Intermediate-a? SPX2533

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1 Summary Like last week, also this week s Friday-price action left a lot to be desired for the Bulls and ambiguity regarding which exact Elliot Wave price pattern remains: major-4 still underway? Major-4 bottomed, and intermediate-i is underway? Or is a larger triangle still possible? Regardless, the short-term trends on the major indices as now back up as price is back above the 20d SMA and price is staying above short-term up trendlines. It does need to reclaim the 50d SMAs on the major indices to make more headway. A break above SPX2675 can unlock these higher prices. A break below SPX2640 is a first warning because otherwise the series of higher highs and higher lows off the SPX2586 low continues, which is Bullish. Below SPX2611 will give the bearish count much more credence. However, the weekly charts are improving to the point where the weekly-djia gave an ideal A.I. buy signal it s 4 th since the March 2009 low and all 3 priors were at significant market lows, and several other indicators are also turning back up from levels that during this Bull always coincided with a significant low, or very close to one. Hence, the weekly charts also support that if there will be any more downside it will be limited and short-lived and that upside potential is far greater at this stage. Market breadth continues to improve, with the SPX-SI giving a buy signal on Friday; joining the NYA-SI and DJIA-SI which both gave buy signals earlier last week. In the meantime, investor sentiment is at multi-month lows. Thus, as usual, we ll let price be the final arbiter, but unless the bears can do serious damage next week, with any of it most likely short-lived, it should lead to much higher prices rather sooner than later. Major-5 SPX2872 Major-3 SPX2802 Intermediate-b? Minor-5 SPX2544 You are here Intermediate-a? SPX2533 Major-4? SPX ? 1 P a g e

2 Elliot Wave Updates Another false breakout, in this case from the SPX2670 level. The market was unable to take advantage of the banks great earnings and trapped Bulls and Bears as those who bought or covered saw all profits go to waste. 1:0 Market. Thus, we re back in the green chop zone and still in the yellow waring zone No material changes here. As such I ve increased the chop zone to SPX2675. The bears want to label today s high as minor-b of intermediate-c, which will have to see follow through below SPX2640 because otherwise the series of higher highs and higher lows off the SPX2586 low continues, which is Bullish. The Bulls want this to be still part of a larger leading diagonal triangle, targeting SPX2700 for wave-c as the decline today is still clearly 3-waves: 2651-> Figure 1. A) SPX 1-min charts: minor-b of intermediate-c of major-4 at SPX2680: 50%. B) price still stuck in orange warning zone, but leading diagonal triangle for intermediate-i still likely: 50%. False breakout 2 P a g e

3 The bearish count, as shown in Figure 1A, remains the larger ABC down, targeting ideally SPX But contrary to last week, price is now back above its 20-day Simple Moving Average (SMA; SPX2630), which is short term Bullish. Price will have to move back below it to keep the Bear thesis alive. If price moves back above the 50d SMA, the Bullish LDT will be favorited, but will also bring another alternate more firmly back on the table: the triangle (see Figure 3 next page). I wish things were clearer and I didn t have to present 3 counts, but these are what they are given the sideways price action over the past month. This will sort itself out soon. Figure 2. S&P daily chart: Bearish count, has a large ABC completing. support 3 P a g e

4 Here s the 3 rd possible scenarios that remains in play and keeps popping back up; the dreaded go nowhere for a while triangle. Fourth waves are often notorious triangles. Although it doesn t match well with TECH, which made higher highs in March, it does fit well with the Russell2000 Figure 3. S&P daily chart. Large 4 th wave triangle remains still a possibility. Nothing has excluded it yet. 4 P a g e

5 Chart Patterns Updates The S&P broke above the 20d SMA (SPX2649) on Thursday and it held Friday s decline, albeit it was a bearish engulfing candle, which does need follow through to confirm (one candle doesn t make a pattern). But, once again the SPX2670 level could not be overcome. Price now needs to overtake the 50d SMA (SPX2690) as well to make more headway. As long as price remains above the black dotted short-term uptrend line, which coincides with SPX2640 over the next few day, the trend is up. The A.I. and MACD remain on a buy. In conclusion: the chart is slightly more Bullish now that price is still trending up and now back above the 20d SMA. Figure 4. S&P daily chart. SPX2670 remains key level, next hurdle is 50d SMA. Short term trend is back to up. 5 P a g e

