This week all major indices formed their weekly prints as if they were warning of the things to come. At this point I am hesitant to make any conclusions and would be looking for further confirmations next week when the next weekly, monthly, 3-monthly, and yearly prints are made.
Let’s explore the warning from the various angles.
All futures (upper row): All indices futures completed the very clear Hanging Men candles. The most notable of all is the NQ one that is also a perfect Bearish Harami combo. They all require confirmation in the next week.
DJI: The cash index printed the second Harami in a row. While there is a chance of a continued bull trend, it is rather minor. A confirmation for either direction is required.
NDX and SPX: These indices produced the Harami combos that need to be confirmed in the coming week(s).
SmallCap: This is the most interesting one. While the trend looks clearly bullish, the theory warns against 8-10 consecutive candles of the same color, each making a new high. At any point now the index could have a reversal and possibly a sharp one.
A holistic analysis of all indices and their futures from candles perspective shows that the odds are on the bears side and the bulls would need a major push to overcome the bearish pressure.
Many daily and some weekly technical indicators continued to deteriorate during this week. I am getting cautiously bearish based on these signs.
Over a month ago, I identified a possible diagonal and a sharp reversal to follow the diagonal. Based on the counts and Fibonacci levels I believe that the diagonal made enough waves to be considered completed as of last week. While there is a possibility of a new minor high early this week, there is a higher chance that all indices could start their corrective actions (perhaps aggressively) this week.
In the attached DJI futures chart I marked 30450 as the level where wave 1 equals wave 5 off the March low. Last week DJI hit 30390 and reversed down. Would it continue? We will know in the next few days.
This weekly update is somewhat short as too many important prints will be made in a few days and they will provide much more information for the monthly and yearly forecasts that I am planning to share next weekend.