Thursday, August 9, 2012

Market is Close to a Top!!!

Its is a time to be very careful.

1. The Trend is Neutral-Down for the global stock market proxy, which suggests that the resolution of current sideways market action will be to the downside.

2. US and Global markets are currently undergoing the 8/4 Test on a weekly time-frame. If the test fails, the market will crack hard to the downside.

3. Based on Elliott Wave analysis the wave structure is nearly complete, suggesting that we are close to the top.

4. Sentiment is showing complacency, which supports the top rationale.

5. Technically, current market rise has been very week in terms of internal strength. Furthermore, markets are tracing out ominous technical patterns. And these patterns are prevalent across multiple markets, which is even more dangerous.

6. Inflection Point Model (Both Weekly and Daily) have turn dates around August 10 (+/- 4 days).

7. Leading markets are showing significant divergences, which is typically a harbinger of future market decline.

8. Fundamentals, have weekend considerable especially after the FED and ECB did not announce any new QE program. If the market had fallen right after those announcements, it would have been a very obvious trade. But now after 1 week of rise, market has convinced a lot of participants that those decisions did not matter. However, those decisions were very significant events!! At the same time, slower profit growth, weaker U.S. data, a faltering global economy and other looming events, like the U.S. fiscal cliff and more fallout from the European debt crisis, are all reasons for concern.

Risk-Management: The market (SP500 and Nasdaq) should not rise above April 2012 highs...

Note: I have been busy for the past few weeks that is why blog posts have been in-frequent. If you want a detailed report of the above mentioned analysis or any of the individual components, please send an e-mail to

Because compiling such a detailed market analysis report will take up a lot of time and effort, there will be a fee associated with it.


  1. Naqvi,

    If everything is primed for the down turn, why don't we go lower now vs. the "turn date?" What's so significant with the "turn date?"

  2. To be honest, I myself am surprised at how things have come together near the IPM turn date. Its just that market managed to stay afloat till we reached the turn window.

    You are right that the market should go lower based on all of the reasons mentioned above. But how did the IPM model knew that such reasons will surface during the upcoming turn date?? It just did...

  3. Naqvi,according to your IPM turn date, the market should fall on coming Monday (the last day of 10Aug +/- 4days). What the market could be if market passes to a new 52 week high on 14/15 Aug? I think the possibility is very high.

  4. Nick the ipm model window includes market open days I.e. August 10( + - 4 days would mean) August 6 to August 16. I still think that new highs in both SP500 and Nasdaq are a very low possibility.

  5. Does low volume from the past 4 or 5 days indicate a decline is coming?

  6. and the VIX is at 13. Is that a good sign of future decline? I thought the VIX needs to be high in order to signal a top?
    Anybody? Thanks

  7. According to Abby Doolittle, the VIX needs to bottom and bounce up to 17.56 to keep the bull trend alive. If no bounce, I would think the market has topped and look out below. As always, be careful out there....Brad

  8. I was thinking this morning that this market is like a fighter that just doesn't know when to go down! Jeeeze. Brad

  9. The market has been very dull over the past few days, which corresponds to low volume. In terms of Elliott Wave structure, this market pattern suggests that the market was tracing out 4th wave of the final 5 wave sequence. If time permits, I will post a chart for Elliott Wave count of current market structure, which counts best as: 3(A,B,C) - Triangle - 5(Diagonal). In order to complete the pattern we needed one spike above August 7 highs. So at this point, if the market declines below 1396 (SP500) then it would mean that have started the decline. In any case, both SP500 and Nasdaq should not rise above April highs.


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