2007- now comparison

It is still unclear if this is a A-B-C or a -1-2-3 which implies a 4 and 5 to come.
Only after the waves are completed will we be able to say what it has been.

Here is again a comparison between 2007 and now on the weekly:
The divergences between Price / MACD and Price/RSI are to be noted.

On the 1-Hour chart we can see the MACD histogram decreasing: When <0, then there will be a good chance this leg is over, like in 2007. However, it may also just note the top of wave-3 up (if an 1-2-3) and hence a somewhat prolonged 4 and quick 5 may still be in the works.

How do you tell a TOP : I will write a separate entry for that, but for now lets just say that "a top in a particular time frame is in when a new down-trend has confirmed!"

it can still be a large A-B-C

Patience is the name of the game

The waiting out game

Daily: We need to see the MACD histogram turn negative along with RSI(14)>70. We are almost there, but not there yet, in order to call for a short term change in direction

15Min: There is a potential short term trading opportunity here again for a wave down

Let's put wave counts aside: October 2007 v.s Now

Let's forget wave counts for a short while and just look at technicals as a measure of market participants' behavior.

First on the Weekly charts:  2006-08  v.s  2013-14

- Price / MACD divergence
- Price / RSI divergence

both at an All Time High and just following overbought conditions

Second Daily Charts

- Overbought RSI conditions
- MACD histogram < 0
- MACD turning down at the top

worrisome Price / MACD divergencies

The markets can not continue to go up without a break-down!

For the first time since the low of Oct 15, we have Price / MACD divergence in the 2 hour chart corresponding to almost overbought RSI(14) conditions.

What worries me the most is the Price / MACD divergence on the weekly charts (as well as monthly).
This concerns the whole uptrend that begun in November 2012!

Where are we in this uptrend ?

one last push up left ?

looking for that tradable 1-2-3 down

Futures are breaking down in an 1-2-3 fashion

Potential 1-2-3 set up for the down side

We have again Price / MACD divergence, indicating a possible top of some sort on the 1-hour chart

We have a dip in Price & MACD which can serve as a launch of an 1-2-3 set up to the down-side. Usually, we would like to have a daily close below today's low.

More evidence that this uptrend is almost over

1-Hour chart: See count on the chart

10min chart: Detail from boxed area of hourly chart

Conclusion: The uptrend looks like it is almost over

Monthly analysis of 2007-08 and Now

MONTHLY

October High   <  September High 
    ($201.82)            ($201.92)


2007: You can appreciate the divergence between (1) price and MACD, as well as (2) price and RSI.

2014: No such divergences yet

  =>    We expect that we will see a higher - high some time in the future

Is it going to be next month (November) ?

We will wait and see!

Should a higher high take place next week, we will have the occurrence of the divergence we saw in the summer of 2007



WEEKLY

2011: You can appreciate the development of divergence between the top of 3 (high prior to '4') and 5 (high after '4') versus MACD and RSI. Following the topping off, we have a lower MACD and RSI along with a lower price, which displays a bend like this: ^


2014: We did not have a higher-high today!
I hope you can appreciate the similarities between 2014 and 2011 in the '^' bend of the price and the 3rd descending peak of MACD and RSI. Interestingly, at the top of each high, the RSI barely touched a value of 70.



DAILY

I spoke about how this uptrend is a single wave yesterday (Friday 10/31).



The 3 most important things in trading: 1-2-3 set up

A 1-2-3 set up takes place during:

=> a new uptrend,

and/or

=> a C wave.

Note: If you read this prior week's blog, you will see how we were looking for a 1-2-3 set up in the downward direction to call the start of wave C down
This did not happen, despite the divergence we were noticing between price and MACD in SPY, $SPX and ES/ (suggestive of an end to the uptrend).



WHERE ARE WE ?

1). Either a giant single wave-1 up: It would require a sizable drop and then a breakout (1-2-3)

or

2). a wave B: I here show what would confirm such case (below).



CONCLUSION: Wait patiently now until we have clarity

We were correct on 10/18 about the market heading up, but not this much !

