valuable because it shows that historical periods where volatility is low, between 10.00 and 12.00 leads to a decent size uptick in volatility within the next six months.  With the exception of 1993 and 1995, past instances of this chart finding the ten to twelve zone have lead to runs from a minimum of 17 up to as much as 150.  We entered into this zone at the beginning of July as you can see from the chart below.  This increases expectations of market volatility dramatically and coupling that with what we already know with regards to MSP and presidential cycle analysis we have a recipe for a very volatile fall.

Volatility Index

Volatility Index

In conclusion, although we are a stones throw from the all time highs, evidence is piling up that points to it being increasingly dangerous as the days pass to be long the market.  Good luck this week and profitable trading.

MCM Newsletter – Outlook for Week 11 – 15 July

Executive Summary:
Main Trend (weekly): neutral
- Intermediate Trend (daily): up
Short-Term Trend (480&288min): up
Details:
As we were mentioning previously, on the weekly cycles we had 2 consecutive LRE (lower risk entry) for longs which the market respected, rallying strongly. The resistance levels are currently being tested, with ES managing to spike above once again, while YM stopped exactly at that level. The directionality tool kept moving down however some of its components started to bounce. The normal expectation is unchanged, namely for the resistances levels to hold and the market to have a bigger correction from this general area. The structure of the daily cycles adds weight to this assumption, however with the market testing the ATHs, next week looks decisive for a decision to be made one way or another.

Weekly Cycles

Weekly Cycles

The daily cycles are continuing to unwind the up impulse. After the Brexit vote, the market spiked below the 2nd BR (bullish retrace) support, however the market rallied strongly from there and made a higher high vs the day before the vote. From a cycle perspective the price is in an area in which a 2nd END resistance could trigger basically at any time. Once that happens, that could mark the end of the impulse, which is suggesting that the up-driving energy is close to fully dissipating. That is not favorable to continuing upside, although the exact turning point has a bit of room. The shorter term cycles should provide early clues for that.

Daily Cycles

Daily Cycles

The 480 and 288min cycles show a “zoomed-in” version of the post Brexit action. After marking the first low with an END and 2nd END support and having those supports spiked below by the lower low, the ensuing rally was very powerful. Resistances were triggered, but unable to contain the rally and both started impulses up. 288min reversed that impulse up and triggered a 3rd END support lower, then another resistance higher, which was broken as well by the relentless upside. 480 managed to keep its initial up impulse intact and triggered an BR (bullish retrace). The next important level to watch would be an END resistance on 480, which would likely mark the unwind of the up impulse.

288&480min Cycles

288&480min Cycles

MCM Newsletter – Outlook for Week 4 – 8 July

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): up
Short-Term Trend (480&288min): down
Details:
On the weekly cycles, the market made a low below the “Brexit low” which was greeted by a new LRE (lower risk entry) for longs. After that the market rallied, giving credit to the 2 consecutive LREs, and is now close to testing the resistance level once more. The directionality tool keeps moving down and the action next week looks critical to see if it will bounce back up or continue its slide (which would be bearish).

Weekly Cycles

Weekly Cycles

The daily cycles show nicely the huge 4 day rally following the lower low registered on the next day following the Brexit vote. The market bounce right back through the broken support and bounced enough to an area where it’s possible already for a 2nd END resistance to trigger. That doesn't mean the market cannot go higher though. It’s interesting that the mcm-MA on YM changed color and a LRE for shorts was triggered on Thursday.

Daily Cycles

Daily Cycles

As anticipated last week, the 480 and 288min cycles spiked below their END support levels before the market came back and rallied strongly. The big rally triggered new resistance levels at 2075 ES, which were broken and 288 is now close to confirm its up impulse. If this breakout turns into a real impulse on both and if the impulse holds any back-test, then the bounce could go significantly higher. The next 1-2 trading days appear to be key for that, especially considering the directionality tool which is at its maximum value and if it turns, it would be a clue the bounce is done. The even shorter time-frame cycles like 60&135min or even 5&15min will also be important to watch for early clues about a potential turn or further break-out.

288&480min Cycles

288&480min Cycles