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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     You need to be authorized or upgrade to see this content. Please go to http://mcm-ct.com/membership-signup-dev-2/ to sign up.

MCM Newsletter – Outlook for the Week 9-13 January

The holiday shortened first week of 2017 had a strong bullish bias. The market advanced in almost all trading sessions and finished by making new all time highs on Friday.
The market’s move, although seemingly impressive, did little to change the big picture. Partly because YM had under performed relatively to ES. And on the weekly cycle, YM is now overlapping its resistance level, while ES managed to spike above once again. The normal expectation for downside has not changed, but will do so in case the move above the resistance levels is sustained.

Weekly Cycles

The daily cycles are in up impulses and held the initial decline (which stopped exactly at the mcm-MA on ES). It is interesting that the directionality is still stuck at the lowest level. That is a sign that the up move is not sustained just yet, so if it starts to move up, that would mean the bounce might have more to go.

Daily Cycles

The 288 and 480min cycles     You need to be authorized or upgrade to see this content. Please go to http://mcm-ct.com/membership-signup-dev-2/ to sign up.

MCM Newsletter – Outlook for the 1st Week of 2017

Happy New Year!
The market action in the last week of 2016 was on the bearish side. After attempting to continue the pre-Christmas bounce when the market reopened on Tuesday, the market declined on all remaining trading days for an almost 40 points decline from Tuesday’s high to Friday’s low. The pattern of higher lows and lower highs which we were noticing a while back was broken to the downside.
The market’s decline was enough to finally trigger a resistance level on the weekly YM cycle. That is a big deal and an important line in the sand going forward. The normal expectation is for downside from here, especially since ES also came back below its previously triggered resistance which was a bit whipsawed at first.

Weekly Cycles

The daily cycles are in up impulses, however the directionality tool turned down and made it to the lowest level. Watching for a bearish retrace (BR) support to trigger and the market’s reaction to that would be important. If the market continues its decline it will be also important to see how it behaves when ES will back-test the break-out level at 2212.

Daily Cycles

The 288 and 480min cycles     You need to be authorized or upgrade to see this content. Please go to http://mcm-ct.com/membership-signup-dev-2/ to sign up.

MCM Newsletter – Outlook for Week 19 – 23 Dec

Last week was a bit dull compared to the one 2 weeks ago, but the market was still able to make a new ATH on Tuesday the 13th. After that, the action was choppy and sideways, the market making higher lows and lower highs. That is typical for an EWT triangle formation, which would suggest it could be a 4th wave with another 5th needed to take us to ATHs again before a turn.
Coming back to the cycles, we had no new development on the weekly. The resistance triggered on ES was whipsawed, but the market couldn’t break above it with conviction and closed right in its vicinity. YM still didn’t trigger a resistance level, which is something to keep an eye on.

Weekly Cycles

The daily cycles are both in confirmed up impulses now. Normally we would expect them to have regular unwinds, meaning BRs and ENDs before they finish. Reaction to a triggered BR or to the break-out levels in case the market heads there directly, will be telling for the intermediate term direction. Of course right now there is no sign of a turn and the market could continue higher in the mean time. The directionality tool on YM is pegged at the highest level and is getting a bit long in the tooth for a pullback. That would also provide clues of a potential turn once it starts moving.

Daily Cycles

The 288 and 480min cycles     You need to be authorized or upgrade to see this content. Please go to http://mcm-ct.com/membership-signup-dev-2/ to sign up.

MCM Newsletter – Outlook for Week 5 – 9 Dec

After the silent grind higher from 2 weeks ago, which had us question whether it was the calm before the storm, last week didn’t bring the storm just yet. But the market did retreat from the high registered the previous Friday. That high was breached though on Monday and Wednesday on ES and also on the cash index on Wednesday. That seems like a typical flat formation (for those EWT inclined), which would mean that at some point the market would need to take out the ATH once again.
Looking at the cycles the weekly still doesn’t show signs that a turn is in. The slight pullback we had last week was not enough to paint a resistance level on the weekly and it also didn’t change the directionality trend which is still going up.