6 As for the DJIA it was unable to move above the 50d SMA and red downtrend line of the triangular formation price has been in since the February decline started. Like, the S&P also here a bearish engulfing candle, but it needs confirmation, and also here the 50d SMA needs to be taken out. A diagonal triangle (a,b,c,d,e; black arrows) is also here still a very likely pattern, with wave-c now underway. For now, the short term trend remains up as the TIs remain on buy and price is above the 20d SMA and in the DT pattern. Figure 5. DJIA daily chart. Short term uptrend, needs to reclaim 50d SMA. LDT pattern also here very possible. 6 P a g e

7 Despite all the bad news, the weekly S&P chart shows price closed 2% higher. Price bounced off the 50w SMA last week and remains in the red uptrend channel. The weekly A.I. gave a none-ideal buy signal, and as said last week Also, the A.I. can give a buy signal in a week from now, which will be a very strong signal to go long See also the weekly DJIA chart where we got an ideal weekly A.I. buy! The RSI5 is pointing back up from slight positive divergence, and the MACD is carving out a bottom. Note the weekly SMAs are still bullishly aligned (20w>50w>100w >150w> 200w), and all are pointing up, but price is still below the 20w SMA. Hence, the weekly chart has clearly improved over last week! Figure 6. S&P weekly TI chart: still long term bullish, A.I. buy signal, Technical Indicators carving out bottoms. 7 P a g e

8 I wanted to show the weekly DJIA chart as we have an ideal A.I. buy signal (all 3 TIs that make up the A.I; turned up from <20 to >20 this week). This has happened 3 times before in this Bull (see solid green up arrows) and is thus a strong signal. The small blue boxes on the A.I. show each time its fastest TIs (its time and momentum based) bottomed into the <20 zone an important low was struck. I also wanted to show the so called Diffusion Indicator, which bottomed below -20 last week and has now moved back above it. Each time this happened, in the Bull off the March 2009 low, the market had struck or was very close to striking a significant low. Figure 7. DJIA weekly TI chart: still long term bullish, ideal A.I. buy signal. Diffusion Indicator has bottomed 8 P a g e

9 Market breadth, Sentiment and Volatility The SPXSI (McClellan Oscillator [MO] derived Summation Index for the S&P500) ended the week at +12, up 20p compared to last week and thus confirming this week s higher close. All other indices MOs took a small hit on Friday, but still ended the week positive. The SPX-SI therefore joined the NYSI and DJIA-SI as it also turned to a buy on Friday. Tech s SIs remain on a sell. The weekly NYA s cumulative A/D line continues to move higher and needs to close above the red downtrend line to signal the correction is over. Until then it is still in correction mode. Figure 8. A) SPXSI gave a buy signal on Friday. B) The NYA weekly A/D is still in correction mode, but moving higher. A B 9 P a g e

10 AAII Sentiment saw multi-month high pessimism and low Bullishness this week, which is a contrarian signal (42.8 vs 30.5%, 26.1% vs 38.5%, 31.2% vs 31.0% -current reading vs long term averages; respectively). Hence, this week s higher close on all indices is not a real surprise (too many Bears and too few Bulls: contrarian signal). The Fear & Greed Index moved higher this week but remains extremely Bearish (from 9 last week to 23 this week on a scale from 0 to 100) and has been in extreme fear for over a month. The CPCE (equities only put/call ratio) ended at 0.66 on Friday: elevated but not too extreme. The put/call trend is currently up. The VIX moved even lower on Friday to close the week at $17, and us now firmly below the $20 level as well as below its 20d and 50d SMA. This tends to be Bullish for stocks. 10 P a g e

11 Simple Moving Averages Charts The Simple Moving Averages (SMAs) trend-following charts show the short-term chart improved this week to around 15% Bullish. No surprise as the week ended up 2%. The long-term chart is still 100% Bullish and keeps trending higher. Thus, the long-term trend remains up, and there s no signs of a Bear market yet at all. The insert shows the same chart for the 2011-correction, and clearly the current setup is very, very different. Thus, the current correction is very different and when over will mean more good times ahead and a faster recovery as well as the long term trend for the market is now up, while it was down in Figure 9. Short term Simple Moving Averages: 15% Bullish. Long Term Simple Moving Averages: 100% Bullish. Copyright Intelligent Investing, LLC. May not be copied and/or distributed without permission. Copyright Intelligent Investing, LLC. May not be copied and/or distributed without permission P a g e

12 Fib-based Turn Dates & Bradley Turn Dates Next Fib-based turn date is on April May9. Next Bradley Turn date not until May 17. The drop I expected last week to SPX2660 on April 12 th didn t happen, we simple got more chop with an upward bias. Figure 10. Fib-based turn dates. Aloha Arnout aka Soul 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. 12 P a g e

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