SPX/AEX-update of 25th of February

Hi guys,

We got quite a nervous week on several markets this week. Lots of pundits are calling for a huge crash while others say, this time it’s different. Who is right?

Nobody knows the future, that’s one sure thing we can bet on. Technicians can make a scenario, their favorite and an alternate. This is all!

My scenario is based on natural patterns and numbers with clear measured targets, way before they are reached. For this reason my favorite scneario is that we still need more bullishness to fulfill targets whereafter some kind of consolidation may occur.

First the perspective of thinking explained;

As in prior posts described we are very near the completion of a 8-year cycle from low March 2009. Half of this cycle is a Kitchin-cycle (4-year) which in fact was an inverted cycle (low) in 2013. We are facing the second Kitchin-cycle from March 2009-low right before our eyes and tell me…is sentiment toppish or what? In prior posts you can read more details about those cycles explained by Fibonacci and W.D. Gann.

So, IMHO some kind of decline is favorite. Depending of the magnitude and speed of decline we have to consider more bullishness as this current Kitchin-cycle could form a LOW mid March 2017 probably extending until May. A new bull-run can start thereafter again with current hot overbought-readings eliminated. Keep also in mind that Gann’s timetable project a ‘panic’ in 2017.

Which scenario will establish? Markets do their own thing and the upcoming high could be far more historic as sentimentlevels are quite bearish from different points of view. Are they right?

They could be indeed, as the decline from 2000 to 2009 could be  part one out of a total of three. Since March 2009 we COULD end the second part with a high by retracing 61.80% of the leg down 2000 ~ 2009. See how the 38.20, 50 and 61.80% retracements did their work so far. Part three about to start? We better pray for another scenario!

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Conclusion:

  1. Markets are topping out and a historic decline of huge proportions can start as part three will wipe out all gains of last years and even more. This is the worst case-scenario…or
  2. Markets need a breather with a fast correction to start soon, hammering the Kitchin-LOW.

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AEX

As in chart described a new measured move RSI lies ahead with 511.15 as 512.75 is yearly balanceline. See monthly chart and convince yourself how nice all seems to fit in time and price as the 38.20 % retracement is 509.05.

Strategy: Selling short from 506.25 on with weekly stoploss on close 513.

TP1: 484 ~ 480

TP2: 462 or yearly balanceline 445 = about 50% retracement monthly chart !!

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SPX

Not much to add this week. See prior post and chart below for details.

Strategy:  Selling short from 2.383 on with weekly stoploss on close 2.401

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PS: If you like to enlarge the charts, rightclick with mouse and click “open image in a new tab”. The new tab should give great insight.

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Have a great weekend, MW1

 

 

 

 

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SPX/AEX-update 19th of February

Hi guys,

We witnessed another interesting week with new highs in the major indices.

Regarding prior posts about the importance of building some kind of top here, today I like to announce a SHORT-trade next week. Why?

  1. SPX hit measured move RSI of 2.329 and 2.384 is about 1% shy of yearly resistance
  2. AEX hit measured move RSI of 493.02 and 512.75 is about 2% shy of yearly resistance
  3. Timezone is due for small or bigger correction downwards

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AEX

Probably tomorrow, the 20th or later next week I start selling from 506.25 on with weekly stoploss of 512.75 on close. We got another purple dot last Friday, confirming negative divergence on daily basis. The green boxes in chart below represent two bearish scenario’s, where

  1. a small correction will end between 484 ~ 479 and
  2. a bigger correction is heading for 200 day MA (457) to yearly balanceline 445.
  3. the 9th of March and 20th of March are dates to consider closing strategy.

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SPX

With lots of US-indices confirming Harmonic bearish setups since last Friday I like to take a SHORT-trade in SPX as well. From 2.370 on with weekly stoploss of 2.401 a correction to at least 2.304 is possible. If this consolidation is even worse I expect prices to fall to the unfilled gap of 2.209…or even more.

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PS: If you like to enlarge the charts, rightclick with mouse and click “open image in a new tab”. The new tab should give great insight.

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Have a nice weekend, MW1

SPX-update 11th of February, RISK-mode ON!

Hi Guys,

And again we saw quite an interesting week as SPX broke spiral upwards of 2.304. Second, yesterday’s high was 10 points shy of measured target positive reversal RSI of 2.329.

As in prior post described, RISK-mode is on now as the 1-yearcycle of last year’s low is celebrated today….with a HIGH?

It could be indeed as TIME is always more important than price!

IMO we face some kind of building a topformation here, where TIME is at risk from now on until mid March at least. Many cycles, from 3-month (Trump won elections) to 8-year (low March 2009) are confluencing here. That’s exactly the reason why it is impossible to pinpoint an exact date as we don’t know which cycle overrules the other in time.

  1. For this reason it’s nice to know what targets in PRICES still are possible. We are going to look for this, including volatility by VIX (SP500).
  2. Another scenario with mid March as LOW we even have to consider!
  3. I like to share recent insiders buy-or sell-behaviour, interesting!

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1. 

Targets in SPX are;

  • Positive reversal RSI = 2.329
  • Yearly resistanceline = 2.383
  • C=A (EWT) = 2.383

Target German DAX by Harmonics

  • Bearish Butterfly W1, target 12.170

Volatility H1 SPX, I like to see a shoot below lower standard-deviationband

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2.

