Figure 1. S&P 60-min chart. Ideally intermediate-a bottomed at SPX2593, then b to SPX2808 and c down to 2529

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1 On Friday and Monday, 89% of NYSE stocks declined. Two back-to-back 89% down days are generally indicative of selling exhaustion, and on que 72% of NYSE stocks advanced today (ref: ISPYETF). This fits with what I would ideally label as a minor-c of all of intermediate-a at SPX2593. The two alternatives are that a) only minor-a of intermediatea bottomed, but that would make for a complex major-4 and a target of SPX and that s rather steep, or b) all of major-4 already bottomed, but with major-2 lasting 47 days and the current decline only 7+ days I can t find the time-symmetry here; although price has reached the ideal target zone of SPX as shown in the daily charts (see Figure 2), which must be respected. However, with the preferred count we should now see a bounce to ideally SPX2808 as than a classic c=a relationship targets SPX2529, which is almost exactly at the 38.2% retrace (SPX2535) of major-3. Figure 1. S&P 60-min chart. Ideally intermediate-a bottomed at SPX2593, then b to SPX2808 and c down to 2529 Please note: the S&P 500 futures tested the 200-day SMA and 38.2% Fibonacci retracement last night, before recovering. From high to low, the S&P 500 futures lost 12.14%. My Hedge Fund, North Post Partners, already went long SPY at SPX2550 as the risk/reward of going long is becoming very attractive. Buying at market weakness can be recommended as several other indicators are now signal buy; but not all. 1 P a g e

2 The daily chart of the S&P shows the major-4 target zone and how price held the blue and black up trend lines. However, there are no buy signals anywhere yet, except that the S&P closed outside its lower Bollinger Band yesterday and inside it today: that s a good buy signal (see also Figure 4). Hence, going long is still a bit risky and should be done with tight stops. Figure 2. SPX daily TI chart. No buy signals yet, price reached target zone. 2 P a g e

3 Boooom, the RUT found support exactly where it had to and exactly where I had drawn the first (green) support zone. Note that price has now completely retraced the EDT off the red iv low, which is exactly what price does when an EDT completes. Picture perfect. I am still looking for price to reach the $1320 +/- 20 zone before the next rally starts. A retest and fail of the 50d SMA seems now likely. Figure 3. RUT daily TI chart. EDT pattern completed and fully retraced. Classic! Found support where it had to. 3 P a g e

4 The S&P500 s McClellan Oscillator (MO) ended today at -89, up 43p compared to Yesterday. The number of stocks declining still far outweighs those advancing. That s still Bearish. As such, the SPX-SI ([Cumulative] Summation Index of the MO) remains on a sell signal. All other MOs rallied as well, but all still ended very negative today too, and all other SIs remain on a sell. NYMO closed back inside it s lower Bollinger Band, after having closed for 2 consecutive days outside of it and <-40. Rule of thumb tells us that the 3 rd day (today) is then a rally day (correct) and it s a good buy signal. However, the VIX hasn t given a Sell the VIX, buy the SPX signal yet as it closed above its upper Bollinger Band. A close below it (at $27.84 today) tomorrow will be step 2. The ratio of the % of stocks above their 50d and 200d SMA for the S&P as it dropped below 0.50 yesterday. In this Bull (since the March 2009 low) each such occasion has meant either a low is in or a bounce, marginal lower low, and then rally set up. Although a V-shaped recovery can not be excluded since this Bull has had its fair share, I still do prefer the latter. Lastly, Zweig Breadth ended wellbelow 0.40 yesterday and a move >0.615 by February 19 will usher in a Thrust event. Figure 4. A) SPX-SI on sell, as breadth remained negative today, albeit improved. B) 50/200 % ratio at bottom level.. A B 4 P a g e

5 In conclusion: The selling exhausted itself over the last two days and the market bottomed at SPX2593, which is only 2p away from my forecast yesterday: Shorter term it seems as if the S&P has a rendezvous with SPX2620 and then it can decide to do a larger bounce (intermediate-b) to SPX2770s or higher, or put in a 4 th wave to SPX , then a 5 th wave to SPX2595 to complete intermediate-a. Price and Breadth gave both good buy signals by closing back inside their respective lower Bollinger Bands. Ideally, I d like to see a b-wave bounce to SPX2808 and then a c- wave equally long to the recent a-wave (279p) to SPX2529, which is right at the 38.2% retrace of Major-3 (SPX2535). Major-5 should then carry price to over SPX3000, which will be a nice 20+% trade using the SPY. Given that there were eleven > min TICK readings today higher prices should be expected over the next few days. How to trade this: Aggressive traders can buy market weakness, but should place tight stops and set a sell target for SPX2800 as they may get a chance again to buy at much lower prices. Long term traders can sit this out until a sold 1, 2 set up has materialized. ALOHA 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. 5 P a g e