Summary Merry Christmass,

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1 Summary For weeks I ve been looking for the indices to reach ideally SPX , NAS and NDX6080 +/- 10, DJIA $23,200 +/-100 and RUT $ as at these levels the minute, minor and intermediate-waves that make up major-a all three have perfect Fib-extension confluence for an anticipated simple c=a zigzag. However, this week the S&P500 started to move below its price targets, while the NAS, NDX, RUT and DJIA are still right on point, but which forces me to adjust my perspective and Elliott Wave count: anticipate, monitor, and adjust if necessary. This update is therefore, and because of the upcoming Holiday Season in which I won t be able to provide daily market updates over the next two weeks but only weekly market digests, a bit different from the others as I want to provide a road map of what I anticipate is most likely happening next. This road map, is as usual, primarily based on Elliott Wave. This week several secondary indicators (market breadth, sentiment) have reached extreme levels sometimes never seen before, underscoring the severity of the current decline, which with the Russell2000 already trading below 2017 prices only makes is more obvious. These extreme readings often tend to lend to a relief rally/bounce but are never exactly at THE low. Since the technical and breadth indicators on the daily and weekly time frames are simple oversold, but not positively diverging, a bounce followed by and lower price lows in the indices from which a more substantial rally can materials is therefore the most likely outcome. This fits also perfectly with my road-map outlined in this update. With that I would like to wish everybody a Merry Christmas together with family and friends. I would like to thank you for a great year, which was one of the hardest to track and trade and being a valued premium member. My worst fear is to provide you with inaccurate, unreliable forecasts, which can mean instant loss of members for me. However, most of you have over the years come to learn I don t get it right all the time, and nobody else does either. But that through my methods I adjust very quickly. Many of you have therefore been with me ever since I started over 4 years ago, which is fantastic. Such consistency is what pays off in trading as well. And my dear members is the greatest gift I can get as a market forecaster: happy customers. Merry Christmass, Dr. Arnout, aka Soul, ter Schure Ps: the next update will be on the weekend of December 29/30. 1 P a g e

2 Elliot Wave Updates Let me start off with the Anticipate, monitor, and adjust if necessary principle as a lead in to my analysis in this weekend update because it is critical to understanding the financial markets and in forecasting them. Namely, Figure 1 shows six out of my seven over the last two months forecasted price targets for the S&P500 have been reached, with only one falling 10p (0.4%) short. Also for the NDX, NAS, RUT and DJIA all, week s ago, forecasted price target zones have been reached, and even exceeded, this week: NAS $ , NDX $6080 +/- 10, DJIA $23,200 +/-100, RUT: $ Quite the track record. All these price target forecasts were based on an anticipated simple larger zigzag corrective pattern, where c = a, measured from the b-wave high. I ve had this pattern as my preferred pattern since early November. Not until (later) this week was there information / confirmation to tell something else was going on (monitor), as the S&P broke below SPX2475 (adjust). Hence, why all we can do is Anticipate, monitor, adjust if necessary. because nobody has all the right answers beforehand all the time; especially not months in advance. That said, Fig 1B shows what I anticipate to happen next: either wave-c is extending into 3 or 5 waves OR we will see 5 (i, ii, iii, iv, v) larger waves down. I will go over these options on the next page. Figure 1. SPX daily chart. All forecasted price targets have been reached. Lower target has now been exceeded; adjust the forecast based on the anticipate, monitor, adjust principle. 2 P a g e

3 Elliott waves move to Fibonacci-based price targets and the bigger waves consist of smaller waves, which in turn consist of even smaller waves (fractals). Each wave-degree is therefore labelled diffent; e.g. intermediate, minor, minute, etc. (I also color code them in text and chart for easy reference.) Table 1 below shows the Fibonacci-based price targets for the intermediate-, and minor-waves as shown in Figure 1B and repeated below. The blue cells in the tables show where the two different wave degrees, with the intermediate waves comprised of the minor waves, overlap. Normally 3 rd waves move to the x Fib-extension, 4 th waves back up to the x Fib-extension and 5 th waves down to the x Fib-extension. Of course waves can extend or truncate. But, what we see here is that the minor-wave x extension overlaps exactly with the intermediate-wave 1.236x-1.382x extension, and the minor 2.000x extension overlaps exactly with the intermediate 1.618x extension. Hence, what I anticipate to happen is for minor-3 to drop to the SPX , with SPX2334 preferred, then a minor-4 bounce SPX , with SPX2467 preferred and then a last minor-5 th wave down to SPX to either complete all of intermediate-c or only iii. Namely, at that stage, the market can decide it had enough and the first leg of the correction is over (wave-a), with a bigger bounce (wave-b; black dotted arrow) to follow, OR it can decide to tag on one more iv th and v th wave to complete a picture perfect impulse to SPX IF and when that happens, the long-term ramifications for the markets will have shifted tremendously in favor of the long-term Bear Market, which the Benner Cycle predicts (see my September and October updates here and here). The third option is that wave-a completes with a minor-3 (grey dotted arrow) only. But, I find this scenario least likely since the daily chart doesn t have any positive divergences to speak off (see Fig. 2) as the technical indicators are simple extremely oversold, which is more in line with a 3 rd wave. In addition, there s no positive divergence on any (internal) breadth indicator, VIX, etc either. A minor-4, then 5 will however accomplish all that. Table 1: ideal wave tracker tables. 3 P a g e

