MCM Newsletter – Outlook for Week 14 – 20 Mar

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

Details:
The weekly cycles are still just oscillating, and considering that the market has traveled quite a lot since the support triggered at 1804 ES and 15364 YM, we are now looking for a resistance level to trigger. That would signal the completion of this wave (i.e.the peak of the wave) and reaction there will be key, since breaking above it would start an impulse up. However the normal expectation would be for the market to move down from there until a new support level is triggered. Interesting is that both ES and YM triggered a 2nd Lower Risk Entry for shorts (LRE) in a row. Additionally both are coming to a historically relevant level, to which the market reacted many times in the past. That means the current area is important to watch for either a reversal or a break-through.

Weekly Cycles

Weekly Cycles

On the daily cycles, YM confirmed its up impulse, as the mcm-MA also moved above the break-out level. ES did not do that yet as the MA flat-lined and is now right at the break-out level. Same as on the weekly cycles, both YM and ES came into a relevant historical level. YM is close to breaking above that area (highlighted in the previous newsletter), while ES is now testing that exact level. Going forward it would be important to watch how the market reacts to these levels and also how the impulses will develop and if they will have a regular unwind with BR and ENDs.

Daily Cycles

Daily Cycles

The 480 and 288min cycles are both currently oscillating after 288min finished the unwind of its up impulse. The last levels triggered were support at 1977.25 and the market managed to hold and bounced after a brief spike below. Currently the normal expectation is for a resistance level to trigger and the market to move down from there until it finds a new support. Considering the oscillating nature, the direction of the next impulse will be important for defining the near-term direction.

480&288min Cycles

480&288min Cycles

MCM Newsletter – Outlook for Week 7 – 11 Mar

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): neutral
Short-Term Trend (480&288min): neutral
Not too many changes since we posted our interim newsletter. The market did manage to move higher from the resistances triggered on multiple timeframes, however the normal expectation is still for those resistances to hold and market to reverse back below them. If anyone missed it, here is the link: http://mcm-ct.com/blog/interim-newsletter-3rd-of-march/

Details:
The weekly cycles are still just 
oscillating, last signals being support triggered at 1804 ES and 15364 YM. However both ES and YM triggered a Lower Risk Entry for shorts (LRE). The LRE confirmed at the top of the bar, which was on Friday, and this points to that high as a potentially important high in the market.

Weekly Cycles

Weekly Cycles

On the daily cycles, both YM and ES triggered a resistance level, but which was spiked above by the relentless bounce.
The impulse up is NOT yet confirmed, as the mcm-MA is still below the break-out level, however it will likely confirm in the next few days, unless the market reverses. YM is coming into an area (shown at point 1) which has proved significant many times in the past both when coming into it from below as well as above (shown at point 2). Breaking above this area, could propel YM even higher. If the market reverses, the levels of the resistances (1944 on ES and 16516 on YM) are important to watch, to see how the market reacts to the back-test.

Daily Cycles

Daily Cycles

The 480 and 288min cycles both triggered resistances at 1984.75. The resistance on 288min is a 3rd END which is significant, since it signals the complete unwind of the up impulse. (note:we explained 3rd ENDs in our interim newsletter from 3rd of March). The market did manage to spike above those resistances, however it is interesting that on Friday we got 2 capitulation bars on 288min and the last one (which was also bigger) held and triggered a slight reversal. As mentioned before, the normal expectation is for the market to head back down below that 3rd END and quite possible move more significantly in the opposite direction.

480&288min Cycles

480&288min Cycles

In conclusion, the area indicated as significant by the cycles on multiple timeframes was spiked above, but not broken through significantly. Therefore we are still on the look-out for a potential reversal which is viewed as the normal expectation. That being said, if the market would manage to break through this area, despite the odds, that would be very significant and would need to be respected.

Interim Newsletter 3rd of March

This is an interim update, since there have been significant developments on the cycles.

The weekly cycles triggered a LRE (lower risk entry) for shorts (highlighted at point 1). As it can be seen, the previous LREs (both for shorts but also for longs) have been quite successful in indicating reversals. Only in very few occasions they have not been respected, so it is worth paying attention to them. The LRE will confirm on Friday after the close, so if the market makes a higher high in the mean time, the LRE will confirm higher. This points to the high of this week as a potentially important high in the market.

Weekly Cycles

Weekly Cycles

On the daily Cycles, the price broke out above resistance on both ES and YM, however the impulses up are not yet confirmed. And the market is coming into significant historical extreme levels (highlighted on the chart).