As mid March is starting Spring where many historic lows are born we also have to consider mid March as LOW!. In this scenario we may expect some kind of crash as time from top to low is short in time.

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3.

Source Thomson Reuters, a picture tells it all. Why are the better informed selling?

insiders-ratio

 

Conclusion; My investment-advice is neutral. Besides I start looking for taking a shortposition from 2329 on, knowing more upside is possible, but not necessary as time may be done now. To pinpoint more in detail, I also watch for confirmation in volatility and DAX.

The reason for this agressive approach is that mid March also could be a low!

PS: If you like to enlarge the charts, rightclick with mouse and click “open image in a new tab”. The new tab should give great insight.

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Have a nice weekend, MW1

SPX-update, 4th of February 2017, markets still dancing but music stopped!

Hi guys,

This update could be one the most important of 2017 as I like to explain my view on SPX in coming weeks/months.

In prior posts I already outlined the 8-yearcycle, started from March 2009, a very significant low.

Below I will show you how important the upcoming cycle could be in terms of significance proven with Fibonacci, W.D. Gann and even Elliott Wave-analysis. The latter, EWT has always been very subjective to me but below I implement social behaviour in wavecounts as this looks to me confirming any wavecount mostly.

Analysis based on W.D. Gann;

This analysis is always based on Time 1) and Price 2), where Time is more important than Price. In prior posts I explained the bigger picture in Time so will not repeat this.

Based on Gann’s spirals I see 2.304 and 2.401 as next hurdles. As of close yesterday 2.304 is nearing fast so some choppy action next week looks favourable to me. Timewise from the 10th of February (1-yearcycle) until 28th of March is a keyzone with lots of hits to rely on for CIT (change in trend). A special key-date is around the 20th of March!

Probably SPX keep on with choppy/rising action until June but this would only fit in an alternate scenario.

Analysis based on Fibonacci;

Fibonacci-wise I see a huge 8-yearcycle ending in coming weeks/months. See prior post for details. For price-patterns I use Harmonic patterns which in fact confirm topping action coming up. An example of Dow Jones Industrials is included, see below.

Analysis based on Elliott Waves;

As we see in chart below we can conclude that the February 2016-low was of major importance for the current run up. Another aspect is the social behaviour of markets. Important lows and/or highs will mostly occur on changes in social mood. For this reason I researched Elliott wave-patterns who are impulsive or corrective.

In chart below I labelled the run up from Feburary 2016 as a corrective move. To be honest it is one of the more rare corrective patterns Elliott relied on. It is called a running correction, where, and this for me is the most important part, the C-wave is equal in length to the A-wave. Ofcourse this is textbook-analysis so the real world might be less exactly.

To avoid discussions about labelling the waves, as in hindsight it is always clear, I came to this conclusion because;

  1. The 1st wave (A) stopped at 2.116 (2.111.05 actually), a spiral, and was worth 300 points
  2. The second point of interest was Brexit, to me a logical explanation to label this low.
  3. The B, when Trump won elections, is also a major point in price.
  4. The whole a,b,and c then is of the family of corrective patterns, a running one (B) and part of the bigger picture where C is unfolding still!
  5. Probably the most interesting part of this analysis is the fact that from EWT-point of view we consider C=A in length! So we have a measured target in EWT!
  6. The length of wave A was 300 points. Wave C is…..indeed,  300 points as well!
  7. Low 2.083 (B) in November plus 300 points is target of 2.383,  exactly my 1st resistanceline on yearly basis (fat red line)!

Conclusion:

IMO we are in the first stages of an important toppingprocess as the upmove from February 2016 and probably even March 2009 is expected to end in 1st half of 2017. Is a new crisis looming or may it just be a correction in an ongoing bull-market?

The media are talking about forming a new world-order as Trump is waking the whole world up with his decisions. Such news, with lots of uncertainty of several levels of interest, not only in United States, is a negative medium term. Let’s see what elections in Europe will bring us, exactly in the timezone!!! This time it will be different? Be prepared!

Regarding the EWT-analysis, when proven to be right as it turns out to be a corrective move up (ABC), we may expect a severe decline coming up to at least 2.100. In fact the bullish sentiment regarding 2017 is still valid above 2.095. Coincedence or not, the 50% retracement over low February 2016 and 2.383 (when reached) is….2.097!

More devastating scenario’s can be made in case the whole 8-year bull-run has to be corrected…or even worse. But let’s focus on topping action first.

From the 10th of February on the TIME-element of analysis is due. Regarding the 8-yearcycle it is quite challenging to pinpoint an exact date for top, but key-dates to me are for now;

10th of February, 9th of March, 15th of March, 19 ~ 21 of March, 24th of March and 28th of March.

I watch, as time and price must be aligned, for those dates including reached price-targets.

In general US-indices, based on same EWT-pattern, still need 2 ~ 5% upside from current levels to fulfill their targets.

PS: If you like to enlarge the charts, rightclick with mouse and click “open image in a new tab”. The new tab should give great insight.

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Overall I keep my investment-opinion on neutral for now after the nice runup from November 2016. Shortterm more upside may be expected, but overall risk is increasing rapidly.

Have a nice weekend, MW1