MCM Newsletter – Outlook for Week 16 – 20 May

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): up
Short-Term Trend (480&288min): neutral

Details:
No real change in the weekly cycles. They are still oscillating, which means the main trend is neutral. However, as previously mentioned, the fact that resistance has triggered shifts the normal expectation to down movement until a new support level is found. The directionality tool did not move down yet, so a re-test of resistance is still not out of the question before a larger correction. The mcm-MA also provided support, as the market came into its area. As it can be seen from the history, the market couldn't break below the mcm-MA easily, so paying attention to the level indicated by it is important.

Weekly Cycles

Weekly Cycles

On the daily cycles, the unwind of the up impulse is continuing. The bullish retrace (BR) support provided an initial bounce, but the market could not sustain the up movement and came back down and is now back-testing that level again. Those levels are key. The market could regain some composure and bounce to put in an END resistance and a proper unwind of the impulse, like it did on a previous instance (highlighted on the chart). Or, it could break through the support level directly, without triggering an END. That would be quite bearish since it could be an attempt at an impulse down. The next few days will be key as to which option will play out.

Daily Cycles

Daily Cycles

The 480 and 288min cycles both attempted up impulses, by breaking above their resistances triggered, however these were reversed (highligthed on the charts). 288 triggered a support level quite quickly after coming below the break-out level and has in the mean time broken below it, with the impulse down looking to confirm most likely in the next trading day, if the weakness continues (by having the mcm-MA also moving below the broken support level). 480min triggered a support level which confirmed right at the lows from Friday. That points to a bounce being the normal expectation. However if the support on 480 will also be broken, then the picture would become very bearish, since true impulses down on 480 and 288min would likely travel quite far and the daily cycles would also start impulsing down in the mean time.

288 & 480min Cycles

288 & 480min Cycles

In conclusion, we maintain our view that the market may have registered an important high at the level indicated by the resistance on the weekly cycles. Near term it is again make or break time for the markets. The support level on the daily cycles is under pressure again and the next few days are key to see if they will hold once more and produce another bounce or not.

MCM Newsletter – Outlook for Week 9 – 13 May

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): up
Short-Term Trend (480&288min): down/neutral
Details:
The weekly cycles are still oscillating, however, as mentioned in the previous newsletter, the fact that the resistance level triggered is a significant event. That signals the crest (top) of the wave and although the market may choose to test that area again before heading down, the normal expectation is for it to hold any bounces and the market to move lower from that general area. The directionality tool did not yet turn down and once it does that will also be an important signal that the market is starting a more significant correction.

Weekly Cycles

Weekly Cycles

On the daily cycles, the up impulse started to unwind. As expected, the pull-back did trigger a bullish retrace (BR) on ES and on Friday it triggered one also on Dow. The normal expectation is for these levels to provide support and a bounce. If that comes to pass, the END resistance of that bounce would be a very important signal since that would mean that the impulse up either fully unwinded, or ended the first unwind phase (and a 2nd and potentially a 3rd END would be required). That level, viewed in the context of the resistance on the weekly cycles, becomes even more important and has the potential to mark an important top. There is one important thing to be mentioned about the potential END - it does not have to be higher than the previous high, just as the 2nd END (if we will get one) does not have to be higher than the 1st one. If the market fails to bounce and breaks these support levels for more than a brief spike, that would be more immediately bearish since it could start an impulse down. The directionality tool is still at the lowest point, if it will move upwards that would likely confirm that the bounce will continue and we will likely get the END higher. Additionally 3 consecutive LRE (lower risk entries) for longs triggered on the Dow and one on ES.

Daily Cycles

Daily Cycles

The 480 and 288min cycles continued their different developments. The 480min is still in an impulse down, after having held the back-test, while 288 is having a weak impulse up which is unwinding lower than the break-out level. Interesting is that 480min started to generate LREs for shorts - it had 2 consecutive ones (highlighted on the chart) which worked really well. Also 288 triggered 3 (highlighted on the chart) which behaved very well too. Another interesting fact is that the directionality tool on 480 moved lower from April 21st until April 25th and stayed at the lowest point until now. Near term it will be important to watch if the directionality tool on 480 will bounce and, if the market continues to bounce, what will happen at 2065 and another back-test of the impulse down on 480. It is important to mention that the next resistance level on 288 might be a 3rd END, which normally triggers a strong reaction.

288&480min Cycles

288&480min Cycles

In conclusion, the market may have registered an important high, at the level indicated by the resistance on the weekly cycles. Near term however, the normal expectation is for a bounce from the BR support on the daily cycles to unwind the impulse up. The behavior of the 288 and 480min cycles will be telling if we get the bounce indicated by the daily or not. 2065 ES and break-out into the down impulse on 480min is a key level. Holding that and/or getting a resistance level on 288 that holds, could see the support level on daily being under pressure again.

