Weekly Report - For the week of January 9, 2017 Page 1

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1 Page 1 Market Overview December nonfarm payrolls figures were released on Friday. And, the 156,000 figure was below some analyst's expectations. However, the November figure was revised upward to 204,000 from the previously reported 178,000. In the week ahead, traders may want to remember that PPI and Retail Sales figures for December are due on the 13th. QQQ Daily When trading kicked off for the new year on Tuesday, the market opened higher. And, the market continued higher as the trading day unfolded. However, during the session, it backed away from these highs and finished around the middle of the day's range. On Wednesday, the market continued higher. Not only did the market open higher, but it also continued higher during the session. However, the market backed away from the session highs before the end of the trading day. When trading resumed on Thursday, the market seemed to continue the bullish tone established the prior day. And, some traders may also notice that the market opened near the lows and closed near the high for the day. On Friday, bulls took control of the markets to push prices higher. And, we can see that Friday's trading finished in the upper portion of the day's range ahead of the weekend.

2 Page 2 QQQ 15 Minute Moving down to the 15-minute time interval for the QQQ, we can see that IntrepidTrader has identified the current wave as wave four on this timeframe. Also, we can see that the fourth wave trades to a price area between the yellow and red Fibonacci target boxes for this wave. Different waves in the Elliott wave count have different characteristics. And, being able to identify these characteristics can go a long way in helping traders. The reason is that it helps the trader identify the appropriate trading which can be married to the current state of the market. And, it also helps a trader manage his expectations which help to reduce the overall stress associated with trading. So, for example, if a corrective move has been identified a trader may not want to employ a trend following method during this phase. When the market enters a correction such as a wave four, it comes on the heels of a third wave in an Elliott wave count. And, the third wave is usually associated with a strong increase in momentum. So, during the fourth wave, the market starts to slow down a bit and does not accelerate in the direction of the third wave. When a market enters a fourth wave, the market can begin to chop back and forth. So, a trader who has not properly identified this phase of the market may also find himself whipsawed into and out of trades relatively quickly. Understanding this, a trader may choose the appropriate strategies for trading both directional and non-directional market phases in his trading methodology. In the end, he may find that this approach allows him to follow the current state of the market and lower his stress when trading.

3 Page 3 In the week ahead, traders may want to watch the 15-minute time interval for the QQQ. If this market continues to retrace its most recent bullish advance, it is possible that a new ABC type correction could emerge. However, should this market decide to sustain a move beyond the price level, this will be our confirmation that we are in the fifth wave on this timeframe. SPY Daily Continuing onto the SPY daily chart above, we can see that this market started the new year with a higher open. And, after trading lower during the session, the market recovered and closed slightly higher on the day. Wednesday's session began with a slightly higher open. And, the market continued higher during the session. Some traders may also notice that the market finished near the highs for the day. On Thursday, the market seemed to stall. The bullish tone seen in the prior session seemed to change when the market began to dip into the red for the day. And, while the market was able to recover, it finished only slightly higher on the day. On the final day of trading for the week, the market began the trading session slightly higher. And, even though the market decline during regular trading, it was able to recover and close higher on the day.

4 Page 4 SPY 240 Minute Drilling down to the 240-minute time interval for the SPY, we can see that IntrepidTrader has identified the current wave as wave four on this timeframe. Also, we can see that the fourth wave trades to the yellow Fibonacci target box for this wave. After reaching this price objective, the market created a correction greater than the minor wave B (shown in blue) within the major fourth wave (shown in red). One of the key advantages of using Fibonacci ratios in trading relates to the leading aspect of the indicator. And, it also helps to understand how experienced traders use them to gain an edge in their trading. The context that Fibonacci ratios are utilized in helps a trader understand the overall scenario that he is analyzing. And, it also helps a trader derive the appropriate meaning from the ratios based on the price chart he is using as the basis for his analysis. Since Fibonacci ratios can be applied to various market swings using different methods, multiple Fibonacci ratios projections and retracements can be calculated. And, when these various techniques highlight a common price area on a price chart, this price area can be seen as more significant. The reason is that different methods for using the Fibonacci ratios can be seen as agreeing on a common price area. And, for this reason, more experienced traders may take note of these price levels in their technical analysis.

5 The charts in this newsletter have green, yellow and red rectangles. And, these rectangles represent places on the price chart where prices derived from various methods using the Fibonacci ratios seem to agree and cluster together. Page 5 While programs such as IntrepidTrader helps a trader with the calculations and identification of Fibonacci price clusters, they shouldn't be used as a substitute for learning the mechanics and principals of the methods. In the week ahead, traders may want to watch the 240-minute time interval for the SPY. If this market continues to advance and trades beyond the peak of wave three, this will be our confirmation that we are in the fifth wave on this timeframe. However, should this market decide to trade below the bottom of the yellow Fibonacci target box for the major fourth wave shown in the chart above, it is possible that the minor ABC correction within the major fourth wave could change. Good Trading! Sam Perdue