Daily Cycles

Daily Cycles

The 480 and 288min cycles both triggered resistances at 1984 (shown at point 1 on the chart). The resistance on 480min is a simple one, since this cycle is only oscillating, however the one on 288min is a 3rd END which is more significant, since it signals the complete unwind of the up impulse. 3rd ENDs, especially on the longer time frame cycles are very rarely broken above and turned into a nested impulse. They can be spiked above, like it happened on 480min (highlighted at point 2), but the spike was afterwards reversed and the market proceeded in the opposite direction with conviction.

480 & 288min Cycles

480 & 288min Cycles

The 60 and 135min Cycles also show significant levels. 60min broke into an up impulse at 1948 (point 1 on the chart), while 135min triggered a resistance 3rd END at 1980 (point 2 on the chart). Same as the 3rd END on 288min, it is unlikely that this resistance will be broken above for more than a spike, before reversing in the opposite direction.

60 & 1335min Cycles

60 & 1335min Cycles

In conclusion, many cycles show significant resistance in the 1980-1984 area. Considering that 2 cycles are showing a 3rd END resistances there, indicating the complete unwind of the up impulses, it looks like the upward thrust of the market is losing steam. The odds are that this area will not be broken significantly before the market reverses for a more visible correction. The LRE for shorts on the weekly cycles, which will confirm at the end of the week, is completing the picture, indicating that highs above the mentioned area are likely to be short lived and possibly mark an important short-term high. That being said, since the LRE can confirm higher and the resistance area could be spiked above, it is not a signal to go short immediately, but rather to be on the look-out for a potential reversal.

MCM Newsletter – Outlook for Week 29 Feb – 6 Mar

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

Details:
The weekly cycles are still just oscillating, last generated signals being support at 1804 ES and 15364 YM. The market continued to bounce from the back-test of support and now the price reached the mcm-MA, about which we were mentioning last week that would be interesting to watch for a reaction.

Weekly Cycles

Weekly Cycles

On the daily cycles, both YM and ES triggered resistance levels, but which were spiked above by the relentless bounce. The market did not yet break into an up impulse, as the mcm-MA is still below the break-out level, however it will, if the market continues to head higher. Interesting is that the last LRE (lower risk entry) for shorts was canceled on YM, as the mcm-MA turned green. The market is still below the LRE level, so if it would’ve been played, it would still allow for a profitable exit. Going forward, near term it would be important to watch if the break-out over resistances was just a head-fake or if it will turn into an up impulse. The levels of the resistances (1944 on ES and 16516 on YM) are therefore still important to watch, to see if the break-out will hold or if the market will come back below.

Daily Cycles

Daily Cycles

The 480 and 288min cycles are in slightly different positions. Both broke into up impulses, however 480min reversed the up impulse, by having support trigger lower than the break-out level and now showed a new resistance at the high of the week at 1969. 288min broke into an up impulse which held and started the dissipation phase having already a 2nd END at 1941.75. The market broke above and had a capitulation bar at the high, reversing afterwards and now the market is back-testing the previously broken resistance. This back-test if very important near term, especially since the mcm-MA is testing the break-out level as well. That means that if the market bounces from here, the nested up impulse will likely be confirmed and more upside will be expected. Breaking below the back-test would invalidate the up impulse and we will be on the look-out for a new support level lower.

480 & 288 min Cycles

480 & 288 min Cycles

MCM Newsletter – Outlook for Week 22 – 26 Feb

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

Details:
The weekly cycles are still just oscillating, with support having triggered at 1804 ES and 15364 YM. The market visited the support levels again and bounced from there, continuing the move also this past week. Except for the above mentioned, there are no close-by price levels at which the weekly cycles are pointing at, although, if the market continues the up move it would be interesting to see what happens when price reaches the mcm-MA.

Weekly Cycles

Weekly Cycles

On the daily cycles, YM continues to generate interesting signals, while ES is still caught whipsawing it’s support level, the past week being able to recover it for the 2nd time, after breaking below. As expected, YM did generate a resistance level in the form of a bearish retracement (BR), however this was not able to put a stop to the bounce and the market managed to break above (highlighted at point 1 on the chart). After the break-out, 2 consecutive LREs (lower risk entries) for shorts were triggered (point 2 on the chart) which are a warning that the break-out might be short lived. Indeed, looking at the recent generations of LREs, both for shorts and for longs, respecting them has been quite rewarding. An important aspect to mentioned about LREs is that they only generate in the direction pointed by the mcm-MA (either short if mcm-MA is red or long if the mcm-MA is green). Once the mcm-MA changes color the previous LREs are considered canceled (highlighted at point 3).

