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MCM Newsletter – Outlook for the Week 13 – 17 Mar

The action seemed to change ever since the market hit the round numbers 2 weeks ago. The market made lower lows in 4 out of 5 trading days last week. Friday saw a bounce coming, but that bounce proved weak, ending with a cross type of daily candle (close equals the open, despite the intra-day swings. Usually points to a change of trend, or indecision).

The weekly cycles saw finally a clearer retrace and “dent” in the up move. The up impulses are still fully ongoing, so the picture is still bullish.

Weekly Cycles

The daily cycles show more clear where the decline stopped. The mcm-MA managed to provide support yet again - it did so several times in the past, so at least for now, the picture is still bullish. No new signal, except the fact that the directionality tool moved down, being the first bearish sign in a while.

Daily Cycles

The 288 and 480min cycles    
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MCM Newsletter for week 6-10 March

Last week was another one for the history books. The last 2 days of February seem uneventful in retrospect, although the market did make a new ATH on Monday before moving side-ways to lower afterwards. But March started with a bang. 15+ SPX points gap up and besting the 2400 level, which was almost 40 points higher than Tuesday’s close. Very impressive. However the round number proved to be not so lucky, as the next day we got an almost identically sized candle in the opposite direction. Friday saw the market making another low, before recovering to finish just above the close on Thursday.
The weekly cycles did not register any significant change as a result of this action. YM just confirmed the up impulse with the mcm-MA directly slicing the resistance level. ES is in an established up impulse. Interestingly the directionality tool is still at its maximum level, so that would provide a clue is the decline is more than a short-term correction, in case it moves lower.

Weekly Cycles

The daily cycles are perfectly aligned with the weekly. Up impulses, directionality pegged at the highest level. They are likely to move before the weekly, which would be an early warning.

Daily Cycles

The 288 and 480min cycles
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S&P500 Expert Lounge Update – February 8, 2017

Good morning everyone,

These are key timing for today: N/A

These are key MA levels:  5EMA 2289, 10DMA 2287,  20DMA 2280,  50DMA 2261, 100DMA 2208, 200DMA 2166

These are key Fib Levels: 2302, 2278, 2265

These are key primary and intermediate: 2275(intermediate minor), 2254(intermediate minor)

Here is today's market look at the S&P 500 for Wednesday, February 8th, 2017

A light day for data with only the EIA Petroleum Status Report at 10:30AMEST.  The technical picture found us at the first of a number of rising support lines at the close yesterday with momentum still on the buyers side above the 5DEMA although price action has been quite sloppy around it, neither side has been able to make much progress in recent days.  If a breach of support does take place today be cautious of a sharp reversal back above when the 5DEMA and 10DMA stack are touched.  Good luck today!

Primary and Intermediate Levels

S&P500 Expert Lounge Update – January 10, 2017

Good morning everyone,

These are key timing for today: 10:30AMEST, 2:00PMEST

These are key MA levels:  5EMA 2270, 10DMA 2261,  20DMA 2262,  50DMA 2211, 100DMA 2183, 200DMA 2144

These are key Fib Levels:  2275, 2277

These are key primary and intermediate levels: 2278(intermediate minor), 2254(intermediate minor), 2214(intermediate minor), 2189(intermediate minor)

Here is today's market look at the S&P 500 for Tuesday, January 10,  2016

7:00AMEST timing marked a high via MSP which leaves a number of options available.  10:30AMEST will be key in discerning which MSP is most likely for the remainder of the day, however, weakness seems to be the general theme till later this afternoon on a whole.   At 10:00AMEST we have the JOLTS release with Wholesale Trade.

MSP

On the technical side of things we broke down out of our rising wedge and successfully backetested it then found shelf support just below.  It would not be surprising to see a poke under to test the stacked moving averages and then reverse back up for a larger retracement of the decline.  Below the averages and things get rather thin until we find the remaining gap opening between 2245 and 2249 with potentially a brief stop at the intermediate minor level at 2254.  Good luck today!

