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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

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

 

 

 

MCM Newsletter – Outlook for Week 12 – 18 Sep

Executive Summary:
Main Trend (weekly): up
Intermediate Trend (daily): up
Short-Term Trend (480&288min): down/neutral
Details:
As mentioned already several times in the previous newsletters, the normal expectation was for the market to back-test the break-out above resistance. This is exactly what happened last week as market dropped with conviction and ES is now back-testing the impulse up break-out. YM is diverging again having already failed the back-test by dropping below the resistance level. Of course, YM never confirmed the up impulse, so the ES back-test is more important. What happens next is key and the normal expectation would be for the previous resistance to provide support even if, in the end, it will fail.

Weekly Cycles

Weekly Cycles

On the daily cycles, we can see nicely the brutality of the decline. 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 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

Both 480 and 288min cycles triggered new resistances close to the highs after which the market dropped strongly. It is interesting that support levels did not trigger, so once they will, they will be very important with a bounce from there being the normal expectation.

288&480min Cycles

288&480min Cycles

In conclusion, after being range bound for quite a while the market finally broke out, or better said down. We have confirmed down impulses on all short time frames - 5, 15, 60, 135 (not shown) and we broke below support on the daily cycles as well. The speed of the decline was very high so the market is short-term oversold, however it is important to see if but also how the bounce will shape up. All the impulses down need to unwind, so some bounces followed by corrections to put in BRs and ENDs is the normal expectation. Bigger picture, the break-down below support on the daily is very important and if the market does not bounce towards the break-down levels in the next 2-3 sessions, that will be a serious warning for longs.

MCM Newsletter – Outlook for Week 5 – 9 Sep

Executive Summary:
Main Trend (weekly): up
Intermediate Trend (daily): up
Short-Term Trend (480&288min): neutral
Details:
No big change on the weekly cycles. ES is in a confirmed up impulse, while YM still needs the mcm-MA to also cross the broken resistance level before confirming the up impulse. It will be interesting to see if that will happen. As previously stated, the normal expectation is for the market to back-test the break-out level and in our case, that back-test becomes very important to see if the market can sustain the up impulse or not.

Weekly Cycles

Weekly Cycles

On the daily cycles, there was an important development last week. Both indexes triggered support levels, so the normal expectation near term is for the market to head higher until resistances are triggered. YM already put in a 3rd END resistance, meaning the up impulse finished the unwind and the index is now in a normal oscillation. However ES only had a 2nd END resistance and so the next resistance becomes very important since it will be a 3rd END resistance; and will mark the end of the impulse unwind also on ES. If the market breaks directly the support levels before resistances are triggered higher, that would be more directly bearish.

Daily Cycles

Daily Cycles

Both 480 and 288min cycles unwinded 2 consecutive up impulses with 3rd ENDs and are now oscillating, having had already support levels trigger. The market bounced enough from there to make it possible for the resistances to trigger any time. Reaction to those will be important, especially since we started getting quite a few LREs (lower risk entries) for shorts lately on both cycles.

480&288min Cycles

480&288min Cycles

S&P500 Expert Lounge Update –August 18, 2016

Good morning everyone,

These are key timing for today: 10:00AMEST, 1:00PMEST

These are key MA levels:  5EMA 2183, 10DMA 2182, 20DMA 2175, 50DMA 2133

These are key Fib Levels:  2195, 2188, 2158

These are key primary and intermediate levels:  2180(minor), 2155(minor), 2148(minor)

Here is today's market look at the S&P 500 for Thursday, August 18,  2016

HAL has effectively closed its position on the overnight bounce as a risk management measure less one contract per million still remain on.  Data wise we have the Consumer Comfort index at 9:45AMEST and the EIA Natural Gas Report out at 10:30AMEST.  The Bullish Retrace is till holding on the 480 chart at yesterday's lows and we have a new 2nd End unconfirmed at the overnight highs on the 288 chart.  Price remains more or less range bound overall and HALs risk management measure should give everyone pause before they commit to a view.  Mind your exposure today and good luck!

MSP

MSP

Primary and Intermediate Levels

Primary and Intermediate Levels

MCM Newsletter – Outlook for Week 1 – 5 Aug

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): up
Short-Term Trend (480&288min): up/neutral
Details:
The market basically did nothing but move sideways in a tight range, putting in a frustrating week. One interesting aspect to note is the fact that YM started to under-perform ES quite significantly. This can be seen also when looking at the potential break-out into an up impulse. The mcm-MA is close to confirming the up impulse on ES, but needs a lot more work on YM. Directionality continued to bounce, but didn’t make it to the max value yet, so going forward it will be important to see if it will. Another interesting aspect is the fact that the predictive pivot sits now very close to the resistance levels (highlighted on chart), which adds weight to the expectation that the market will come back to test that level. Reaction there will be critical to watch for confirmation or failure of the (potential) up impulse.

Weekly Cycles

Weekly Cycles

The daily cycles show even better the under-performance on YM. While ES moved flatish to up, whipsawing the 2nd END resistance, YM drifted down from there. The directionality tool also started to move down and watching to see if it makes it to the minimum level will provide clues as to whether we will get the normal expectation of down movement from resistances or the market will attempt to spike (or even break) through.

Daily Cycles

Daily Cycles

The 480 and 288min cycles show nicely the unusual action from the last 2 weeks. ES only moved between 2151 and 2171 and has chopped the nerves of both bulls and bears. The 288min finished it’s up impulse with a 3rd END and is now oscillating, having a recent resistance at 2168.25. 480min is in a nested impulse up, which already had a 1st END, a new support and now we are on the look-out for a 2nd END resistance, which is likely to point the direction back down. Interesting is that the directionality tool moved to the lowest level on 480min and stayed there despite the choppy bounces. On 288 it bounced only recently, so the next 1-2 days will be important to see if it gets to the max value (pointing up) or it will be a failed bounce (pointing down).

288&480min Cycles

288&480min Cycles

In conclusion, the cycles show that downside risk is more significant than upside risk. The market did break-out over the resistances on the weekly and if the up impulses are confirmed, that would need to be respected. However the daily cycles are in the unwind phase of the huge up impulse, having put in a 2nd END resistance. It is unlikely that after such a big run, the market will have enough energy left to push through the resistances for more than a brief spike, before a more significant pull-back. The 288 and 480min are also unwinding up impulses (288 is oscillating already), which points to the same conclusion: the market is dissipating the energy from this huge rally and looks more close to a top than an intermediary bottom. That being said, if the shorter time frame cycles 288/480min but also 60/135min (not shown) will break into fresh up impulses, that would be an early warning that the market is indeed trying to push upwards despite the odds.

 

S&P500 Expert Lounge Update –July 27, 2016

Good morning everyone,

These are key timing for today: 12:00PMEST, 4:00PMEST

These are key MA levels:  5EMA 2170, 10DMA 2168, 20DMA 2142, 50DMA 2106

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 Wednesday, July 27,  2016

Finally, the FOMC announcement day has arrived after two weeks of range bound market torture.  Depending on your risk seeking/aversion, this could be your day to either find something else to do or formulate a game plan for 2:00PMEST.  We have another reasonably heavy data day with Durable Goods at 8:30AMEST, MBA Mortgage Applications at 10:00AMEST, and EIA Petroleum Status at 10:30AMEST.  Lastly and most importantly is the FOMC announcement at 2:00PMEST.  On the cycles front, the 60min chart put a 3rd end in during the overnight session.  Good luck today and be mindful of any open positions coming into the 2 o'clock hour.

MSP

MSP

Primary and Intermediate Levels

Primary and Intermediate Levels

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