4 Chart Patterns Updates Once the Bulls lost the (blue) uptrend line, which I showed last week goes back to 2003, it was all downhill from there. Figure 3 shows the daily technical indicators are all (very) oversold, but there is no positive divergences anywhere on any of them, as is typically seen at more meaningful bottoms (green arrows on RSI5). With price<20d SMA<50d SMA<200d SMA setup the Bear market continues to be in place. Next support is now at SPX , which is in line with the aforementioned price targets for minor wave 3 (SPX ). Thus, this chart -like last week- continues to tell us to look lower. Figure 3. S&P500 daily chart. Technicals are oversold, but no positive divergence and all are still on a sell and pointing down, while price<20d<50d<200d SMAs: Bear market setup. Further downside into support can be expected. 4 P a g e

5 The weekly chart below shows the wave count shown in Fig1B bigger picture-wise and in relation to horizontal support. Note, and as said, the 5 waves down don t necessarily have to happen as price can stop at wave-3 to complete an a, b, c, but the take home message is all the standard Fib-extensions and retraces match very well with longer-term horizontal price support. Like on the daily chart, there is, besides the RIS5, no positive divergence on any TI and the MACD is instead accelerating down, not slowing. On the weekly time frame, the wave-iii, iv and v are most likely needed to setup such divergences. As price broke below trendline support for the 2016->2018 uptrend, next very critical support is at the green trendline connecting the 2009, 2011 and 2016 price lows. Figure 4. S&P500 weekly chart. Price STILL below its 20w, 50w. TIs still on sell. MACD extending lower: SPX2475ish target reached. Projected path forward with dotted arrows and Elliot wave count shown. 5 waves down possible, but not necessary, but 3 waves down is the minimum to expect. 5 P a g e

6 How extreme is the current sell-off? The current sell-off has triggered some extreme readings not seen in a long time, or even ever before, which adds weight to the evidence this current decline may not be part of the Bull that started in Why? One would expect parameters to remain within that market s range. First: The Total Put/Call ratio (CPC) has been around since 1996, which is not a very long time, but on Thursday it registered its highest reading ever of Second: The McClellan Oscillator for the S&P500 (SPX-MO) and DJIA (DIA-MO, not shown) have been around since 1998, which is neither a very long time, but both closed last week at its lowest reading ever of -150, and -164; respectively. Both are thus unprecedented readings. Figure 5 A) CPC: Registered its highest reading ever this week. B) Weekly SPXMO: closed at its lowest reading ever. A B Other extreme readings are presented on the next page: The Equities only Put/Call ratio (CPCE) has been around since 2004, neither a long time, but closed the week at It s third highest readings since the Bull in 2009 started. Readings >0.95 are rare and never coincide with the bottom. Readings over 1.1 are even rarer, and only seen during Bear Markets. The percentage of stocks in the NASDAQ100 (NDX) above their respective 50-day Simple Moving Average closed the week at 3. Yes only 3% of all stocks in the NDX are now above their 50d SMA. A close below 5% has happened only 7 times since 2002 when data became available. Lastly, the percentage of stocks on the NASDAQ with Bullish Point & Figure (P&F) Buy Signals closed the week at 21%; it s lowest reading since P a g e

7 Figure 5 A) CPCE: Registered its third highest reading since B) NDXAR50: closed at its 7 th lowest reading. C) Bullish Percent chart for the NASDAQ: lowest reading since A B C 7 P a g e

8 The reiterate the point, but a quickly forgotten albeit important fact is the Russell2000 (RUT) has already erased all of its gains since 2017 and is only 11% away from also erasing its gains since That s almost three years of gains gone in four months. Hence, it pays to have an exit strategy, and buy-hold-and-hope is not the one. Figure 6 RUT: Has now erased two years of gains in four months. 8 P a g e

9 Buy/Sell signals based on Summation Indices and My Mechanical System 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 or don t have a system: don t trade! BUT I can teach you my systems. Just sign up here. Table 1. Buy/Sell Signals based on Summation Indices Table 2. Buy/Sell Signals based on my Mechanical System for SPY/SH only. 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. 9 P a g e