Nasdaq NQ (EOD)


#1

The Nasdaq is interesting at this juncture. Has the 80 day cycle occured or not? Long term phasing below and shorter term phasing below. Note the predicted support at the 40 week FLD in the Nasdaq rather than the 18 month FLD in the DJIA and others…

Note also the A-H interactions between price and the FLD suggests the ‘A’ category is yet to come…


#2

Hi David, very interesting juncture indeed. You mention that the A-H sequence suggests an A coming next, which is true. But it is worth mentioning that if that 80-day trough has come in and it is going to be a “subtle” trough (not really straddled, but unimpressive) then the A-H sequence that follows it will be distorted to the downside. This would fit in very neatly with this being the last 80-day cycle leading into that 18-month trough in late August.
And in fact if you look at the interactions that have followed that 80-day trough they are exhibiting good characteristics for a downward-pressured sequence: the A-category looked like it just achieved its target last week, and when price fell back to the FLD for the B-cat it did a typical B-cat track from Tuesday to Thursday last week. And finally for the market to slip below the FLD on the B-cat would not be unusual with so much bearish pressure.
It’s going to be interesting to see how it plays out.


#3

Yes, exactly, that is the other scenario that presents itself. The fsct the other markets look like they are bouncing out of the 80 day is making it interesting. I’ve little doubt there is money to be made for all Hurstonians on the short side in the coming weeks…


#4

I am fully on-board with you guys.


#5

Guess where we’re headed next?


#6

Down for about one week than up one week again.


#7

That’s right, we should trough at the peak of the 20d FLD (black) give or take a day. The question is do we break out of this congestion zone to the 40w FLD (purple). If so, it will happen quickly because there is a lot of white space below us. I’m guessing we follow the script and this thing starts to pick up a little steam to the downside now.


#8

I’m looking for a weekly high today and a 5 week high at the end of next week or so based on projecting the average period of my price waves. Translation may cause those times to wiggle a little bit but the very short price waves will pick it up.


#9

Agree on the high today. The last 5 week high was a lower high that occurred at the FLD congestion area at the end of last month. Might be a replay next week if we are headed lower to the 40w FLD.


#10

I have a little uncertainty due to the fact that the down trendline connecting the two most recent 5 week highs has been broken to the upside. Ordinarily that would imply that the next 5 week low will be higher. I looked back a couple of years and I did not see any expanding triangles formed by the 5 week wave in the NQ. I never use the NQ to determine overall market direction, however the 5 week wave is dominant presently in all three indices with the Nasdaq having the most amplitude.


#11

NASDAQ model. Confidence is not high. NASDAQ is not in cyclic mode and the trend is still up until proven otherwise.

DJIA monthly will it go vertical?


#13

I’m super new to cycles (learning from all you experts so thank you) but doesn’t it seem likely that the July 5th low was actually an 80d low and we’re currently nearing the peak of the 40 day? Still lines up for a 20w and 40w trough sometime in late August early Sep? Happy to hear where I’m wrong…(and sorry I don’t have the cool tools you guys do, just bloomberg…)



#14

Hi Dwarner, welcome.

That phasing is correct in my view and what I am tracking in all equity indices.

Dave


#15

Don’t knock Bloomberg, brother. I couldn’t live without it😊. Of course, ST is really great too.

As usual, the stock market phasing picture has become clearer with patience and time. A good lesson for all, including yours truly. I cannot remember one recent instance where waiting for increased visibility and/or clarification hurt me. That’s probably because I’ve been itching to short this monster.

Curt


#16

Ha I have been too! Hardest thing for me is always being patient and waiting for confirmation. Prob should get on the ST train too! Has to be helpful!

BTW not sure if you’ve looked at bond yields lately but feel like the June trough was meaningful ie looks to me like the 17w (ish) and the bounce here is off a shortened 40d with the 80d toward end of August/early Sep? The bounce has just been too impulsive for me not to think the trough in June was more meaningful. What do you think? Guess i could post in the bond chat too…


#17

Here is a short term chart updating my comments from above. Barring a drop of Biblical proportions next week, the 5 week price wave is going to put in a higher low. The 20 week price wave (red diamond) has also put in a higher low. The 1 week price wave is trying to put in a higher high.

I believe in taking what the market is offering and right now that is trading long (futures). I word of caution though. On the other indices the amplitude of the 20 week price wave has shrunk considerably. It is starting to look like an amplitude “squeeze”. Tight VTL’s based on the 5 and 1 week price waves should provide timely entry points to short at the next high in case the market decides to take a dive. There is no need to anticipate.


#18

I like your style, William.


#19

Hi William,

Given you’ve noted the last two 20w troughs on the above chart, this must imply that according to your filter analysis, the 80w trough was in early July? If so, your results would be different from most ST users. I am curious why you think this would happen. Could you humor me and provide a comparable filter analysis as the one above since 2/2016? I just want to see the phasing your filters produce from the last major low.

In your experience, what does an “amplitude squeeze” lead to? What other cycles could be having a more significant influence on price if not the 20w? I seem to recall you saying, “If you get the 20w cycle right, you’ll get a vast majority of the trades right”. What about in an amplitude squeeze situation?

Sorry for all the questions but I am still very interested in using a band pass filter approach as a complement to my ST work and it is important that I understand both and reconcile the differences, if possible.

Thanks.

Curt


#20

Hi Curt and William

What means “amplitude squeeze” ?

Amplitude squeeze means that the amplitude of the “cycle” is reduced . Here because of the underlying trend ( sum of the Cycles whose duration is longer than 1 Year // 256 Trading Days

since the last Low of the 18 Months - you can roughly estimate the variation of the amplitude going from 100 % of the 1 Year Envelope amplitude , then 75 %, then 50 %


#21

Hi Curt,

Those are good questions and I’ll try to answer them as best I can.

Firstly, my results will almost always be different from, but similar to, ST users. The difference stems from the underlying assumption as to what constitutes a price wave. ST uses a “pattern recognition” algorithm whereas filters mathematically extract the waves from the price itself. One of the larger differences is manifested in the fact that ST hard codes the synchronicity principle even though Hurst stated that it was just a “strong tendency.” It is mathematically impossible to have always synchronized lows using filters. This is not meant to be a criticism of ST, which I think is a spectacular piece of software, but merely to highlight some of the differences.

Based on the above, your statement about my filter analysis implying an 80 week low in July is incorrect. Another distinguishing characteristic of the filter approach is that the price waves are not restricted to a simple harmonic relationship in the time domain by a factor of two. They frequently create complex harmonic relationships with neighboring price waves over long runs of data. The chart below shows the 80 week wave in the S&P500 back to the 2007 high. Notice for several years it had large amplitude and was visually evident in the price action. However beginning with 2012 4 year low (red square), the amplitude shrank to almost nothing over the next 4 year cycle. It did not phase to the 2016 4 year low, which is rare but not unprecedented. The most recent one and a half oscillations has it phasing to somewhat visually evident highs.

When I see a diminution in amplitude of a price wave, I just look at the longer and shorter waves to determine which one is “visually evident” in the price action. Presently the 40 week price wave is exhibiting consistent amplitude over the past year or so and of course the 5 week price wave. When there is a “squeeze” it is eventually followed by an expansion. This usually occurs when a much larger wave changes direction. You see it most often at highs.

I could go on but I don’t want to be too verbose. Hope this helps.

William