ES – Current Set-up

Recently there have been two significant developments in the market.

First, a resistance level triggered on the weekly cycles signaling the crest (peak) of the current wave which started at 1804. We have to note that the wave was quite large, for a non-impulsive wave. That means that it would take a much larger amount of energy to push through resistance and turn into an impulse.

Weekly Cycles

Weekly Cycles

The 2nd big development was on the daily cycles, where ES triggered a support level in the form of a bullish retrace (BR). What is important is that the daily cycle broke out into an impulse back at 1944 and has been in this impulse up all the way until to now. The bullish retrace (BR) is signaling the start of the impulse unwind. Normally we would expect an END resistance higher (as shown on the chart) and, considering the length of this impulse, a possible 2nd support and 2nd END resistance.

Daily Cycles

Daily Cycles

The most important conclusion comes when we look at the 2 cycles combined. The beginning of the unwind of the daily cycles seen in the context of the wave peaking on the weekly is a very strong message. Considering that the daily is a fractal of the weekly, the fact that the impulse up on daily is unwinding (meaning dissipating the energy and finally ending the impulse), means that the weekly cycle has very low odds of breaking above resistance and turning into an impulse. And considering that the resistance level on the weekly already confirmed it also means that the most likely unwind of the impulse on daily would be with an END which is lower than the previous high and, if a 2nd END will come, that could be lower than the 1st END.

There is also the possibility  that the BR support on the daily is broken directly. If that happens, that would be very bearish since it would likely start an impulsive wave down. So if the market continues to be weak and fails to bounce in the next days, the 2045.5 support level is a big line in the sand.

 

MCM Newsletter – Outlook for Week 2 – 6 May

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

Details:
The weekly cycles are still oscillating, however a significant development was registered last week. A new resistance level finally triggered and will confirm when the market opens and the new weekly bar is generated. That does not mean that the market will go down immediately, although that is certainly one of the options. Another option would be for the market to back-test the resistance area after an initial downward reaction (like it did on previous instances - highlighted on the chart). Regardless of how this will play out it is important to be aware that the normal expectation shifted to weakness for the intermediate term. And also that the resistance levels (2105.5 ES and 18084 YM) become key going forward, the normal expectation being that they will hold any bounces. If the market manages to break above them in a significant way that would change the picture and be very bullish, however that is viewed as having low odds at the moment.

Weekly Cycles

Weekly Cycles

On the daily cycles, the historical extreme area which we were pointing to last week managed to put a stop to the up movement and the market turned. The directionality tool continued to move down and is now approaching the lower boundary; staying there would point to further weakness. Considering that we are in up impulses, a more significant pullback would likely generate a bullish retrace (BR) which would provide support and, normally, a bounce. Reaction to that level will be important for defining the near term direction. Interesting to point out is that YM triggered a LRE (lower risk entry) for longs and although the trigger of a 2nd one at a lower level would not be out of the question, it is pointing to the fact that a bounce could be close.

Daily Cycles

Daily Cycles

After breaking into up impulses the 480 and 288min cycles had slightly different developments. The 480min reversed its up impulse and had another oscillation, while the 288min triggered a bullish retrace (BR) which held, after a brief spike below, and unwinded the up impulse with an END resistance. After that, both triggered support levels which were broken. 288 also had a nice LRE (lower risk entry) for shorts right before that. At the moment 288min is impulsing down, while 480min didn’t confirm the impulse down just yet (by having the mcm-MA move below the broken support level). For the near term direction it will be important to watch if those levels will hold the back-test or not (2070-2076 ES). Holding the down impulses would mean there is more downside likely, while a reversal would point to more oscillating movements.

288&480min Cycles

288&480min Cycles

In conclusion, the cycles are finally pointing to a pause of the relentless up movement and to the possibility of a more significant turn. The resistance level on the weekly points to a possible intermediate term top being close (or even in already). The daily cycles turned in an area of previous historical extremes and would ideally need a bit more downside before triggering support in the form of a bullish retrace (BR). The 288 and 480min cycles broke into down impulses which, if hold the back-test, would point to further weakness near term.

MCM Newsletter – Outlook for Week 25 Apr – 30 Apr

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): up
Short-Term Trend (480&288min): neutral/up
Details:
Not too much to be said about the weekly cycles. The situation is pretty much the same as in the previous few weeks: the oscillation is ongoing and the resistance level did not trigger yet. The market is now in the area of the previous resistance level and also slightly above the predictive pivot, but so far there are no clear signs of a reversal (or resistance triggering).

