Intelligent Investing, LLC Major Indices Daily Update 03/06/ 19

Transcription

1 Elliot Wave Updates It is still technically possible for the S&P500 to be in minor-4, as it is becoming possible more complex, but since the RUT is IMHO already in a confirmed major-2/b down wave, see Figure 3, and since the RUT always leads up AND down; odds are deminishing rapidly for this possible Elliott Wave count (40%). Also because price has clearly lost its uptrend support (black and green uptrend lines) and has closed below SPX2775. But, as long as price remains above SPX2764 it can still move high if it wants to. However, odds are now in favor of the major-2/b decline being underway (60%), which is shown in Figure 4 and 5. Figure 1: SPX hourly chart: 4 th wave becoming a complex irregular flat? Possible, but price has lost trendline support, closed below SPX2775 and the RUT is in a confirmed major-2/a. 1 Page

2 Nothing has changed today: The alternate Elliott Wave count is major-1/a topped at SPX2817, with the final 5 th wave as an ending diagonal (grey dotted lines) and major-2/a is underway to ideally between SPX ( %) after which major-3/c should take hold to new highs/aths. But we still can t be sure until the Bears accomplish the aforementioned steps 2 and 3: a close below SPX2764 and below SPX2741; respectively. In this case the first smaller (minute) wave-a has completed, and wave-b has also completed at SPX2796. Now wave-c is underway to between SPX to complete minor-a (of intermediate-a of major-2/b) and it is possible wave-c subdividing into micro-a, b and c, with micro-a possible (close to) complete, then micro-b to SPX2780 followed by micro-c down to ideally SPX2740 for a c=1.618x a relationship. A break below SPX2764 will confirm this count. Figure 2. SPX hourly chart: Major-1/a completed at SPX2817? Bears still need to see price move below SPX2764 first. 2 Page

3 Again, the RUT performed the worst today and since it is the canary in the coal mine: it leads in rallies and also in corrections; today s price action which erased half of the February gains confirms major-1/a has topped and major- 2/b is underway. Currently price is at a 1.618x extension for either wave-c or -iii. Hence, it is unclear yet if this will turn into an impulse (i,ii,iii,iv,v) or a corrective structure (a,b,c) down. The 2 nd line of evidence is price moved below the uptrend that has held all downside in check since mid-january. The 3 rd line is price closed well-below its 20d SMA. The 4 th line of evidence is the technical indicators are all on confirmed sell signals and at their lowest levels since the rally off the December low started. Hence, my CAUTION warnings over the last two days were correct. It is of course impossible to know beforehand how exactly the preferred wave-2/b will transpire, so for now we simply need to focus on the ideal downside target of IMHO around $ A break below $1440 will have me look at prices below the December low. But we ll deal with that possibility when we get there. Figure 3. RUT daily chart: Invalidated the can still do one more wave up option: major-1/a topped. 3 Page

4 The DJIA s daily chart continues to deteriorate and all the technical indicators are on a sell and have now dropped lower than anything we ve seen since the rally off the December low started. In addition, price closed below its 20d SMA for the first time since January 5. All add weight to the evidence major-1/a has topped, as all is behavior not seen before suggesting the current price action is not part of the uptrend anymore. Ideally, I anticipate minor-a to be underway and it could drop a little lower first, before minor-b rallies price back to around $26,000 from which minor-c take hold and takes price down to $ for a c=a to c=1.618x a relationship. That should conclude wave-a of 2/b. I don t want to look any further in time and price than that; as uncertainties are of course very large the further out we try to forecast the markets. Figure 4. INDU daily chart: Technical indicators on sell, price closed below its 20d SMA, lost uptrend line support: all suggest major-1/a has topped. Green a,b,c labels show anticipated path forward for wave-a of 2/b. 4 Page

5 The NASDAQ100 (NDX) daily chart show that the preferred count has 9 waves up off the February 8 low complete in overlapping fashion: ending diagonal!? These waves are simple based on red-days. No other criteria. Not the best of methods, but hey it works. Price must close below its 200d SMA to tell us it won t tag on a few more up-waves, but given the technical indicators are weak and bleak, down looks more likely than up. Figure 5. NDX daily chart: Technical indicators rolling over, 9 waves up completed off the February low, but no lower price lows yet. A break and close below the 200d SMA will be telling. 5 Page

6 The third down day in a row for the S&P500; it s 2 nd losing streak over the last eight trading days. Price closed SPX2775 today and while the 20d SMA is still holding (not on the DJIA and RUT) a break below it targets SPX2715 based on simple symmetry. This fits with the lower end of the target zone SPX shown in Figure-2. All technical indicators, including the A.I., or now on a sell. Hence, the indicators want to see lower prices for now, not higher. Figure 4. SPX Daily chart: Today price closed below SPX2775 and as expected the chart deteriorated further with all technical indicators now on a sell; wanting to see lower prices. A break and close below the 20d SMA targets SPX Page

7 Market Breadth Market breadth as per the McClellan Oscillators (MO) continued its decline even further and all five MO s I track are now negative. But all MOs closed today well-below their lower Bollinger Bands for most the 2 nd day in a row and a (snap back) rally within the next 1-2 days should therefore still be expected. Hence, the Bears are however now in charge as more stocks are declining than advancing across all indices. With the negative MOs the Summation Indices, which change by the daily value of the MOs, are starting to turn over and point down; and close to giving sell signals. The 1-min TICK chart was weak with no >+800 and eight <-800 peaks. Meanwhile the put/call ratios ended 0.70 and 1.06: neutral to noise. The VIX closed back above its $15 level but is still below its 200d SMA. Figure 5. SPXMO continues to make lower lows: Bearish. But it closed well-below its lower Bollinger Band for the 2 nd day in a row, while getting very oversold: a snap back rally within next 1-2 days is likely. The SPXSI is almost on a sell. 7 Page

8 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: Major-1/a has been confirmed for the RUT on all levels (price, indicators, technical support, length of decline, etc), but the other major indices haven t gotten that far yet (each index must be treated individually as each is unique); although their daily charts and market breadth have now deteriorated well-beyond anything seen since the rally off the December lows started. Thus odds now favor price being in major-2/a (60%) eventhough the S&P500 hasn t gone below its invalidation levels. Technically the S&P500 could thus still be in wave-4 of -v of -1/a, but we need to see price move above SPX2817 to be certain. For now, it is lower closing lows and today s close below SPX2775 doesn t help the Bulls either. Market breadth however has gone down too far too fast and its current setup suggest a short-term (snap back) rally within the next 1-2 days, while longer-term we should expect more downside. 2019, 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. 8 Page