MCM Newsletter – Outlook for Week 4 – 8 July

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): up
Short-Term Trend (480&288min): down
Details:
On the weekly cycles, the market made a low below the “Brexit low” which was greeted by a new LRE (lower risk entry) for longs. After that the market rallied, giving credit to the 2 consecutive LREs, and is now close to testing the resistance level once more. The directionality tool keeps moving down and the action next week looks critical to see if it will bounce back up or continue its slide (which would be bearish).

Weekly Cycles

Weekly Cycles

The daily cycles show nicely the huge 4 day rally following the lower low registered on the next day following the Brexit vote. The market bounce right back through the broken support and bounced enough to an area where it’s possible already for a 2nd END resistance to trigger. That doesn't mean the market cannot go higher though. It’s interesting that the mcm-MA on YM changed color and a LRE for shorts was triggered on Thursday.

Daily Cycles

Daily Cycles

As anticipated last week, the 480 and 288min cycles spiked below their END support levels before the market came back and rallied strongly. The big rally triggered new resistance levels at 2075 ES, which were broken and 288 is now close to confirm its up impulse. If this breakout turns into a real impulse on both and if the impulse holds any back-test, then the bounce could go significantly higher. The next 1-2 trading days appear to be key for that, especially considering the directionality tool which is at its maximum value and if it turns, it would be a clue the bounce is done. The even shorter time-frame cycles like 60&135min or even 5&15min will also be important to watch for early clues about a potential turn or further break-out.

288&480min Cycles

288&480min Cycles

MCM Newsletter – Outlook for Week 27 June – 1 July

Executive Summary:
Main Trend (weekly): neutral
- Intermediate Trend (daily): up
Short-Term Trend (480&288min): down
Details:
On the weekly cycles, the market re-tested the resistance levels once more before being denied with authority. Again the resistance held cleanly on YM and was spiked briefly on ES. The directionality tool (white lines at the bottom of the charts) finally started to move down on both indexes which is a serious warning that the trend is changing. We did get a LRE (lower risk entry) for longs at the lows from Friday which shows that at least short term the market is oversold, so a near term bounce would not be totally unreasonable to expect. We need to be aware however that due to the large move, the market could drop further (and quite significantly) before the bounce (as it happened on the previous LREs for longs triggered on ES - highlighted on the chart).

Weekly Cycles

Weekly Cycles

The daily cycles provided again a nice “zoom-in” into the weekly cycles. The bounce from the 2nd support triggered (which corresponded with the test of the mcm-MA on the weekly) was very strong and already reached an area where a 2nd END resistance could trigger (at the highs of last week). The Brexit vote was the main news behind the huge daily bar from Friday which spiked directly through support and triggered a LRE for longs at the low (same like weekly). The price is still below the support level and it is important to see how the market will behave when (or if) it will come back to test it. If the market comes back above it and we do not get a 2nd END resistance trigger at the previous highs, then a bigger bounce might ensue. If it cannot come back above, that could have very bearish consequences since it could be the start of an impulse down.

Daily Cycles

Daily Cycles

The 480 and 288min cycles were in down impulses and they attempted to reverse them by breaking above the resistances triggered in the form of a bearish retrace (BR) on 480min and a 2nd BR on 288. The up impulses never confirmed (mcm-MA never broke above the break-out level) as the market reversed strongly on the Brexit news and found a bottom marked by support and a LRE for longs on both cycles. The bounce from there touched the mcm-MA on 480 and spiked it a bit on 288 before reversing. Where this down move ends will be telling for the near term direction and the support levels area is key to watch. The current move is close to qualify already as a back-test of the support levels, however the market could test them better and even make a new low by spiking below.

480&288min Cycles

480&288min Cycles

MCM Newsletter – Outlook for Week 20 – 25 Jun

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): up
Short-Term Trend (480&288min): down
Details:
On the weekly cycles, in line with the normal expectation, the resistance level held (cleanly on YM and after a brief spike above on ES) and the market moved again lower from there. Once more the price met the mcm-MA on the way down, which provided a bit of support. Interesting is that the directionality tool on YM already started to move down and on ES not yet (highlighted on chart), which is not surprising considering that YM is underperforming quite significantly. The normal expectation about a more significant correction from this general area is unchanged, however for early clues about when the actual turn happens, we have to look at the shorter term cycles.