Weekly Cycles

Weekly Cycles

On the daily cycles, the up impulses reached yet another historical extreme area. The directionality tool on YM turned down, bounced and now it is turning down yet again. That doesn’t mean that the market will turn immediately, but it does show that the up strength is weakening and we believe that the risk has shifted and long positions should be reduced or hedged. Once the market finally tops, the expectation is for a more significant pull-back to happen which would trigger a bullish retrace (BR). Reaction to that BR support would be important, the normal expectation being a bounce to an END resistance higher, which would signal the unwind of the up impulse.

Daily Cycles

Daily Cycles

The 480 and 288min cycles have oscillated for quite a while. Recently both managed to break out into up impulses, after the market broke resistances triggered at 2077.25 (point 1 on chart). The impulses never really established themselves though and came back to test the break-out level several times. On 288min, the most recent back-test triggered a bullish retrace (BR) at nearly the same level, which usually has higher odds of holding. The 480min did trigger a support level, however before this confirmed, the market traveled below the break-out level and so the support level confirmed below, invalidating the up impulse (point 2 on the chart). Considering the support triggered on both, the normal expectation is for the market to bounce until new resistance levels are triggered. However if the market breaks down through these levels, that would be a strong signal that an important short term top is in.

288&480min Cycles

288&480min Cycles

MCM Newsletter – Outlook for Week 18 Apr – 22 Apr

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): up
Short-Term Trend (480&288min): neutral

Details:
The weekly cycles are still oscillating. The mcm-MA turned green and, although that invalidated the 2 consecutive LRE (lower risk entries) for shorts which triggered a while back, the reaction to the expected resistance level will be key going forward.

Weekly Cycles

Weekly Cycles

On the daily cycles, the up impulses are relentless. The market had only brief pull-backs which never triggered a bullish retrace (BR). The directionality tool on YM finally turned down, but quickly bounced again. Although that does point to the fact that the last pull-back was more important than the previous ones and put a dent in the bullish up move, there is still no sign of a top. Once the market finally tops, the normal expectation is for a more significant pull-back to happen which would trigger a BR and then a bounce to an END which would signal the unwind of the impulse.

Daily Cycles

Daily Cycles

The 480 and 288min cycles are still oscillating. The change in the oscillating nature which we were pointing last week seems to have been only temporary, the market managing to make a higher high now which triggered also a new resistance level (at 2075). The normal expectation now is for the market to come back down until it finds a new support level. As already mentioned several times, once the market breaks into an impulse on these cycles that will be a strong message about the intermediate term direction.

288&480min Cycles

288&480min Cycles

MCM Newsletter – Outlook for Week 11 – 17 Apr

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): up
Short-Term Trend (480&288min): neutral
Details:
The weekly cycles are still oscillating. The mcm-MA turned green last week and invalidated the 2 consecutive LRE (lower risk entries) for shorts which triggered a while back. A resistance level did not trigger yet, but it is close. Normal expectation would be for the market to head lower after the resistance level is confirmed. Considering that this wave was quite large in price movement that would also make it more difficult for the market to keep pushing higher.

Weekly Cycles

Weekly Cycles

On the daily cycles, the up impulses are still ongoing. The market did pull-back a bit and got back to the area of the predictive pivot which we mentioned last week. The directionality tool on YM finally turned (highlighted on the chart) and is now coming into the lower range, which points to the upper pressure weakening. The expectation going forward is for the pull-back to continue until a support in the form of a bullish retrace (BR) will trigger. In the mean time, if the market moves down, a reaction could occur also when market price will reach the mcm-MA.

Daily Cycles

Daily Cycles

The 480 and 288min cycles are still oscillating. The nature of the oscillation seems to have changed though, with the waves making lower highs and lower lows (highlighted on the chart), while until the beginning of April it was the other way around. Whether an important turning point was reached remains to be confirmed, and the next impulse break-out will be important. That being said the last level triggered was support on both cycles (at 2025.75) and the normal expectation is for a resistance level to be triggered next.

480 & 288min Cycles

480 & 288min Cycles

MCM Newsletter – Outlook for Week 4 Apr – 10 Apr

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): up
Short-Term Trend (480&288min): neutral
Details:
Again no change in the weekly cycles. They are oscillating and we are still on the look-out for when the next resistance level will trigger, which would point to a correction until a new support level is found. As mentioned in the previous newsletter, it is also important to watch if the mcm-MA will turn green since that would invalidate the 2 consecutive LRE (lower risk entries) for shorts which triggered a while back. Until then, the LREs are still valid although the market overshot their trigger level.