As we predicted on October 18 (Friday), the market went up as we saw a 1-2-3 set up on the 15min

We never thought it would climb so high so fast - what a short squeeze!


The question is "where are we now".


Daily chart: We are still within a single wave up since the recent low; we need to see overbought conditions on the daily RSI(14) to call this uptrend complete.


10min chart: Still looks like a part of a B wave up from the recent low, in need for a higher intraday to complete this part of the uptrend. That would also satisfy the requirement on the daily for RSI(14)>70. It would also generate a price / MACD divergence that is shown below.

Tomorrow will report on my monthly chart analysis in order to examine where we are

Beginning of a new trend?

Tomorrow will tell

Need a close below today's low for 1-2-3 set up on the way down.

Overbought and wondering when the shoe will drop

On the hourly, we have overbought conditions - a relentless bull!

Down-trend began? Futures say ...

Futures suggest that the down-trend has begun

Also, the daily chart agrees

Need of course confirmation with price action that will close on the daily below today's low

Analysis of the similarities between April 2012 and NOW

Similarities indicate possible wave B 

DAILY  ANALYSIS

- MACD histogram > 0

- Price > 50 EMA

- Price below previous high at overbought conditions

HOURLY  ANALYSIS

- Divergence between Price and MACD and RSI

- Overbought conditions

CONCLUSION:

Confirmation of impulsive wave C (down) will come from MACD histogram turning over and becoming negative.

This new wave C with occur in 5 subwaves: We will look for an 1-2-3 set up on the down direction


ALTERNATIVE:

A retrace of about ~50% of this push up since 10/15/14 in the short-term and then a break out with a daily close above the contemporary high will be interpreted as a 1-2-3 set up on the up side

Price captured the 50 SMA on the daily, but this is still one 5-wave push up

On the 1-hour chart, one can clearly see that this is a single 5-wave push up structure: We observe overbought conditions on the RSI(14) and price/MACD or RSI divergence!

The divergence needs to be resolved before this push up becomes appreciable.

So the buy signals on the daily and the weekly need to be taken with a grain of salt at this point.

An 1-2-3 set up needs to develop before a new up trend with legs is established - but not yet. It will require a significant pull back before a breakout above this week's high.

Book-perfect example of wave-3 and -5

1-Hour: We had a perfect example of a wave-3 and wave-5 formation on the hourly. We reached overbought on the RSI(14) at both instances. Also note divergence between price and MACD or RSI: book-perfect!

This may be a top of some sort: The price is expected next to dip down to Wednesday's low for starters - then we wait and see


Daily: Price was rejected at the 50 SMA

uptrend looks like it has ended

1 Hour: Price was way oversold on the hourly since yesterday - as I noted yesterday, a pull-back was expected!

15min: We got a divergence between price and MACD in this time frame. Then, the MACD is now below the "0" line and appears to be some type of 1-2-3 in the down direction in minute degree

Daily: As explained yesterday, a rejection at the 50 EMA was expected - indeed it took place.
Second we want to close below the 5 EMA.
Confirmation of a new trend down will come first from the MACD histogram turning over,
and then of course by making a new low.

Overbought conditions - set up for pull back, but how deep?

After a rally that surprised pretty much everyone, including me, although I called last Friday in the midst of negativity accurately that Monday would be a day up, we have now reached a point of overbought conditions with an imminent consolidation to occur.

Market stopped right up against the 50 EMA, similarly to what occurred on 10/5-10/6.

We will soon have a pullback and then the question will be "what next?"

Although it may appear that we will get a 1-2-3 set up on the hourly chart for a strong upwards move, we must not forget that we are also in set up for a large descent that will show on the daily chart as a reversal of the MACD histogram, with currently the MACD < 0.

Comparison between August 2011 and now

This was then: August 2011

This is now: October 2014

Up Monday ?

Charts are self explanatory

Only point to make is that there is still no divergence between price / MACD on the hourly chart, which means we will likely retest the recent lows in the near future.

A second point on the 10min chart is that we are due to form a price / MACD divergence soon, whereby the price will come up higher than Friday's high but the MACD will not - up Monday?