Primary and Intermediate Levels

S&P500 Expert Lounge Update –October 20, 2016

Good morning everyone,

These are key timing for today:  10:00AMEST, 3:00PMEST

These are key MA levels:  5EMA 2137, 10DMA 2141,  20DMA 2150,  50DMA 2161, 100DMA 2143

These are key Fib Levels:  2159, 2139, 2120

These are key primary and intermediate levels:  2176(intermediate minor), 2160(intermediate minor), 2148(intermediate minor), 2131(intermediate minor), 2125(primary major), 2115(intermediate major)

Here is today's market look at the S&P 500 for Thursday, October 20, 2016

10:00AMEST is going to be key for MSP as four of the five point down from that timeframe.  An upward move after likely progresses rather relentlessly for the remainder of the day.  8:30AMEST has Jobless Claims and Philadelphia Fed Business Survey releases.  9:45AMEST is the Bloomberg Consumer Comfort Index.  10:00AMEST has Leading Indicators and Existing Home Sales.  Lastly at 10:30AMEST is the EIA Natural Gas Report.  5 and 15 min cycles have dissipated and will either refresh or roll over going into the timing this morning as well.

MSP

MSP

Buyers have managed to close the market above the 100DMA for the first time in a number of days and the 5DEMA supporting price says they have momentum in their favor for the time being.  Levels are thin till at least the intermediate minor at 2160 so a swift move up through this region would not be surprising.  Good luck today!

Primary and Intermediate Levels

Primary and Intermediate Levels

MCM Market Update For The Week of October 9, 2016

The market continued to move sideways over the past week and despite the rather big intra-day fluctuations, remained range bound.

Considering such action, it's no surprise that no real development was registered on the weekly cycles. As previously mentioned the potential of a successful back-test of the 2105 break-out level is still there, but it's not a given at this point. The directionality tool continues to head down which is another warning that the market is not decisively bullish just yet.

Weekly Cycles

Weekly Cycles

The interesting development last week came from the daily cycles. After getting a 3rd END resistance on ES 2 weeks ago and marking the end to the up impulse, this past week YM triggered a bearish retrace (BR) of its down impulse. This BR is very close to the break-down level, which gives it higher than normal odds of holding. So the normal expectation is for some down movement, at least until the market can trigger and END support.

Daily Cycles

Daily Cycles

Turning to the Elliott Wave analysis, the preferred path lows still continue to hold on the NYSE Composite.  Price remained range bound for the duration of the week as buyers and sellers jockey for perceived trend direction.  A new development in the chart is the exit of price from the lower bound.  While this in itself is not an invalidation of the ending diagonal, it serves as a warning that buyers may not be willing to maintain the structure and a swift drop to the lower dotted cyan target path could take place.

NYSE Composite

NYSE Composite

Below is a zoomed in version of the current price action and the potential near term paths that we can take.  First is the dotted white  path structurally known in Elliott Wave as an expanded flat where the final leg returns near the point of origin of the correction start point before continuing on the impulsive path.  In this case down towards symmetry.  Path number two, the solid white path is known as a bear nest where bunching in trend takes place before a full release of the potential energy in the structure is unwound.  This particular structure has the potential to go far beyond the symmetry point towards lower Fibonacci targets.  Lastly is the cyan option which is known as an ending diagonal in Elliott Wave, or a falling wedge in traditional technical analysis.  While the paths vary greatly overall, the common theme between them is there should be at least one more low before the potential for a more sustained rally could ensue.  We will monitor this chart throughout the week in the Expert Lounge to see which path is tracking the best and what the potential outcomes for that path imply.

NYSE Composite Short Term

NYSE Composite Short Term

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 28, 2016

Hopefully everyone had a good weekend.   Long term MSP has a bit of a September curve ball which departs from presidential cycle seasonality, but the one thing to be mindful of is that MSP is not a magnitude type instrument.  It shows a general bias.  Which is to say, although the chart shows what appears to be another rally leg to new all time highs, that does not need to transpire.  A marginally upward/sideways week would satisfy that portion of the MSP just the same.

