2 P a g e. Elliot Wave Updates

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1 Summary In last week s update I concluded The S&P500 closed at SPX2532 and therefore suggests major-b is underway. Majora simple formed an unorthodox oversold bottom, I now prefer to see this rally as major-b, which consists of 3 smaller waves: intermediate-a, b, c. Wave-a should target SPX , with a sweat spot of SPX before wave-b takes hold to SPX , with an ideal target of SPX2480 +/- 5p from which wave-c can then target SPX to complete major-b. So far, the markets have complied perfectly as the S&P500 closed at SPX2596 on Friday and has stalled in the SPX zone for most of the week. Hence, I see no reason to change my forecast until proven otherwise. The daily indicators are getting overbought on all indices but the micro-count suggests we should still see SPX2625. Please note that SPX2640 (50% retrace of major-a) cannot be excluded, but since the other indices are inching ever closer to their own 50% retraces -as shown in last weeks daily market updates- with ideal targets of NAS7135 (+2.4%), NDX6795 (+2.9%), DIA24325 (+1.4%), and RUT1470 (+1.6%) to complete intermediate-a, the average of these indices possible upside gains applied to the S&P500 would target ~SPX2650, which is in line with the 50% retrace level. A break below SPX2560 from current levels is a first warning wave-b (of b) is underway, confirmed with move below SPX2540. Once wave-a is confirmed we can then determine the ideal wave-b path. These higher prices would align all indices smaller and larger wave counts, Fib-extensions, and retraces. Because as said earlier this week not until all indices have completed their own respective [retrace] advances can we see a larger (wave-b) pullback. Breadth is still strong on many fronts, though not all, but is also still extremely overbought and a cool down, the b-wave, to burn some of these excess off is most likely coming to our door steps soon. But, because breadth has been so strong, we can then also expect higher prices after; the c-wave back up. With price most likely moving to the upper end of my ideal target zone I ve had for some time (SPX ), the subsequent pullback will likely also bottom higher: SPX /- 20p. BUT, a move below SPX2440 at any time going forward will mean majorb has already topped and major-c to new lows is underway. However, I remain long-term Bearish because the S&P500 recovered a 16% loss in 14 days (2800->2344) with a 11% gain in 12 days (2344->2596). Impressive, but it is thus still less than the prior decline and thus still a bounce within a bigger downtrend. Especially with price still below its falling 50-day and 200-day Simple Moving Averages. Aloha, Dr. Arnout, aka Soul, ter Schure 1 P a g e

2 Elliot Wave Updates In last week s digest I stated Minor-c should now ideally target SPX , NAS ; which coincides well with horizontal resistance levels to complete intermediate-a. Bingo, you have arrived! Again, that s what accurate and reliable forecasting does for you. Enough shoulder patting, as the micro-count (as shown in last Thursday s update) still seems to want to target SPX2625 through a 1.618x extension. See Fig. 1, orange Fib-extensions. The alternate possibility is for price to form a (leading) diagonal (blue arrows), which has price drop to ~SPX2560 first ( d? ) and then rally one last time to SPX2625 ( a? ). Leading diagonals are quite common in a-waves (of a larger zig-zag), as they allow for a fast and furious b-wave drop, which wrong foots most (thinking new lows are coming), to then allow for wave-c to kick in. The 2 nd alternate is a run to SPX (upper green box), but given how overbought most indices are on the daily indicators -especially the RUT- and other factors, I find this a low odds possibility. Figure 1. SPX hourly chart. c=a target remains still in play. Leading diagonal cannot be ruled out. C-waves can extend to x a, but I find it less likely given lots of overhead resistance. 2 P a g e

3 In last week s digest I showed the road map Once intermediate-a completes in the SPX zone, with an ideal target region of SPX intermediate-b should take hold and bring price back to SPX , with an ideal level of SPX2480 +/- 5p. From there intermediate-c can then [ideally] rally to the % retrace of major-b: SPX Please keep in mind that corrections are treacherous and can do what ever they want: C=A relationships are a not a given, 5-wave C-waves are not a given, etc.. For now this is what a normal and typical b-wave counter trend rally should look like. This EWT count will, however, be invalidated if price moves below SPX2444 without making higher highs first.. For now there s nothing in the charts to suggets to me anything else is going on and I keep this road map pretty much as is, other than I narrowed the b-wave target down to SPX , until proven otherwise. Figure 2. SPX daily chart. Preferred path and target zones for the intermediate-waves that make up major-b shown. Please note the importance of the SPX2625 zone (horizontal dotted red lines). 3 P a g e

