Because the AD line made a new ATH, there s simple too much underlying strength to suggest a large third- or c-wave lower is just around the corner

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1 The short term count remains a bit messy over the past three days, so we ll just look at trendlines instead: see Figure- 1. Hence, please don t focus on the wave labeling as the 2 nd SPX2699 low may have been the low as well. Namely, the Bulls managed to break and close above the lower descending trendline, and if the market responds well to the NFP and Tariffs tomorrow, we should see a break above the upper descending trendline (now at SPX742) as well. That be a very good signal the market is on its way to SPX2850/2875. If the Bulls fumble again and price closes below the dotted blue uptrend line then we should expect SPX in rapid order IMHO. Figure 1. SPX 1-min charts: Price must clear the upper black trend line. 1 P a g e

2 As said on Tuesday: The S&P keeps gyrating around the 50d SMA, it s very hard to develop a consistent pattern; basing or distributing?! Today s close above the 50d SMA must thus be viewed as Bullish and opens up a move to SPX2780 (upper dashed purple trendline) and SPX2850 (upper dashed red trendline). Yes, I know that s a marked change from Tuesday update, but above 50d SMA: look up. Below 50d SMA: look down. Simple as that. The TIs are pointing back up, wanting to see higher prices. Here we can clearly see how a break above the dashed orange downtrend line (same as the upper trendline in Figure 1) is necessary to unlock higher prices. Figure 2. SPX daily chart. And back above the 50d SMA, TIs more firmly pointing up, but price is still in a short term downtrend. 2 P a g e

3 The NDX and RUT still look good for that 5 th wave up. Either it is intermediate-v of major-5 (of Primary V) or it s only to complete intermediate-i of major-5. Time will tell, as it has taken time for this 4 th wave to bottom (eight trading days so far with 0 net progress ). Again, you may think it seems as if I am flip flopping between counts given Tuesday s more bearish perspective, but please remember what I wrote on Tuesday: I am not saying this will happen, it is simple something to be cognizant off considering the short term, whipsawing, market movements, which are not indicative of a trending market but of a correcting market. Thursday may be a whole different story once again, and as long as nothing has been decided we simple have to keep all options open. And that s what we re doing keeping our options open as to feel out what the market is ultimately up to as eight trading sessions with no net progress can be confusing and frustrating. But in the end the below shown counts have remained the preferred counts for the NDX and RUT, and continue to line up with a 5 th wave for a diagonal on the S&P as well. Figure 3. NDX and RUT daily chart. Intermediate-v of major-5 most likely underway 3 P a g e

4 The DJIA has traded below its 200d SMA for the past seven trading sessions and managed to close above it by just 4p today. The DJIA must regain the 200d SMA or suffer the consequences: more downside. Price found support at the dashed green lower parallel trendline, and Elliot Wave count-wise we can make the case for a completed leading diagonal 1 st wave (wave-i) at the June highs (red arrows) and wave-ii should now be complete. A move below 23,400 will usher in a move to 22,200 based on symmetry and hence why the Bulls must reclaim the 200d SMA ASAP. A move above the 20d and 50d SMAs (24,800) will go a long way to reclaim a new uptrend and set the stage for wave- 1 of iii. How this then aligns with the other indices remains to be see, but since NDX/NAS and RUT have been out of whack with the DJIA over the past 2-3 months anyway, it may simple stay this way as well. Figure 4. INDU daily chart: time for price to move back above its 200d SMA or suffer the consequences. 4 P a g e

5 The S&P500 s McClellan Oscillator (MO) ended at +2 today, up 34p compared to Tuesday. It s the first time since June 18 the MO closed positive. Albeit +2 is not an impressive number, it s a feather in the Bull s Hat. The SPX-SI ([Cumulative] Summation Index of the MO) remains thus still on a sell, as are all other SIs (Table 1), but they can now start to bottom out and move back up on continued strength. The close back outside followed by close inside the lower Bollinger Band buy signal for the SPXMO, NDXMO and NAMO remain in effect since last Thursday. The NYAD made a new ATH today, which as stated on Tuesday will go a long way to help suggest higher prices are indeed ahead. Because the AD line made a new ATH, there s simple too much underlying strength to suggest a large third- or c-wave lower is just around the corner. The CPCE (equities only put/call ratio) ended at 0.60 today: neutral. The VIX closed lower and just below $15 today, after opening much higher: bearish for the VIX, good for stocks. Friday s sell the VIX, buy the SPX signal thus remains in effect and may have stuck this time. The 1-min TICK registered no peaks <-800 and four >+800 peaks during the day. Hence intra-day breadth was once again good. Figure 5. SPXSI daily chart: SI on a sell but bottoming out?! NYAD daily chart: new ATH suggests minimal downside risk. 5 P a g e

6 In conclusion: With price closing back above the 50d SMA things can be considered back on track for the Bulls, but a close back above SPX2743 is needed to ascertain the next leg up to SXP has started. Meanwhile, breadth is improving and the MO s ended 4 out of 5 positive today, while the NYAD made a new ATH. The latter suggests any downside will be limited: too much market strength. The NDX and RUT remain on track for the preferred last 5 th wave up to complete 5 waves up off their early-april lows. The DJIA closed less than 4p above its 200d SMA, and now needs to continue to move higher or suffer the consequences (22,200 ). After around 8 days of going nowhere to markets should tip their hands soon. Given the improving breadth readings we should expect higher. How to trade this?! Price-based (S&P500): Short term investors should still await a rally and close back above SPX2740 to go long. Longer-term investors are long since April 5 and should still be long and continue to have stops on a close below the 200d SMA. STD-SPY-Performance = ~5.8% Summation Index based: Table 1. Buy/Sell Signals based on Summation Indices. Intelligent Investing s Mechanical System: Table 2. Buy/Sell for the Exchanged Traded Funds (ETFs) SPY & SH and performance (intermediate- and long-term only. Short-term is now only my private twitter feed. ALOHA Arnout aka Soul, Ph.D. 2018, Intelligent Investing, LLC. This copyrighted daily periodical is published on most stock market trading days by Intelligent Investing, LLC, and is intended solely for use by designated recipients. No reproduction, retransmission, or other use of the information or images is authorized. Legitimate news media may quote representative passages, in context and with full attribution, for the purpose of reporting on our opinions. Analysis is derived from data believed to be accurate, but such accuracy or completeness cannot be guaranteed. It should not be assumed that such analysis, past or future, will be profitable or will equal past performance or guarantee future performance or trends. All trading and investment decisions are the sole responsibility of the reader. Inclusion of our information for trading and investing are the sole responsibility of the reader and cannot be construed as any type of recommendation, nor solicitation. 6 P a g e