Long Term MSP

Long Term MSP

Overall on the week, while retesting the all time highs again we've continued on the drawn out downward preferred Elliott Wave ending diagonal/rising wedge magenta path.  While the shorter term has thrown a number of whipsaws, Friday's being the most recent courtesy of Mrs. Yellen, the market has behaved quite well from an intermediate term perspective.

SPX Intermediat Term

SPX Intermediat Term

VIX, while at historically low levels, has begun to show some life.  Considering where timing has us within the next two months and seasonal precedence for weakness until November.  Expectations of a run to $20, most likely before the end of October based the other previously mentioned items seems very reasonable.  Until something is seen in the internals to negate the mounting evidence, being a patient and cautious buyer appears to be the most prudent course of action at present.

vix

Historical VIX Chart

In conclusion, all the evidence compiled at the beginning of August still holds validity and continues to point to weakness over the next couple of months with the exception of the one spike in longer term MSP starting in the middle of the second week of September.  Good luck this week and see you in the Lounge.

Technical Laboratory Update For The Week Of August 14, 2016

We moved marginally higher this week out of our 2155 to 2175 range to a new 2175 to 2185 trading range where we closed essentially in the middle of on Friday.  Last week we covered potential paths for the coming couple of months which we'll revisit and weight at the end of the month once we have entered our turn window via presidential year seasonality along with a coinciding Weekly MSP turn.  Our focus for this edition is a longer view of cycles and their implications.  In the United States we average a recession every 5.5 years.  June marked the seventh year we have been recession free and are rapidly approaching the record set from 1981 to 1991 of ten recessionless years.  There are a few interesting items at play in conjunction with our business cycle becoming rather extended.

U.S. Recessions

U.S. Recessions

First is our exceptionally weak recent GDP numbers and the precedence it sets with regard to historical incidence of the same kind.  Below is the FRED chart with the description of the phenomenon.

FRED Chart

FRED Chart

The next piece is another cycle chart, but not of presidential cycles.  This one covers the 100 years worth of decades and their price behavior as they progress through each year.  You'll notice that year sevens have a history of containing some very nasty declines, think 2007 and 1987.

Decade Cycle Chart

100 Year Decade Cycles

While it is premature and perhaps a bit ambitious to already be looking ahead to 2017 it would also be complacent not to think about what may lie ahead.  This week we saw a chink in the strong growth main stream media narrative with PPI coming in with a negative number which indicates that deflation is rearing its head.  With rates currently only .25% above zero the Federal Reserve is in a tight spot with regards to options to attempt to stoke inflationary pressures without some seriously unorthodox and untested measures.  As the evidence begins to pile up it is beginning to appear as though the incoming newly elected president is going to be tested right from the word 'go'.  Good luck this week and we'll see you on the board.

S&P500 Expert Lounge Update –July 28, 2016

Good morning everyone,

These are key timing for today: 8:30AMEST, 1:00PMEST

These are key MA levels:  5EMA 2169, 10DMA 2167, 20DMA 2145, 50DMA 2108

These are key Fib Levels:  2191, 2186, 2156, 2145

These are key primary and intermediate levels:  2130(minor), 2126(primary major), 2116(major)

Here is today's market look at the S&P 500 for Thursday, July 28,  2016

FOMC came and went without even so much as a hick-up outside of the current trading range surprisingly enough.  Since Bernake has taken a trip to Japan to discuss their 'situation', more emphasis may be put on what they do with their Central Bank announcement in the overnight session this evening.  There are a number of items to hit the tape this morning starting with International Trade and Jobless Claims at 8:30AMEST.  That is followed by the Consumer Comfort Index at 9:45AMEST, EIA Natural Gas Report at 10:30AMEST, and the Kansas City Fed Manufacturing Index at 11:00AMEST.  We have a new support cycle that triggered on the overnight weakness so that should be watched closely as a hint to whether we may make an attempt to break down out of the trading range, until then, play the edges.  Good luck today.

MSP

MSP

Primary and Intermediate Levels

Primary and Intermediate Levels