4 Last week the DJIA was the only major index left to suggest a 5 larger waves down could complete as price had stalled exactly where a 4 th wave normally ends. But, this week the index moved higher; confirming a perfect c=1.618x a wave. The DJIA s counter trend bounce still seems not complete as it hasn t reached it s c=a relationship yet, which targets the 50% retrace of major-a. In addition, as shown last week, the symmetry break-out target of the grey box also targets the 50% retrace (grey dotted arrows). Note how the 50% retrace coincides with prior support, which is especially wellexamplified using the DIA ETF as it is also rallying on ever declining volume. Figure 3. DJIA daily chart. 50% retrace most likely on tap. Note DIA ETF is running into resistance (prior support) at ever declining volume. 4 P a g e

5 Similar to the S&P500 chart shown in Figure 2, here I ve outlined the road map for the NDX (NASDAQ100), which has reached its c=a relationship and 38.2% retrace of major-a, typical for wave-a of larger wave-b. But a c=1.382x a extension can still try to target the 50% retrace, which fits with the forecast for the S&P and DJIA to also move (marginally) higher. BUT, a break below $6500 from current levels will most likely mean wave-b is already underway. Wave-b should then ideally bottom at the 23.6% retrace ($6320), before wave-c takes hold and targets the 61.8% at $7010 for a classic zig-zag major-b. Now lets see if the markets want to grant us with a text book b-wave?! As long as $6150 holds from current levels this road-map should unfold. Figure 4. NDX daily chart. Can still try to tag the 50d SMA to 50% retrace. Upside potential vs downside risk decreasing. 5 P a g e

6 Similar to the NDX and S&P500, the preferred (ideal) road map for the RUT going forward shown last week remains in effect. Price has now moved well-inside it ideal target zone and reached the 38.2% retrace level of major-a. Albeit a move to the upper end of the target zone, which coincide with the upper Bollinger Band and 50d SMA can t be excluded (only 1.6%) from current levels, price is now very overbought and the upside reward is very small vs the downside risk (4.7%). A move below $1420 without moving higher first will most likely mean wave-b is underway. Figure 5. RUT daily chart. Price has now reached well-inside the ideal wave-a target zone, while becoming very overbought. Price can still stretch a little higher, but wave-b can now take hold at any moment. 6 P a g e

7 Chart Patterns Updates In last week s digest I mentioned A move over the 20d SMA, can target SPX And as price has now cleared the SPX2575 level, symmetry breakout targets indeed SPX2625 (grey arrows), which coincides with the lower blue dotted trendline (prior support may now act as resistance) Albeit price is now back above its 20d SMA (SPX2521) and thus in a short-term uptrend, it is getting overbought (per the RSI5) and price is still below its 50d and 200d SMA (SPX2635, 2741; respectively) while all SMAs are still bearishly stacked and declining: 20d SMA<50d SMA<200d SMA, which still means this is a Bear market setup. Figure 6. S&P500 daily chart. SPX2625 most likely next. Price > 20d, but 20d < 50d < 200d SMAs, which are declining. That s still a Bear market setup. RSI5 getting overbought, and bear markets normally don t stay overbought for long. 7 P a g e

8 On the weekly chart, price rallied off its 200w SMA after positive divergence on the RSI5, but that s about it. The current price-bollinger band set up (see insert; with price rallying off the lower band without making a W-shaped bottom first) is more reminiscent off the late 08, September 10, and September 16 counter trend rallies/bounces than anything else. A W-shaped bottom -either with or without a lower low to set up positive divergences on all other TIs and not just the RSI5 is therefore still preferred. The insert shows there s strong resistance at SPX with the later being the lower edge of the Ichimoku cloud. These levels coincide well with the Fibonacci and Elliott Wave based forecasts, adding weight to the evidence. Figure 7. S&P500 weekly chart. SPX strong resistance. most likely next. Price < 20w < 50w and 100w SMAs. Current price action in relation to Bollinger bands suggest this is a bounce not a new Bull rally. 8 P a g e

9 Simple Moving Averages Charts The Simple Moving Averages (SMAs) can be used for trend-following. In this week s digest I want to assess the Long Term (LT) chart in more detail as it continues to deteriorate as price remains well-below all its LTs including the 200d SMA: ~55% Bullish. When we compare the current LT SMA setup with that off the 2015/2016 decline we see that it is about where it was during the counter trend bounce. Also this fits with my preferred POV that a (larger) counter trend rally is underway. Figure 8 A) Short term Simple Moving Averages: 90% Bearish. B) Long Term Simple Moving Averages: 55% Bullish. A Copyright Intelligent Investing, LLC. May not be copied and/or distributed without permission. B Copyright Intelligent Investing, LLC. May not be copied and/or distributed without permission. 9 P a g e

