2 P a g e. Elliot Wave Updates

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1 Summary Last week I concluded Short term there s a possibility to revisit SPX first before moving below SPX2600, but the most likely scenario is a direct move lower with an ultimate target of ideally SPX , NAS6390 and NDX6080. At these levels the minute, minor and intermediate-waves that make up major-a all three have perfect Fib-extension confluence. True to form the markets dropped on Monday causing the S&P500 to reach SPX2583 that day, but only to close back above the prior week s close. The SPX then gapped up 25+p the next day and therefore had all the chances to rally higher for the rest of the week. But each subsequent day was met with selling pressure (close below gap-up open) and on Friday several indices made fresh 52-week lows. This means, from an Elliott Wave perspective, the move lower continues and is subdividing. Like last week, breadth ended the week negative, while investor sentiment is now more at panic levels but the put/call ratios have still not reached such levels since the correction off the October highs started. Hence, there s still room for more downside in the indices before washout low sentiment sky high put/call ratios and VIX levels are reached. The price charts continue to be weak with price<20d<50<200d SMA: bear market setup. In addition, the S&P500 has lost uptrend support in place since Hence, my SPX , NAS and NDX6080 +/- 10 targets remain in place. I can add targets for the DJIA and RUT at $23,200 +/-100 and $ ; respectively. Lastly, please remember stocks usually peak before the economy. And that s why we can't use old economic data (fundamentals) to predict the direction of the stock market. Only price can. So far, December hasn't lived up to its reputation as the year's strongest month. Stocks have lost -5% since the start of the month, which the Wall Street Journal calls the worst December start since This is a serious warning for the aging bull market which is in its 10 th year: the longest in history Aloha, Dr. Arnout, aka Soul, ter Schure 1 P a g e

2 Elliot Wave Updates As price fell to SPX2853 on the S&P500, which is THE main benchmark for the U.S. stock market, and why I follow it most closely and report on it extensively, on Monday; the rest of the week only saw a 3-wave bounce to SPX2685 folowed by a lower weekly close. This means the market is subdividing lower and the SPX2623 low was only micro-a, the SPX2710 micro-b of minute-a, which bottomde at SXP2583 and minute-b of minor-c of intermediate-c of major-a was this week s SPX2685 high. See Figure 1. Now minute-c is underway to finish it all off. Often c-waves consist of five waves, but we may as well see another set of a, b, c waves as the entire decline so far from SPX2940 in both down and up direction have been three (a,b,c) waves. A bit of a mood point at this stage as all lines of evidence, like last week, based on these three different wave-degrees still point to SPX : Fig 1. Figure 1. SPX daily chart. Preferred count shown. Only to scale in price not in time. Fib-extension confluence SPX of three different wave degrees (dotted grey-, green- and red arrows) gives a high confidence forecast the target zone will be reached. From there I anticipated a three-wave bounce back (blue arrows show preliminary, based on ideal ratios, bounce path), before the next even larger decline starts. b On the following pages the NAS, NDX, DJIA and RUT are shown with their ideal price targets, which haven t changed from last weekend s update: NAS $ NDX $6080 +/- 10 DJIA $23,200 +/-100 RUT: $ P a g e

3 Figure 2. NASDAQ daily chart. 3 P a g e

4 Figure 3. NASDAQ100 (NDX) daily chart. 4 P a g e

5 Figure 4. DJIA daily chart. 5 P a g e

6 Figure 5. RUSSELL2000 (RUT) daily chart. 6 P a g e

7 Chart Patterns Updates The Bulls lost (blue) uptrend line support and while there s still support in the SPX , which held in February and April, the difference between then and now is that price and the 50d SMA were back then above its 200d SMA (2759) showing strength but now both are below it and thus showing weakness. In addition, the price<20d SMA<50d SMA<200d SMA setup remains in place: Bear market. As such I don t think this support zone will hold other than for maybe another intra-day bounce. The technical indicators are all pointing down and are on a sell. Yes, the RIS5 is getting oversold, but crashes happen from oversold, not from overbought. Thus, this chart tells us to look lower. Figure 6. S&P500 daily chart. Charts technicals turned to sell, after trying to go to buy last week. Price closed below 2018 uptrend support, while <20d<50d<200d SMA: bear market setup. 7 P a g e