Daily Cycles

Daily Cycles

The 480 and 288min cycles showed the impulsive nature of the bounce. Although both generated resistance levels at the same price (1893), the market managed to break above (highlighted at point 1 on the chart) and started up impulses. At point 2 on the chart, we can see that both back-tested the break-out levels and bounced slightly. Going forward, the action on Monday (and possibly Tuesday) is critical for the near-term direction since if the market continues to move up, that would mean the back-test of the up impulses held and the normal expectation would be for these to develop into fully fledged impulses, which can travel quite substantially in the direction of the trend. On the other side, if the market falls and breaks below the break-out level, that would reverse the up impulse and cancel the bullish momentum (at least until another support level is triggered). So 1893 is a very important level near-term.

288 & 480min cycles

288 & 480min cycles

 

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

MCM Newsletter – Outlook for Week 1 – 5 Feb

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

Details:
The weekly cycles are still just oscillating, however there has been a significant development this week, in that both ES and YM triggered support levels (highlighted on the chart). This means that although the trend is still neutral, the normal expectation shifted from down movement to up, until a new resistance level is triggered. If the market starts heading lower before a resistance level is triggered, the support levels (1804 ES and 15364 YM) are very important to watch, since breaking them would start an impulse down.

Weekly Cycles

Weekly Cycles

On the daily cycles, YM broke its support level and confirmed the down impulse. As mentioned last week, YM could unwind the impulse in a similar manner to last impulse. The market bounced quite strongly from the lows and therefore we are coming in an area in which the appearance of a bearish retrace (BR) would be quite possible. ES broke it’s support level initially, but manged to recover and bounce back over it. Therefore the next level triggered should be a 3rd END resistance, pointing in the same direction as the (potential) BR on YM. For early clues as to where these resistances might trigger we will have to watch the shorter time frame cycles.

Daily Cycles

Daily Cycles

The 60 and 135min cycles oscillated for a while after completely unwinding the down impulses with a 3rd END. Currently both confirmed up impulses, while 60min also had a capitulation bar (red bar on the chart) at the top on Friday. Although that is a serious warning for bears, once an impulse is confirmed it usually back-tests the break-out level before really taking off. In the current context, this back-test becomes very important going forward. If the market manages to hold those levels (1903.25 and 1896.5) then more upside is likely before the up impulse will start to unwind. If the up impulse is reversed, with the price moving below the break-out levels, then the reaction to the next triggered support level will be key.

60&135min Cycles

60&135min Cycles

mcm “MSP, Market Cycles, eTickTools & Trade Modality/Allocation” Webinar Scheduled & Attendance Information

We have scheduled part 1 of the "mcm MSP, Market Cycles, eTickTools & Trade Modality/Allocation Webinar". This will be a 45 minute to 60 minute general Q & A and overview. We are especially looking forward to learning from your questions that we can address in detailed fashion in a follow-up webinar for Sunday @ 5 PM EST for Part 2.

We look forward to seeing you there.

Waves - mcm Webinar

mcm Webinar - impulse waves/cycles, eTickTools, mcm-Indexes, MSP and Trade Discussion for Volatile Markets

 

Log-in URL:

Registration Form URL:

Dial-in Number:

Attendee PIN:

Meeting ID:

https://www.anymeeting.com/443-563-506

http://www.anymeeting.com/PIID=EC53D780824839

323-920-0091

517 6159#

4381270

Using the mcm-CCI on RSI Cycles part 1

The mcm-CCI addition to the RSI Cycles turned an already useful tool into something so powerful that it quickly became my main reference for intra-day trading. I have seen it signal intra-day bottoms and tops, including the intermediate term bottom from the 20th of January. I am sure lots of people were reluctant to buy that bottom, myself included. But this tool proved its worth once more and proved my reluctance wrong.

Before going into examples to point out how the tool is working, please read the previous articles published on this subject for basic info on cycle behavior, RSI cycles and the mcm-CCI:

Now that the basics have been covered, we will focus in this article on one of my favorite ways to use mcm-CCI: anticipating the change of intra-day trends. There are 2 ways in which mcm-CCI on RSI cycles is doing that:
1. mcm-CCI is getting close to an extreme value: either close to +300 or close to -400.
2. a divergence between mcm-CCI and market price is occurring (eg: price is making lower lows, but mcm-CCI is making higher lows).
Here are several examples, with explanations attached.
1. mcm-CCI extreme value
RSI Cycles with mcm-CCI

mcm-CCI 1st example

At point 1, mcm-CCI was getting close to +300. At the same time, the RSI bars were showing an overbought condition (red bars). Shortly after the high, the directionality tool (white lines) tripped over and headed lower. At point 2 the previous impulse up of the RSI cycles was reversed, as the price broke below a support level (the bullish retrace, BR, cyan line). The mcm-CCI confirmed the move lower, by moving in the same direction. At point 3, the mcm-CCI broke below the 0 line, confirming the bearish character of the market. Afterwards the mcm-CCI didn't start to diverge from price and the impulse down unwinded in a near perfect faction, by moving side-ways and getting a 1st, 2nd and a 3rd END.

