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S&P500 Expert Lounge Update – February 19, 2018

Good morning everyone,

These are key MA levels:  5EMA 2696, 10DMA 2670,  20DMA 2750, 50DMA 2725, 100DMA 2649, 200DMA 2546

These are key Fib Levels:   2792, 2742, 2521

These are key primary and intermediate levels: 2871(primary minor), 2817(intermediate minor), 2651(primary minor), 2577(intermediate minor), 2563(intermediate minor)

Here is today's market look at the S&P 500 for Tuesday, February 20, 2018

An easy start to a shortened trading week with no data points to concern ourselves with.  Last weeks technical picture should put sellers on alert as we broke over the intermediate minor level at 2725, the 50DMA, and declining resistance.  It will be important for sellers shove this back under these levels as quickly as possible lest risk a buyers basing process.  Given the distance between intermediate minor levels a basing process has the potential to open up a quality upside move back into the lower 2800's where as a failure here has the exact opposite effect with the next lower primary minor level being in the mid 2600's.  Be mindful of the round number psychology and rising support at the 2700 level and good luck today!

Primary and Intermediate Levels Detail

MCM Newsletter – Outlook for the week of 19-25 February

The market managed to bounce back from the lows registered on the previous Friday and last week saw only green daily candles painting. It reached now a bit higher than the 61,8% retrace of the entire decline from ATH, which is quite an achievement considering how vicious the drop was.

The weekly cycles have shown a warning for the bears, by having LRE (lower risk entries) for longs at the lows from 2 weeks ago. ES even triggered a 2nd consecutive LRE at the higher low from last week. Big picture is still unchanged on this time frame, with the up impulses still established, but this correction was big enough that it could trigger a bullish retrace (BR) support at the lows.

Weekly Cycles

The daily cycles show a more zoomed-in picture of the decline and subsequent bounce. They were also showing LREs for longs, albeit a bit early. More importantly they triggered bullish retraces (BR) supports on both ES and YM. The market bounced strongly from there and basically a corresponding END could trigger any time, which doesn't mean it cannot trigger much higher from here.

Daily Cycles

The 288 and 480min cycles    
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MCM Newsletter – Outlook for 2nd week of February

Finally the market stopped the relentless up move and had a rather panicky turn. A drop of more than 100 SPX points in one week is definitely something that draws attention, but it was not only that. The market character seems to have changed also, as the market sliced through supports like they were not even there. This is definitely the first sign of the bear in quite a long time.
The weekly cycles, show just how overextended the market was until last week. The nested up impulse traveled more than 600 points and more than 1 year without any correction big enough to qualify for a bullish retrace (BR). That is rather unusual both in terms of both price and time.

Weekly Cycles

The daily cycles show the same story as the weekly, although the last up impulses started only in October 2017. But they also traveled a whooping 400 points without any retrace. This correction looks as the first serious one and we already have a lower risk entry (LRE) for longs at Friday's lows, which doesn't mean it's over, but the next low might be greeted with a new one, which would have to be taken seriously.

Daily Cycles

The 288 and 480min cycles    
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MCM Newsletter – Outlook for Week 21-25 August

Last week was very spectacular and continued with even higher volatility than 2 weeks ago. After gaping up and moving higher into Wednesday, Thursday was again a bad omen for the markets (just like 2 weeks ago) and saw a big 30+ points decline in a single day. The market did break the low from 2 weeks ago, which means that something (i.e.an impulse wave) did finish at the ATH, despite it’s strange shape. The retrace of the first move lower from the ATH was quite big (more than 70%) and so far this looks like only 3 waves from there, so we are still in no position to scream “the top is in”. The action was certainly very bearish with the market apparently restarting to take the stairs up and the elevator down, as 3 days of slow up action were reversed in a single day, which also saw the previous weeks’ lows taken out. So it’s worth noting this change in character. From an EWT stand point there are too many options on the table right now to make a clear call. If the market stops here or a bit lower (2410-2420 is important support), then it could be just an a-b-c down, with new ATH to follow. If this is indeed the start of something more bearish, then this wave should continue significantly lower. Monday’s action looks to be key for the intermediate trend.
On the weekly cycles, ES is testing the mcm-MA directly, so bulls may try to defend this level again.

Weekly Cycles

The daily cycles also are directly on the support levels. ES triggered support at the lows from 2 weeks ago and is now working on breaking below. While YM is back-testing the previously broken resistance level. Both indexes have consecutive LREs (lower risk entries) for longs.