8 The importance of this lower blue uptrend line support is best shown in Figure 7. A simple box-symmetry analysis targets SPX ; which fits perfectly well with the target zone shown in Figure 1. Figure 7. S&P500 daily charts. Simple symmetry targets also SPX2500 and the loss off the lower blue trendline is a longterm Bearish signal. 8 P a g e

9 Last week I forecasted The 2 nd close below the [weekly Ichimoku] cloud will likely not be reversed: two times the charm. Symmetry targets SPX2475ish which is also where horizontal support resides. Since all TIs are pointing down and are on sell lower prices should be expected. This -lower prices- is exactly what we got. The cloud is now turning down (Bearish) and so are the 20w and 50w SMAs. There s potential positive divergence forming on the RSI5, but the MACD has fallen to its lowest level in nearly three years, while the last histogram bar of the MACD fell to a new low this past week (-29.39): there's probably more selling to come. The 150w SMA is next week at SPX2449, which is rather close to the ideal SPX target zone I have. Figure 8. S&P500 weekly chart. Price STILL below its 20w, 50w and weekly Ichimoku cloud. TIs still on sell. MACD extending lower: SPX2475ish most likely next target. 9 P a g e

10 Simple Moving Averages Charts The Simple Moving Averages (SMAs) can be used for trend-following. The Short Term (ST) chart continues to deteriorate supporting further downside instead of upside and is now 100% Bearish. The Long Term (LT) chart is deteriorating quicker as price remains below the 200d SMA: ~70% Bullish. Although these chart as lagging, neither is supporting higher prices. Figure 9 A) Short term Simple Moving Averages: 100% Bearish. B) Long Term Simple Moving Averages: 70% 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 P a g e

11 Market breadth and Sentiment The SPXMO (McClellan Oscillator -MO- for the S&P500) ended the week at -59, DOWN 19p compared to last week and all other indices MOs ended the week lower as well. See table 1. As such, the related Summation Indices (SIs) are all on a sell, except for the NDX-SI. Regardless, not a pretty picture, and not the internals that support a sustained rally. This is supported by the NYAD which is making lower lows with price, support lower prices as well. Figure 10. A) Daily SPXSI: Switched to sell this week. B) NYAD made lower low and still in correction mode. A 11 P a g e

12 In last week s update I found sentiment per the AAII Sentiment had shifted back to exactly the long-term normal 38% Bulls and 31% Bears. This suggests the market can experience more downside before sentiment is turning too Bearish. And VOILA, here we are. Lower price. But sentiment took a nose dive too and is now at 21% Bulls and 49% Bears. Further downside next week will certainly help get us to total washout levels. The Fear & Greed Index ended at 8 last week, down 3p compared to last week (on a scale from 0 to 100: extreme fear). In Bull markets this indicator stays in greed to extreme greed a lot, while in Bear markets mostly in fear and extreme fear. Hence, all this indicator does, is IMHO, continue to tell us -correctly so- we re in a Bear market. It can stay low for a long time. We can assess shorter-term Bullishness and Bearishness with the put/call ratios. This Friday the CPCE (equity put/call ratio) ended at 0.79 which is only 2p higher compared to last week, while the total put call ratio (CPC) ended at 1.14 (3p higher). Thus, despite the lower close this week, the current put/call ratios have barely budged and are still not extreme and have yet to reach the extreme levels as seen in 2015, 16 and 17 for example (CPCE>0.95, CPC>1.4) that coincide with a washout low. With AAII sentiment getting bearish but put/call ratios not yet (neither VIX btw which closed at 22; down 7% compared to last week) awaiting washout levels in these secondary indicators will be a good sign of a washout low at hand, especially when they occur close to the aforementioned preferred target zones for the major US indices. 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 Trading Performance Update with Hedge Fund North Post Partners, LP NPP provides neither a boom, nor a bust. Just consistency. New ATH close for us at 29.1% No comment. Please visit and bookmark our newly updated website, albeit still in progress, here: NPP s performance since 2017 compared to several major indices. Insert shows YTD performance. If you want to join our winning team, please contact me or NPP s President, Rus Chao, directly (rustinchao@gmail.com) for more information. We do the hard work, i.e. trading for you, and you get to reap the rewards! *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. We made another 10% back in realized gains over the prior week s losses this week and continue to be short (using inverse ETFs) all indices. I still expect to be at % EOY in realized gains. Please join my other followers for stellar performance. 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 Private Twitter Feed Trading Results Since June 1* *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 equal sized position. However, position sizes may 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. 2018, 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