Intelligent Investing, LLC Major Indices Daily Update 02/26/ 19

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1 Elliot Wave Updates Yesterday I found a move below last Friday s high (SPX ) will be a first sign of lower prices as then the decline can t be a 4 th wave because 4 th and 1 st waves can t overlap in a standard impulse (unless we re dealing with an ending diagonal [ED]). A move below SPX (last Thursday s low) will be the 2 nd clue that a top has been struck as even in an ED wave-4 doesn t move below the start of wave-1. A break below SPX2731 is the 3 rd step and we still need ultimately a break below SPX2682 to be able to confirm major-1/a. Step 1 has been accomplished, but will the Bears fail yet again at step 2? It is still possible, but odds for higher prices are thus decreasing at this stage. Figure 1: SPX hourly chart: Possible impulse pattern shown can have completed at SPX Page

2 The Dow Jones closed lower today and can therefore still complete the one more down and up wave (green wave 8, 9 in Figure 2) to complete an impulse up off the February 14 low. Yesterday green wave-7 topped, wave-8 now underway, to be followed by a final wave-9. As said yesterday this pattern is not necessary as there are enough scribbles in place to count the advance since the December low as complete; in addition to the fact that the 5 th wave extension target zone was reached, and price stalled at the lower end of resistance. To invalidate this pattern a move below last Thursday s low is $25762 is needed. Ultimately price needs to move below the February 8 low ($24883) for full confirmation (any subdivision of the waves is then impossible), but since the largest pullback since the December low was ~800p, a move deeper than that (~$25400 from current levels) will be very telling. Figure 3. DJIA daily chart. DJIA reached lower end of resistance and target zone. One more wave up can t be excluded, but a move below last Thursday s low will tell a top has likely been struck. 2 Page

3 Nothing new to add to yesterday s update for the daily S&P500 chart either: it continues to show triple negative divergence on its daily RSI5, has another initial A.I. sell signal. A move and close below SPX2775 (lower end of resistance and the lower dotted red trendline) will be telling. For now, this chart looks toppy. A break and move above the yesterday s high (SPX2814) will leap price over resistances and will be Bullish, however. So, we continue to watch those levels. I added a pennant pattern that formed in January and it does target SPX2875, but there s no guarantee price will get there. Figure 3. SPX Daily chart New initial A.I. sell signal, triple negative divergence, (trendline) resistance holding. 3 Page

4 Market Breadth Market breadth as per the McClellan Oscillators (MO) continues its decline and is only barely positive. Not a healthy sign. But, as long as breadth is positive the Bulls are still in charge. The SPXMO closed below its lower Bollinger Band (BB) and often within two days a move back inside can be expected; e.g. the NDXMO closed on February 21 below its lower BB and then rallied the next day; whereas the NAMO closed below its lower BB on February 8 and rallied higher since. The related Summation Indices (SI), which change with the daily value of their respective MOs, are therefore still on a buy and continue to be extremely overbought for each day that passes with positive MOs. See Table 1. The VIX is forming a possible diagonal, which on a break higher (above its 20d SMA) targets around $21. A higher VIX is of course Bearish for stocks. Figure 6. SPXMO continues to trend down, but closed below its lower Bollinger Band today: snap back? VIX is setting up for a larger (up) move but must break above its 20d SMA first. The 1 min TICK registered no >+800 peak and no <-800 peak today (max +1087, min -851), thus a neutral market. The equities only put/call ratio (CPCE) ended at 0.60, while the CPC (total put/call ratio) ended at 0.85 today; which is noise to low. Yesterday s too Bullish readings were indeed correct in foretelling todays price action as CPCE readings below during this rally- have consistently resulted in prices below the signal s day closing price one to three days later. 4 Page

5 Buy/Sell signals based on Summation Indices and My Mechanical Systems 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. See here for more information Bottom line: Not much happened today other than a break below last Friday s high, which was yesterday determined as the first sign of lower prices to come. But, the bears still need that 2 nd confirmation: a break below last Thursday s low and ultimately a move below SPX2731 is needed to tell us the top for the current advance is in. Meanwhile breadth keeps deteriorating, though a snap-back within the next two days can at this stage not be excluded. If that occurs and depending from what price levels- than a move above SPX2814 can target SPX , 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. 5 Page