Weekly Cycles

Weekly Cycles

The daily cycles registered an interesting development. A resistance level triggered also on ES which was more respected than the one which triggered on YM a while back. The market pulled back from there and found support at the mcm-MA. The directionality tool on ES started to move down also, while the one on YM is still at the maximum point. So there are signs that the market is approaching exhaustion, but for the exact turning point to be confirmed we need to look at the shorter timeframe cycles.

Daily Cycles

Daily Cycles

The 288 and 480min cycles show     You need to be authorized or upgrade to see this content. Please go to http://mcm-ct.com/membership-signup-dev-2/ to sign up.

mcm Market update for week 42

More sideways action the past week, as the market didn't move much in terms o price, but was again range bound. After putting in a low on Monday, the market gaped up on Tuesday, but the up movement was short lived as the last 2 days of the week saw the market retreating again.

This choppy back and forth finally triggered a change in the weekly cycles - both ES and YM triggered new support levels. This fact has 2 important implications. First, the previous impulse up on ES is reversed, both ES and YM being in normal oscillations now. And 2nd - the new support level is now the critical one to watch. The normal expectation is for the market to move up until a new resistance level is triggered. The directionality tool continues to move down so it will be important to watch how it acts going forward. If the market can’t bounce and the support gets broken directly, that would be very bearish.

Weekly Cycles

Weekly Cycles

The daily cycles also have supports in place. ES did whipsaw its support level, but the market didn’t break down, so a down impulse was not triggered. This also points to up movement as the normal expectation, same as the weekly cycles, and here also the directionality tool is moving up so it would be interesting to see if it continues to do that.

Daily Cycles

Daily Cycles

mcm Market Update For Week 38

The FED week was a good omen for the bulls and the market finally managed a small break-out above the choppy range in which it was stuck for a few weeks already. We had several short term cycles break into up impulses on mcm, which provided early clues about this ramp.

Coming back to the big picture, the weekly cycles show a dangerous development for bears. The back-test of the 2105 break-out level appears to have held. The market bounced from there and if it will continue to go higher that will be a situation in which shorts would have to be patient for quite a while. YM continues to underperform, however it bounced when it met the mcm-MA and now managed to get above the broken resistance also. The bears do have one more chance and that would be to reverse this bounce rather directly. The fact that the directionality tool is still heading down is also a sign that the back-test is not decided just yet.

Weekly Cycles

Weekly Cycles

The daily cycles are the reason why we are not fully in the bullish side just yet. They unwinded the big up impulses started back in March. YM completed that unwind (with a 3rd END resistance), while ES only had a 2nd END and could still (theoretically) get a 3rd END. In the mean time, they broke below support and actually started down impulses, although now the price came back above that support. So bears have 2 options here. One would be a direct reversal, which would mean the back-test of the previously broken support held and the down impulses are confirmed. That would be very bearish. The 2nd option is for the market to go higher and reverse after ES triggers the 3rd END resistance. As we can see on YM, that 3rd END doesn’t necessarily require a lot of upside to trigger. Once that happens, reaction to that resistance will be critical. If the bullish scenario on the weekly is to be confirmed the market could break into a nested impulse on the daily. But the normal expectation is for downside from there. As always, the shorter term cycles will provide early clues into which scenario will play out.

Daily Cycles

Daily Cycles

The Elliott Wave projection of the NYSE is also pointing to a crossroads with regards to market direction.  With minimum expectations of the structure being met, waves one and four overlapping, the market is free to do as it sees fit from here.  The duration of the fourth wave seems to be lacking taking into consideration that from a seasonal perspective, most bottoms aren't put in place till sometime on or after the second week of October.  While the projected paths are very insightful as far as targets and bias is concerned, the fact that markets don't go in a straight line as the projections do makes for a challenge.  Keeping that in mind, although we've bounced in what appears to be the final leg up to new all time highs, there is a very good potential this is just a counter trend move that has the potential to bottom at 'or 2' into the month of October.  Best to your trading this week.

