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?

1-2-3 set up in formation ?

Compare today's action with yesterday's chart - the set up appears to be unfolding.

Waiting for a 1-2-3 set up ...

Looking for something like this to occur - until then, patience!

Approaching oversold on the Daily

Almost every other time in the last 2.5 years, every time a 5th wave on the daily ended, the market dipped below the 200 SMA along with an RSI(14)<30 and a MACD deep dip below "0".

Today, always on the daily, we have an RSI(14)=30.71, a deep MACD dip & price < 200 SMA.

So far all is book perfect!

Of course, past performance do not guarantee future action, but nevertheless it is a time for CAUTION.

NEXT: After these dips, a new 5 wave structure developed raising the all time high even higher.


Let's see what happens this time: Need to wait here for more clarity

short term oversold conditions

Weekly: We are approaching the low of Aug 2014, a potential point of support

Daily: SPY is approaching the 200 SMA, a telling point usually for the market and a potential point of support

1-Hour & 2-Hour: Break-down below Oct 2 and Oct 8 lows early today, leading to further down action. Last hour sell off before the weekend reached almost oversold RSI conditions on these time frames. Lack of MACD / SPY price divergence still!

15 min chart: SPY closed on oversold RSI conditions displaying also MACD / price divergence!

Interpretation: We are approaching both potential levels of support in the weekly and daily as well as oversold conditions in the shorter time frames.

Next: CAUTION

looks like a wave 4

up - down - up - down : looks like a wave 4

patience is required in order to determine the market's next move

of not is the fact that there is no lower - low yet

we are still looking for a MACD - price divergence

1-2-3 set up in the making ?

15min chart:  We reached overbought conditions today following another 1-2-3 set up similar to last week as shown below on this time frame. It is very interesting that today's $SPY low was $0.01 above last week's low (but not on the $SPX) -  ES/ was similar lower only by $0.25 lower.

60 min chart: Last week and today $SPY bottomed on oversold conditions on the hourly chart followed by a bounce as expected.

Interpretation: We may be forming an 1-2-3 set up on the SPY while the recent descent in the short term may be over.

Next: after the current 5-wave structure is complete and is followed by some type of retracement, will look to identify a daily close above ~197.55).

Example of 1-2-3 set up from last Friday as requested

Last Thursday a potential 5-wave up structure formed on the short time frame (5-10-15 min) charts:
i-ii-iii-iv - to -1 on Thursday Oct 1:
- MACD histogram became positive, following the price up and then negative (MACD < 0)
- potential wave-1

Then Friday am, there was a strong gap up at the open:
- Price closed on the 15 min chart above Thur high (labeled 1) accompanied by MACD elevating higher than Thur
- wave-3

By Friday 3:00pm:
- there was a divergence in the MACD with Price
- MACD histogram had become negative
- end of wave-3

Gain: 196.75 - 195.75 - $1 (10 $SPX points).

Unsure at that point what would follow, including the weekend, so an exit seemed resonable

Monday action: Don't just do something-stand there and observe!
- Is this wave structure over?
- Total points of wave = $50 on $SPX: Usually upward waves 1 on larger time frame are 60 points
- the gap up open followed by a drop reminds of a final wave/push up and possible completion of a 5-wave structure

Next: If tomorrow we close the day above today's high, we may be dealing with an 1-2-3 set up on larger time frames (hourly-daily) - we will evaluate tomorrow Tue or Wed at close

For downward movement, we want to see the price move below 195 (Thur high)

it can go either way

Unable to find direction ...


15 min chart: divergence between MACD and price ($SPY)

Example of 1-2-3 set up

Steps:

(1) Determine "1" (daily) and confirm on lesser time frame (hourly)
(2) Enter "3" at the close after the breakout above "1"
(3) Set the stops at the bottom of "2"
(4) Exit:
              Option-A: exit at the end of "3"
              Option-B: ride messy "4" and exit in "5" when price/MACD divergence occurs

bounce up hits 50 EMA daily ceiling

Daily: Price ($SPY) hit and retracted from the 50 EMA that served as a ceiling (red arrow)

1-Hour and 2-Hour: MACD reversal on both time frames

Next: 2 scenarios

(1) this is either a "b" that will retrace ~50% of the decline from the top 

(2) this is a "i" of a new uptrend

Either way, we should see a move down on $SPX before price either sets up for an "i-ii-iii" or moves lower in a 5-wave structure

Oversold conditions: Is wave "a" down complete?

1 Hour + 2 Hour: We had a bounce on oversold RSI conditions on both time frames. We also have a reversal on the MACD histogram, which shows some type of upward reversal here.

Interpretation: The 2-Hour chart shows nicely a wave-iv (red) both on the price and the MACD (outlined in red). Therefore, we are expecting anytime now for the descent to reverse.

Next: Because there is no negative divergence between price ($SPY) and MACD yet, we ought to be cautious about another possible dip following a period of recapitulation here, whereby the price will make a lower low but the MACD will not.

Posting for October 1

Hourly: At the closing of October 1, the market displayed oversold conditions on the RSI, the second such condition in a week, and a divergence on the MACD histogram.

Interpretation: It appears that the decline since September 19 to have a 5 wave structure with a typical wave-3 topping / wave-4 structure from September 26 - 30.

Next: What is missing to call a completion of this descent is a divergence between the price ($SPY) and the MACD - perhaps we will see another dip below yesterday's drop.

This is still an "a" formation, which means that we likely have a bounce up yet to come