Weekly Cycles

Weekly Cycles

On the daily cycles, the up impulses are ongoing and are respecting their bullish nature. There has been no significant pull-back in order for a bullish retrace (BR) to trigger, so even if the main trend shown is up, a correction from these levels is not out of the question. Last week we were pointing to some signs appearing, like the directionality tool on ES turning down. That was a failed attempt, since it never got back below 0 and bounced. On YM it never left the upper range, so once it does that will be a warning that the strong bullish trend is waning. The predictive pivot is now lower than the market price too and since it usually acts as a magnet, it also points to the probability shifting to a correction. Once we do get that, the reaction of the market to the triggered BR will be key to watch.

Daily Cycles

Daily Cycles

The 480 and 288min cycles are oscillating and have been doing so for a while. The 288min cycle actually attempted an impulse down after briefly going below the support triggered at 2047, however the market managed to bounce back above it and canceled the attempt. The 480min cycle has resistance as last triggered level and the market is bumping into it again (at 2064.75). Reaction here will be important to watch, together with the reaction on the next triggered resistance level on 288min. The normal expectation is for resistance to hold, of course, and the market to move back down until a new support level is found.

288&480min Cycles

288&480min Cycles

MCM Newsletter – Outlook for Week 28 Mar – 1 Apr

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): up
Short-Term Trend (480&288min): neutral
Details:
Still no significant change to be reported in the weekly cycles. They are oscillating and although the market rested a bit after the relentless run up, this was not enough to trigger a resistance level. We are still looking closely to see when one will appear, as well as to see if the mcm-MA will turn green. If that happens this would invalide the 2 consecutive LRE (lower risk entries) for shorts and should be respected. Otherwise it would not be surprising if the market would act the same as it did close to the prior resistance level, when we also had 2 consecutive LRE for shorts which triggered earlier than the resistance level.

Weekly Cycles

Weekly Cycles

On the daily cycles, we have fully fledged up impulses ongoing. The pull-back from the last 2 trading days was not enough to trigger a bullish retrace (BR), so price could still go lower until one is triggered. However there is no clear indication that this is the market's intention and this is not only a shallow correction. Some signs are starting to appear - as the directionality tool on ES starting to turn back down, as well as the fact that the market stopped after overshooting the predictive pivot and returning back into its vicinity - but the way these develop in the next few days will be key to figuring out the near term direction.

Daily Cycles

Daily Cycles

The 480 and 288min cycles are still oscillating after having reversed yet another attempted up impulse. A new support level was triggered on 288min at 2012, which produced an immediate bounce. The 480 has support in the making at the same level, so this proves its significance. Going forward the normal expectation is for possible up movement until a new resistance level appears, although if the market revisits the recent low it would be critical to see if a possible impulse down would start.

288&480min Cycles

288&480min Cycles

MCM Newsletter – Outlook for Week 21 – 25 Mar

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): up
Short-Term Trend (480&288min): neutral

Details:
No significant change in the stance of the weekly cycles since previous week. They are still just oscillating, however the market managed to move above the levels at which the 2 consecutive LRE (lower risk entries) for shorts have been triggered and also the historically relevant level which we were signaling. It remains to be seen if this was just a spike or a real break-out. Next week it will be important to watch if the mcm-MA will turn green (bullish) thereby invalidating the 2 LRE for shorts and/or if a resistance level will trigger. As previously stated the reaction to that level will be key going forward, with a pull-back in the market after it appears being the normal expectation.

Weekly Cycles

Weekly Cycles

On the daily cycles, ES followed YM and confirmed its up impulse. The historical levels which we were pointing last time were overtaken and YM reached another (higher) one. With the impulses up established, there is nothing bearish about the daily cycles, although a pull-back to a level which would generate a bullish retrace (BR) would not be out of the question. As there is no clear indication on this chart at what level that pull-back could begin, for the near term direction we will need to look at the shorter time frame cycles.

Daily Cycles

Daily Cycles

The 480 and 288min cycles have been oscillating for a while and are now attempting up impulses after the market moved slightly above the last resistance level triggered (on both at 2027.50). The previous such attempt was reversed, so near term it is important to see if this one will be as well. Going forward the 2027.50 level is important to see which way the market will go. Breaking into a real up impulse on these time frames could signal that the impulse up on daily has further to go, while a reversal here back below the break-out level might signal that the pull-back could begin. Depending on how quickly a new support level will trigger on these cycles and reaction to that, of course.

288&480min Cycles

288&480min Cycles