NYSE Composite

NYSE Composite

Anatomy of a Tradable Bottom

The decline from Friday 9/9 was brutal. After months of range trading to get a 50+ points decline in a single day can be traumatizing, especially if caught wrong-footed playing the long side. In fact it can be so traumatizing that it is hard to even consider longs immediately after that. But the very next trading day, after continuing the decline for another 10-15 points (probably to shake out the last remaining longs and draw in some more shorts), the market proceeded to rally 50+ points from the ES low in the overnight. It is very hard to keep the objectivity when faced with this type of volatility, but one thing the mcm tools definitely have is the fact that they are objective. They are based on real data and when they trigger a signal, that signal is objective. And when signals align... Well, wonderful things tend to happen. The mcm tools signaled the 2100 ES overnight low from 9/12 as a VERY important level with significant support and, as a result, a high probability long.

And here is why.

First off the virtual tick tools signaled the 2100 level as very important. At point 1, around 3:30am it signaled a tiny capitulation bar (yellow bar on chart) and also a selling Xtreme (or sell X, which means there was an extreme selling effort in which all willing sellers have sold). At point 2, around 4:30am, it triggered another sell Xtreme with an Xtick (a sort of super sell Xtreme, to put it in simple terms), which came at the same level of 2100. At point 3, around 7:30am, the market tested once more the sell X and held. At point 4, around 8:30am, the tools signaled a buy X Xtick, with a capitulation bar (red bar), which were broken above. Ever since that break-out, which was held, the market rallied and never looked back.

V-tick tools

V-tick tools

Reinforcing the signal of the V-tick tools, were several cycles which were showing support at the exact same 2100 level.

First off the 1 and 2.5min cycles. For easier reference I kept the time points from the v-tick tools (1= 3:30am, 2=4:30am, 3=7:30am, 4=8:30am). 2.5min had support at points 1 and 2, at point 3 it was in a normal oscillation wave, while at point 4 it also broke out above resistance and started an impulsive wave up. 1min is too fast and the 1 and 2 time windows are not shown. But at point 3 we can see that it also had support, while at point 4 it also broke into an up impulse by breaking above resistance.

1&2.5min Cycles

1&2.5min Cycles

Continuing the story is the 5&15min cycle. At point 1, the 5min cycle had a 3rd END support. That means it was marking the complete unwind of a previous impulse down and likely to trigger a bigger reaction in the opposite direction. At point 2, it held the 2nd test of that level. At point 3 it had a new resistance, but at the same 2100 price level. At point 4 it also broke into an up impulse. The 15min cycles shows pretty much the same story. At point 2, it triggered an END support (marking the unwind of the previous down impulse), then at point 3 it held that level, while at point 4 it broke out into an up impulse as well.

5&15min Cycles

5&15min Cycles

Next are the RSI cycles. Same story again. 3rd END support at 2100 at point 1. New support which held at point 2 and 3. Break-out above resistance at point 4 and start of impulsive wave up. An additional signal was the fact that the CCI (the red line at the bottom of the chart) was diverging at points 1, 2 and 3. Market made a new low at point 1 and tested that level at points 2 and 3, but CCI was going up.

RSI Cycles

RSI Cycles

Following are the Tick Tools. These generate signals only during the day session, while V-tick generate also during the overnight. Right off the open, the tools generated a sell X with a 98% Xtick which was never contested and market proceeded to rally directly from there. No surprise, since 2110 was previous resistance broken above on several cycles and a buyX Xtick on v-tick tools. After rallying from 2110, the market met a buy X at 2125, but broke above and continued to move higher, with the bullishness confirmed.

Tick Tools

Tick Tools

Based on the confluence of signals, 2101 ES was called as a high probability trade in real time in the Expert Lounge here at mcm. The trade was never in danger of being stopped out and once the break-outs were confirmed on several cycles (first at 2104, then 2110, then 2114, then 2125), there was no real reason to exit before netting 30 to 50 points, depending on the exit strategy.

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.