10 Market breadth and Sentiment The SPXMO (McClellan Oscillator -MO- for the S&P500) closed the week at +102, up 74p compared to last week, and all other indices MO s ended positive as well, supporting this week s higher prices. See table 1. As such, the related Summation Indices (SIs) are now all on buy. Note that this week we saw a Zweig Breadth Thrust (as outlined in Tuesday s Daily Market Update) as well as a new record high reading for the NAMO. Interestingly, not too long ago the SPXMO registered a new record low reading. Hence, this just shows how extreme the current market is from both sides of the spectrum and thus add additional challenges to the market s analyses and forecasts as there are no prior examples to learn from. All MOs are rather extremely overbought and may want to cool down first. They then also support renewed higher prices after. The NYAD has now broken above its downtrend line and Its exponential moving averages to confirm the past downward move is over, and a new (counter trend) up move is underway. Figure 9. A) Daily SPXSI: Gave a buy signal last week. B) NYAD has now confirmed the current up move is legit. A 10 P a g e

11 However, albeit the percent of stocks in the S&P500 above their 50d and 200d SMA are increasing we yet have to see the surge higher that tends to happen during either the start of a new Bull or even a larger counter trend rally (see Figure 10). Similarly, the Bullish Percent Index charts for the S&P, DJIA, and NASDAQ (latter two not shown) are still not >50, even after a 12 day rally, which is what one would like to see as there s then a Bullish Bias (more than 50% of the stocks that make up the index are then on a Buy signal). Only the NDX has a >50% reading. Hence, this breadth charts tell us that albeit the record high MOs and ZBT event, not everything is okeydokey under the hood. Fig 10. Percent stocks in the S&P above their 50d and 200d SMA, and the Bullish Percent Index. 11 P a g e

12 This week s AAII Sentiment improved further with Bulls, Bears and Neutral back to their long-term averages; 38.5%, 29.4%, 32.2%. A further rally to SPX would certainly add fuel to this impressive switch in sentiment and again wrong foot the majority so wave-b of b can start. The Fear & Greed Index ended at 30 last week, up 14p compared to last week (on a scale from 0 to 100: extreme fear). Hence, this indicator, which is more technical, correctly shows the damage done by the recent decline is being slowly repaired. We can assess shorter-term Bullishness and Bearishness with the put/call ratios. This Friday the CPCE (equity put/call ratio) ended at 0.77, while the total put call ratio (CPC) ended at Hence, both are slightly higher than last week and still in the noise zone. But it could mean more traders are preparing for a pullback. 12 P a g e

13 Buy/Sell signals based on Summation Indices and Mechanical System NO system is perfect, and NO system or trader has only winning trades. EVERY system gives false signals every now and then resulting in losses. But, sticking to a system over the long-run will pay off. Discipline pays. Switching between systems does not. Good systems have small losses and big gains and out-perform the indices. If you can t handle losing trades: don t trade! Table 1. Buy/Sell Signals based on Summation Indices Table 2. Buy/Sell Signals based on my Mechanical System for SPY/SH only. 13 P a g e

14 Investing Performance Hedge Fund NorthPost Partners, LP NPP provides neither a boom, nor a bust. Just consistency. We ended last week with another modest gain of +0.65% gain. We continue to play it rather safe than sorry, and we are not concerned our gains are currently underperforming the indices in the short term as long term is where we are killing it and that s what our investors are looking for. Performance since January 6, 2017 Performance YTD If you want to join our private investment fund, please contact me or NPP s President Rus Chao directly (rustinchao@gmail.com) for more information. In the meantime, please check us out on our website: It should not be assumed that future performance will always be guaranteed and/or profitable. Nor will future performance necessarily equal past performance or past performance trends. All trading and investment decisions are the sole responsibility of NPP. Joining NPP is free, but does not exclude commission costs, and other possible charges. 14 P a g e

15 Trading Performance Private Twitter Feed: Please Join Me & Sign Up Here. The first week of the year trading for me is in the books, and the best achievement was turning my SGMS position from a -11% in unrealized gains into +3.0% of real profits! Most other trades went well as well. It may not look like much, but last year we did 55% in 6 months: see here*. How does it work!? I tweet in real-time when I buy or sell and you can simply follow my lead*. It doesn t get simpler than that! Of course, you don t have to, but Private Twitter Feed Trading Results Since January 2, 2019* *Subscriber does not have to act upon tweets and should consider them as for information purposes only. Results (% gains and losses) are calculated assuming each trade is of exact equal sized position. However, position sizes and therewith returns will differ in reality. Results are for Intelligent Investing, LCC s -the provider- trades only. Subscriber results may vary due to different time of entry as provider s trades are tweeted shortly (up to two minutes) after they ve been made. Subscriber takes full responsibility for his/her own trades and assumes no liability towards the provider regarding possible losses as provider s system is not perfect and no system can guarantee only winning trades. When you subscribe you have read and agree to I.I. s terms and conditions and have read, understand and agree to I.I. s disclaimer. 2019, Intelligent Investing, LLC. This copyrighted weekly periodical is published on non-stock market trading weekend 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 my 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 information about managed accounts, program positions and other information is not intended as any type of recommendation, nor solicitation. For more information, contact intelligent investing at intelligent_investing@yahoo.com. I reserve the right to refuse service to anyone for any reason. 15 P a g e