Weekly Cycles

Weekly Cycles

The daily cycles captured nicely the move above the resistances on weekly, by having resistance in the form of an END coming up on daily too. Both YM and ES spiked here above the ENDs before being reversed with authority. A significant development was registered last week, as the retreat from the highs triggered a 2nd support level which normally needs a 2nd END resistance higher. It is interesting that, given the underperformance on YM, the support level there was triggered lower than the initial one, while on ES triggered higher (shown on chart). Considering that, we don't expect the 2nd END to be significantly higher than the 1st END, if we will get one. If the market breaks significantly below the support level that would be very bearish since it could signal the start of an impulse down (that is not the normal expectation however). Near term, the initial bounce from support was sold, so it remains to be seen if the price will back-test the support again or will go directly higher.

Daily Cycles

Daily Cycles

As mentioned last week the 480 and 288min cycles were close to confirming the down impulses. They did, held also an attempted the back-test which stopped at the mcm-MA (shown on chart) and the market moved further down from there. The impulses are now firmly established so the normal expectation is for them to unwind in a regular fashion with at least one bearish retrace (BR) and corresponding END.

480&288min Cycles

480&288min Cycles

MCM Newsletter – Outlook for Week 13 – 17 Jun

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): up
Short-Term Trend (480&288min): neutral
Details:
On the weekly cycles, as warned about the possibility in the previous newsletter, the market tried to get above the exact level of resistance, at least on ES. It is interesting that YM is under-performing quite noticeably and never made it to the resistance level, while ES managed to overcome it slightly. The long term view is unchanged and the expectation is for the resistance level to hold and the market to register a more significant correction from this general area. Where exactly the market will finish running the stops is difficult to pin-point exactly and the shorter term cycles should provide better early clues in this regard. The directionality tool is still close to maximum levels and would need to start moving down to confirm a turn.

Weekly Cycles

Weekly Cycles

The daily cycles show better the brief move above resistance and here the YM moved in sync with ES, although it’s under-performing vs the previous end of April high. The directionality tool started to move down on both ES and YM and its behavior going forward will be telling for if this is a more significant turn or not. The mcm-MA could provide some near term support, together with the new LRE (lower risk entry) for longs which triggered on YM on Friday. On a bigger picture level we expect the up impulse to either be finished or to require another BR and a 2nd END. For another BR support to trigger more downside will be needed though.

Daily Cycles

Daily Cycles

The 480 and 288min cycles provided early clues about the turn. 480 had previously unwinded an up impulse with a BR and an END resistance in the same area as the weekly and daily resistances. 288 also had resistance trigger there. The market attempted to break-out over those resistances, however failed to sustain momentum and 480min never confirmed the nested impulse. The directionality tool moving lower also warned that the break-out was likely a head-fake and that the up momentum was not sustained. After coming back below resistances, both cycles then triggered support levels which were broken and are now very close to confirm the down impulses. If they will confirm and hold a back-test, that would warn of a bigger correction.

480&288min Cycles

480&288min Cycles

Note: please be aware that the price on the charts has been corrected with the roll-over of the ES and YM contracts from June to September.

MCM Newsletter – Outlook for Week 30 May – 3 Jun

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): up
Short-Term Trend (480&288min): up/neutral
Details:
The initial decline from the triggered resistance level on the weekly cycles has stopped when it tested the mcm-MA and the market managed to bounce from there. Now, price is close enough to the resistance level to be considered a back-test (highlighted on chart). What happens here will be key for the main trend direction, with the normal expectation being for resistance to hold and market to have a more pronounced correction. As it can be seen from the previous resistance levels, it would not be totally unexpected for the market to either head directly lower or challenge the resistance a bit more before that. The directionality tool should be watched closely for signs of down movement as well. Interesting is that YM is underperforming ES, being about 200 points below the resistance level, while ES is only 7 points.