Daily Cycles

The 288 and 480min cycles    
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MCM Newsletter – Outlook for Week 14-18 August

Last week saw volatility come back with a vengeance. A new ATH was reached on Tuesday with a spike-like move, but that was immediately sold off hard. SPX lost more than 50 points from that high to the low registered 2 days later. Friday ended inconclusively but very close to that low and still in, what appears to be, a crash channel. That was for sure the best feast the bears had in a while, but from an EWT stand-point it is hard to scream “the top is in”. Because the last wave into the ATH was very choppy and full of overlaps, being difficult to file that off as an impulse. Which means the B wave (into the new ATH) option we were mentioning last week is still alive and well and that does not bode well for bears. If that is indeed what we are dealing with, after this (presumed C) wave is done a new thrust to the highs will follow. Of course, strange impulse waves have been known to happen, so I would not bet the farm we’ll make new highs, but if the market stops in this general area I would keep this option in mind. The more the market continues lower, the less odds for the flat and more weight to the scenario the top is in for a while.
No change on the weekly cycles. ES is getting close to the mcm-MA again, so it would be interesting to see if it will provide support again.

Weekly Cycles

The daily cycles are in an interesting place. ES broke back below resistance, while YM is still above and just met the mcm-MA, which seems to provide support. The up impulse is confirmed on YM, but not on ES, which is an interesting divergence. We do have a fresh new LRE (lower risk entry) for longs on ES which is also pointing up (and in favor of the EWT flat scenario).

Daily Cycles

The 288 and 480min cycles    
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MCM Newsletter – Outlook for Week 29 May -2 June

Last week saw the market push towards new highs. There was nothing bearish about the action, quite the opposite in fact, the market being able to push past resistances and into new ATHs. From an EWT stand-point the picture is becoming increasingly complicated. The more complex correction is still possible, albeit not favourite anymore. For this to happen the market would need to turn quite soon and avoid pushing significantly higher from here. The most obvious bullish scenario is for a nested wave up from the 2320 low, which would need the market to head higher in a steep manner (continuing the action of last week)

Weekly cycles are unchanged, with directionality still at the lowest level despite the bounce.  Once that moves, it would be a confirmation that the up move is really bullish.

Weekly Cycles

On the daily cycles we saw a support level trigger also on ES (following YM). The up impulses are continuing to unwind and the next resistance levels will be very important to watch for reaction, especially since it will be a 3rd END on ES, marking the completion of the impulse.

Daily Cycles

The 288 and 480min cycles    
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MCM Newsletter – Outlook for Week 22-26 of May

Last week saw the return of volatility to the market. After 2 days of consecutive new ATHs on Mon-Tue, the market saw a big down gap on Wed, which finished more than 40 points lower than the previous close. Next day we got a lower low, followed by a rebound which continued on Friday. Despite the more exciting action, we are still in the 2320-2400 chop zone, so the market is keeping its options open. From an EWT stand-point the more complex correction (started at the ATH from March 1st) scenario is gaining more weight because of the side-ways action. This would mean a flat is in the works, with wave A at the 2320 low and B either done at the recent ATH or needing a new minor high to finish. Then wave C down should follow with new lows (below 2320). Because of the overlap of 2370, the bullish scenario now became very bullish, because the only option still on the table is for a nested wave up (two series of 1-2 waves). This scenario is lower odds, though, at least at the moment because of the side-ways action.

Weekly cycles are unchanged, but directionality made it to the lowest level. That is not a bullish sign.

Weekly Cycles

The daily cycles held the test of resistances and moved lower and triggered some bullish signals at the lows. ES had 2 consecutive LRE (lower risk entries) for longs, while YM triggered a new support level. Those pointed up, but unless ES also triggers a new support level, it is still expected for the previous resistance to hold.

Daily Cycles

The 288 and 480min cycles    
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MCM Newsletter – Outlook for Week 14 – 18 Nov

What a week! It’s hard to keep the exclamations away in a week that saw an intra-day drop of more than ES 100 points to reach a limit down suspension and then a full reversal to come back, open the cash session only slightly in the red and keep rallying to close the day green. It was a Brexit type event, except it was faster. After Brexit we had a big drop, a dead-cat bounce and then the next day the markets made a new low. Now we never got that. Market bottomed in the overnight and then never looked back. People who were short in cash instruments must’ve had a really bad day, seeing the market 100+ ES points down and then opening nearly flat. Which proves once again that a large part of the action has moved outside the regular trading hours. The mcm tools caught the bottom quite nicely, signaling the exact low with a sell X Xtick on v-tick tools and then despite what looked like (and was) a huge bounce, it never triggered a buy Xtreme until the RTH started.
But as always the big question is what now. The weekly cycles put in a very large candle, with a LRE (lower risk entry) for longs at the bottom of it. Both ES and YM spiked below support, but recovered it and we are now looking for resistances to trigger higher. Once that happens, that would be a strong sign that another correction is coming. ES is still in an up impulse which would likely be over once an END resistance triggers. So reaction in the opposite direction could be strong.