2. mcm-CCI divergence & test of 0

mcm-CCI 2nd example

mcm-CCI 2nd example

At point 1 and 2, we can see a slight divergence between market price and mcm-CCI. At point 1 both made highs, with mcm-CCI getting close to the extreme value of +300. At point 2, market price made a higher high, but the mcm-CCI did not. Although the lower high was not significantly lower, combined with the  overbought bar on RSI cycles and the resistance level and the directionality tool going to 0, there were enough clues that a change of direction is coming. Which happened and the RSI cycles started an impulse down by breaking the support (cyan line) level which followed. At point 3 we see another interesting signal from mcm-CCI. Namely - a test of 0. The RSI cycles bars were getting oversold this time and mcm-CCI tested 0 (coming from higher) and held. That is bullish and the market complied, bouncing higher. At point 4 and 5 we had yet another divergence between mcm-CCI and market price. Same scenario as before - market price makes a high, mcm-CCI makes a high (at point 4). Then at point 5 the market makes a higher high, but mcm-CCI makes a lower high, this time more significant than at points 1 and 2. RSI cycles break into a down impulse afterwards (break of the following support level - cyan line). At point 6 mcm-CCI fails the coming test of 0 and confirms more bearish implications, which quickly materialize with the market breaking down even further.

3. mcm-CCI divergence at the low on Jan 20th

mcm-CCI 3rd example

mcm-CCI 3rd example

As a last example of this 1st part, I will show what happened at the low this week. On 20th of January, right at the lows, when everyone was leaning bearish and didn't know how far the market would break, the mcm-CCI on RSI cycles signaled the turn. The same divergence showed in the above examples appeared and also in a significant manner - more than 100 points mcm-CCI divergence between the low at point 1 and the higher low at point 2, where the market made a lower low in terms of price. As soon as a support level (cyan line) appeared and held on RSI cycles, the change in trend started to take shape. At point 3 we had another great coming together of signals - overbought bars on RSI cycles, combined with a resistance level (magenta line) and mcm-CCI testing 0. That triggered a retrace, but which was held by the next support level triggered. At point 4, the RSI cycles broke into an up impulse and mcm-CCI also broke above the 0 line, confirming the more bullish tendency.

Critically Important Support at S&P500 1842 – Below Is A Thinzone

We apologize for limited amount of recent articles published on the site. We have been very active in managing, analyzing and examining detailed market activity in the lounge and also sharing via other forums directly with people we care about. At this juncture, the post from last week which showed the 1840 area as key support has now come into play right in the MSP projection timing area. An inflection point is building and should shortly trigger.

However, it must be stated that the failure to liquidate for the extended periods from 2012 to 2015 sets up a severe potential for volatility greater than the volatility we have seen so far. In this analyst opinion, near-term would be something like a capitulatory type of volatility that would likely lead to a short-term reversal. However, volatility is likely to remain elevated as leverage remains under severe stress and overall account equity has continued to drop.

Note that if liquidation occurs today (or tomorrow) as many commodity centered hedge funds, futures managers and investment firms are likely being taken out in body bags, this liquidation will certainly not remain concentrated in the commodity space.

Oil is interestingly putting in a significant low presently according to MSP which is looking for a significant and potentially somewhat extended rally, as a result of this week's inflection point. Initially, it would be believed that equity markets will consider any recovery of oil prices to be positive and therefore, will correlate. However, it is highly likely. After about two and half weeks or so while oil continues to rally the equity markets will likely no longer correlate with that rally and liquidation phase will continue more focused on traditional risk assets into March in what hopefully will be a more lasting low.

Please be especially concerned with the level shown on the charts below. It is this analysts hope that we remain above the 1680 level by 30 to 40 points, and that enough emotional energy is released and leveraged reduced that some short-term recovery can take hold. Ideally, a recovery rally would look like something extremely strong as capitulated. Long's become shorts and are once again trapped. We ideally would look for return to the 1922 1950 area on such rally into early February.

S&P500 Cash Index Levels Chart

S&P500 Cash Index Levels Chart the failure to liquidate