Weekly Cycles

Weekly Cycles

On the daily cycles, we can see that the mcm-MA on the weekly also had help from the daily when it held. Namely, the market back-tested the bullish retrace (BR) support which had triggered a while back. That back-test showed that not all is as bullish as everyone thinks since the support held with difficulty and was spiked below. However it did hold in the end and market bounced strongly from there. Now an END resistance to that BR could trigger basically any time at these levels. It can also be seen even better than on the weekly cycles how significant is the YM underperformance - while ES went clearly above the previous high, YM did not and is in that general area. The mcm-MA on YM also turned red and we started to get some LRE (lower risk entries) for shorts. As previously said, once that END triggers, that would signal a possible unwind of the up impulse and in the context of the weekly, a larger down move would be expected. There is also the option that a 2nd BR will trigger and require a 2nd END, which would need more back and forth movement before the bigger correction.

Daily Cycles

Daily Cycles

The 480 and 288min cycles show the effect of the big move we had in the past 4 days. 480min actually broke into an up impulse, while 288 had a larger regular wave which triggered resistance at 2092.75. Considering the up impulse on 480, if the market sustains the move past this level and starts an impulse also on the 288min cycle, then we would have to acknowledge that the bounce would have further to run. However, the resistance on 288 might still hold, despite of it having been spiked briefly, so keeping an eye on that level in the next few trading sessions is important.

288&480min Cycles

288&480min Cycles

MCM Newsletter – Outlook for Week 23 – 27 May

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): up
Short-Term Trend (480&288min): neutral
Details:
The weekly cycles continued to move slightly downward from the resistance level. As mentioned a while back, the mcm-MA provided some support and the market failed to break below it so far. Also a historically relevant level was tested last week and held (highlighted on the chart). The directionality tool is still at the highest level and it would be important to see when it starts moving lower. So far it looks still open whether the market will be able to back-test the resistance level again or if it will accelerate down.

Weekly Cycles

Weekly Cycles

On the daily cycles, the unwind of the up impulse is continuing. After failing to sustain the initial bounce off the bullish retrace (BR) support, the market back-tested that level again, came slightly below it and recovered it once more. Although the support level may still hold and this bounce could continue until an END resistance is triggered higher, the fact that the price came below the support level shows the market is no longer full-on bullish. That also means that the END could come after a weaker bounce than usual.

Daily Cycles

Daily Cycles

The 480 and 288min cycles continued to whipsaw their support and resistance levels, showing the emotional behavior of the market. The last level triggered was support on both, which appears to be holding after being spiked below in a few instances. As the predictive pivot is also higher, the normal expectation is for the bounce to continue until a resistance level is triggered. How the market behaves there will be important for the near term.

288&480min Cycles

288&480min Cycles

In conclusion, it seems the market is staying true to the saying a top is a process not an event. The 288&480min cycles did not break into real impulses just yet (although 480 had an impulse down unwind, that had more a sideways form rather then being truly impulsive). The BR support on the daily still attempts to hold and is the key line in the sand for downside movement, while the resistance on weekly is key for upside movement.

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.

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 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 “MSP, Market Cycles, eTickTools & Trade Modality/Allocation” Webinar Scheduling/Poll & Invitation

Applied Cycle, eMotional Impulses, MSP

Applied Cycle, eMotional Impulses, MSP

We have wanted to do a follow-up webinar to our previous discussion for quite some time but scheduling always seems to be an issue so we are once more putting the Webinar scheduling and attendance to a vote. The amount of interest and the state of the markets leads us feel that further discussion and Q&A for the benefit traders.

The webinar/online meeting will be free and will be an interactive Q&A format when it is scheduled. We are seeking to get a near-term slot assigned that is convenient to as many people including ourselves as possible. We feel that there is a benefit on getting this scheduled as soon as possible.

Below is a vote. Please choose the times that work best for you and supply your email address and we will update you on the final scheduling of the webinar. Note all the times are quoted in Eastern Standard Time (New York) Also, note you can become  a registered user for our site and vote which will make it easier to sign up for the event once it is scheduled.  Registration is free.


[yop_poll id="11"]

 

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