Weekly Cycles

Weekly Cycles

Zooming in to the daily cycles, these also spiked below supports and then recovered them strongly. So we have the the same expectation as for the weekly - watching for a resistance level to trigger. We did get some LRE (lower risk entries) for shorts, however the mcm-MA just recently changed bearish (red color) and we can see from such past events that in this case, the LREs are not very reliable. The directionality tool is moving upward and has been doing so for a while, actually since before the “Trump-win” Brexit like event. It will be important to see when it peaks and starts moving down.

Daily Cycles

Daily Cycles

The 288 and 480min cycles both    
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MCM Newsletter – Outlook for Week 21 – 25 Nov

Compared to the election week Brexit type event, last week saw things calming down. Although the intra-day swings in ES were 20+ points in the first 2 trading days and then 15 points in the last 3, that felt like no volatility at all. The market managed to continue to grind higher although the high from the election week was barely overtaken by 5 points.
Considering the absence of major swings, it is no wonder that the weekly cycles saw no major developments. The directionality tool finally bounced from it’s minimum level confirming the ongoing bounce. As previously stated, the cycles now need resistances to come up which would be a strong signal that the bounce is coming to an end. Of course, to anticipate where these might trigger we have to look at the shorter timeframe cycles.

Weekly Cycles

Weekly Cycles

Zooming in to the daily cycles, these also spiked below supports and then recovered them strongly. So we have the the same expectation as for the weekly - watching for a resistance level to trigger. We did get some LRE (lower risk entries) for shorts, however the mcm-MA just recently changed bearish (red color) and we can see from such past events that in this case, the LREs are not very reliable. The directionality tool is moving upward and has been doing so for a while, actually since before the “Trump-win” Brexit like event. It will be important to see when it peaks and starts moving down.

Daily Cycles

Daily Cycles

The 288 and 480min cycles show    
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mcm Market Update for Week 44

The action over the past week was decisively bearish. The market continued the downside movement started 2 weeks ago and declined in all 5 trading sessions reaching a 70 points decline in 2 weeks and more than 100 points lower vs. the August and early September peak. Continuing the bearish signs, the market broke decisively below the trend line connecting the last significant lows (the one from February and the one from June). But of course, the real question is: what now? Will the market continue lower or is a bounce in the cards?

Looking at the cycles, we can see the same bearish signs: the weekly support level on ES was broken, despite it having higher odds of holding. YM also broke its support, albeit only marginally (shown on chart). The directionality tool did provide a nice warning that the bounce after the initial decline was not going to hold, by continuing to move lower throughout it. It is currently at the minimum value and if a more significant bounce is coming, it will start moving up. We also have a LRE (lower risk entry) for longs on YM and as we can see in the past (highlighted on chart) these have the potential to trigger a big bounce. A 2nd consecutive one triggering next week will definitely be something to watch for.

Weekly Cycles

Weekly Cycles

As we were mentioning last week, the daily cycles were bearishly inclined and the market delivered just that. YM was in a confirmed impulse down and it had triggered a 2nd bearish retrace (BR) resistance level which normally needed a 2nd END support lower. The market moved decisively lower, so now we are on the look-out for a support level to trigger. ES also triggered (late) a resistance just above the previous support and then a new support lower, which was slightly broken. Going forward it will be important to see when a support level will trigger on YM. That would be a big warning that the decline is at least pausing for a while.

Daily Cycles

Daily Cycles

Revisiting our potential Elliott Wave ending diagonal on the NYSE Composite from previous updates, it is very obvious that we've broken the rising wedge pattern and have begun to sell off.  This brings in a demarcation point where the diagonal structure becomes invalid because in a contracting ending diagonal, wave 2 must remain shorter than wave 4.  We've marked that level where that is no longer the case and at which point we can begin looking for much lower prices as the next viable structure would bottom in the 9600 to 9500 area.  Futures are markedly green at present so a challenge of the upper area of the declining wedging pattern is a relatively good probability at this point.  Good luck this week.

NYSE Composite

NYSE Composite