Figure 1. SPX daily chart: Larger leading- or ending diagonal, with wave-4 of the diagonal now SPX2675ish now underway

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1 This correction is full of surprises, twists, turns, sharp drops and rallies. That s why corrections are so hard to forecast compared to an impulse. Thus, with the market not complying too much, other than a continued overlapping mess, to a nested i, ii, 1, 2 setup I am adjusting my preferred counts: anticipated, monitor, adjust. It s all we can do. I am a bit uncertain on which of the following is really transpiring (still too little data), so I ll give them 50/50. The first Elliot Wave count has a larger leading or ending diagonal with wave-4 now underway to around SPX The leading diagonal is shown, but the ending diagonal means this is the final wave up to complete all of major-5 (or Primary III). I will adopt that stance if this count produces a new ATH. Wave-5 should ideally target SPX Figure 1. SPX daily chart: Larger leading- or ending diagonal, with wave-4 of the diagonal now SPX2675ish now underway The other preferred Elliot wave count has a smaller leading diagonal 1 st wave (intermediate-i) already complete and wave-ii is now underway, targeting possible as low as SPX2645ish (see orange target zone). After a diagonal, wave- 3 is often extended and so I am looking at a minimum of 1.618x i, which would target well into the 3000s, for waveiii. Thus, from this perspective the downside is limited (~55p), whereas the upside is rather larger 300p. Please keep that in mind, even for the other counts shown. Figure 2. SPX daily chart: leading diagonal wave-i, wave-ii now underway to SPX P a g e

2 My alternate count is that the major-4 triangle is still ongoing with intermediate-e to around SPX2675 now underway. A move below that level will have me discard this count. Another retest of the 200d SMA, like in the other two (preferred) counts is likely. However, this count doesn t fit well with the NDX and RUT, see next pages. Figure 3. SPX daily chart: alternate count has intermediate-e of major-4 triangle still on going. 2 P a g e

3 This is from Wednesday, and for now I see no reason to change anything: The wave count for the NDX is still tracking along well, with an irregular expanded flat wave-iv underway, which is a nice alternation to intermediate-ii, which was a flat zigzag [sorry for the mix up]. This count fits well with the RUT (see next page). The alternate count here is (not shown) the recent high was only intermediate-i of major-5, with major-4 at the late-april low as there were a nice five waves up from that low to the recent high. Wave-ii should than retrace a bit more than the ideal wave-iv target of 6950+/-10, but for now things are tracking along the price action well, so I ll leave it as is until proven otherwise. Note the preferred count shown here for the NDX works well together with the larger leading- or ending diagonal for the S&P targeting ~SPX2850; and this is something we should keep in the back of our minds. Figure 4. NDX daily chart. Intermediate-iv underway and possible close to completion. Like the NDX also on the RUT, intermediate-iv should ideally be underway to around /-5. Price is almost there (5p more to go on a closing basis). Also here, the alternative is that only wave-i peaked and wave-ii is now underway. A move and close below 1615 will have me adopt that count. Figure 5. RUT daily chart. Intermediate-iv underway to ideally / P a g e

4 The S&P closed below trendline and 50d SMA support and we should therefore expect lower prices. Support is now at the green horizontal lines , which fits with the projected downside targets based on the Elliot Wave counts. All TIs are still pointing down, wanting to see lower prices, but are getting oversold. Hence, downside risk is likely much less than upside potential. Or in other terms, the downside will soon (or already) have too many on the same side of the boat Last remark: price closed below its lower Bollinger band and a close back inside tomorrow (or Friday, if it closes below its lower BB on Thursday too), will give a buy the SPX signal. Figure 6. SPX daily chart. Closed below support, all TIs on sell, but getting (very) oversold. 4 P a g e

5 The S&P500 s McClellan Oscillator (MO) ended at -77 today, down 26p compared to Tuesday. The number of advancing stocks is now much less than those declining: Bearish. A such the SPX-SI ([Cumulative] Summation Index of the MO) remains on a sell, as are all other SIs by now as well (Table 1): Bearish. However, most MOs are close to or have reached their buy zone levels, with the NDXMO reaching extremely low levels (-111). These low readings were last seen at the late-march and February lows (-140, -125; respectively). In addition, readings below -110 have only occurred around two dozen times since the Bull started in Hence, per the NDXMO the markets are much closer to a bottom than a top. Lastly, the NYMO closed again below its lower Bollinger Band; hence we can look for another close back inside buy signal. The CPCE (equities only put/call ratio) ended at 0.67 today -elevated- after yesterday s low 0.5 close, marking its highest close since May 3 (0.76) when the S&P bottomed at SPX2595. The VIX closed at $18 today remaining above all its SMAs: That s bearish for stocks. It failed to give step-3 of the sell the VIX, buy the SPX signal today, but it closed again above its upper Bollinger Band so we re like with the NYMO back to step 1. The 1-min TICK registered many peaks below <-800 and below < Hence intra-day breadth was weak, but breadth is overall getting washed out. Figure 7. SPXSI daily chart: SI s on a sell as negative market breadth continues. In conclusion: Today the S&P moved lower than expected as the corrections unpredictable twists and turns continue. I ve therefore dropped the preferred nested i, ii, 1, 2 count and now focus on a wave-ii down (SPX ) or a wave-4 down (SPX ) of a larger leading diagonal, which could also be an ending diagonal for major-5 of Primary-V or Primary-III, depending on how high wave-5 will go (SPX ). Wave-iii in the first count can target as high as SPX The alternate count is now the major-4 triangle with intermediate-e to SPX2675ish underway. The NDX and RUT, for now support the preferred counts. Market breadth has reached buy zone levels on the S&P; and price, NYMO, and the VIX are setup for buy triggers if they close back inside their Bollinger bands tomorrow (or Friday if they also close outside their Bollinger Bands tomorrow). 5 P a g e

6 How to trade this?! Price-based (S&P500): Unfortunately, the market had entirely other plans when it broke over SPX2730 and sucked in all the Bulls, kicked out all the Bears, but only to reverse 16p later Such is life. We ll now await the next confirmation, which is strong rally back above SPX2740. 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 = ~4.1% (slim pickings) 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