Executive Summary Over the past weeks I reiterated smaller corrections can still be viewed as buying opportunities for short-term traders. So far so good, as the S&P dropped to SPX2544 and the NASDAQ to the 0.618x extension on Thursday and then rallied to new All Time Highs (ATHs) on Friday on the back of Big Tech s earnings. Yes, big tech is finally joining the Bull Party as up to last week 5 out of the 7 FAANGTT (FB, AMZN, AAPL, NFLX, GOOGL, TSLA, TWTR) stocks were still not making new highs. Currently that is 2 out of 8 (AAPL and TSLA are still lagging). Last week there was some uncertainty on the exact (micro) wave degree the market was in, but I was still looking for higher prices intermediate to longer term regardless, and depending on where the market would bottom we d then be able to firm the micro-elliot Wave count up: for the preferred count [minute-iv] the correction should drop the S&P to around SPX2530+/-5. For the alternate, more bullish, count [micro-4] the S&P should stay above SPX2540-2545. As the price action was unfolding over the past week, the NASDAQ, DJIA and breadth indicators suggested for each day that passed that minute-iii was still unfolding and thus the preferred and alternate EWT-counts were switched. Correctly so, as the S&P bottomed at SPX2544 and rallied to new ATHs telling us that the more bullish count is operable. Please see the plot below on where we most likely are on the S&P from an Elliot Wave Perspective. Micro-5 of minute-iii to SPX2591-2603, with an ideal target of SPX2596 for the S&P and $6755 for the NAS, should now be underway as long as price remains above SPX2567. Once SPX2596 +/-5 has been reached the markets should see its largest correction since the low made in August and correct 40-65p on the S&P and $110-$180 on the NAS, depending on the Fibonacci-based retrace level (23.6 or 38.2%; respectively) for minute-iv. Hence, for now, let s assume ~50p on the S&P; to SPX2550 +/- 5. After that we should see one final rally; minute-v to new ATHs (~SPX2610 + /10 and around $6860 on the NAS) before the market embarks on a much larger correction: major-4, which will bring price back down to SPX2400 +/-50 and $6200 +/- 100 on the NAS. While the Simple Moving Averages charts remain 100% Bullish, and the VIX gave a Sell the VIX, buy the SPX signal on Friday, the Market Breadth based buy/sell indicators (based on the Summation Indices (SIs) ) are turning more and more from a buy to a sell. Despite the strong rally on Friday, the SPX-SI gave a sell signal, joining the NAS-SI, NDX-SI and NYA-SI. Only the DOW-SI remains on a buy. The analogy with April-2016 thus remains and is strengthening. SPX2578 Micro-3 SPX2600 +/- 5 Minute-iii SPX2610 +/- 10 Major-3 Micro-4 SPX2544 Minute-iv SPX2550 +/- 5 You are here Major-4 SPX2400 +/- 50 1 P a g e
Elliot Wave Updates The financial markets are non-linear and must therefore be approached from a wrong till proven right perspective. As the final 4 th and 5 th waves for major-3 are unfolding, in last weekend s update it was uncertain if minute-iii had completed or not. The preferred count suggested yes, the alternate no. Since price is king, using price levels for supporting one possibility of the other (remember markets are all about probabilities of possibilities; and it is my task to determine those to the best of my ability) it was determined that When the market corrects next we will know more: for the preferred count the correction should drop the S&P to around SPX2530+/-5. For the alternate, more bullish, count the S&P should stay above SPX2540-2545. On Thursday the S&P dropped to SPX2544 (see Figure 1) and started to rally and the NAS dropped to the 61.8% extension (see Figure 2, next page), suggesting the alternate more bullish count. With new ATHs on Friday this count is now preferred. Only a break below SPX2567 will change my POV. Figure 1. S&P 1-minute chart: micro-5 underway. For wave degree nomenclature also see Figure-2 The micro-count (See Figure 1) has 5 small waves up off the SPX2544 low for (pink) nano-1. Etc. So far still a nice impulse. But as said, if the S&P breaks below SPX2568 then we have a first sign of a larger 4 th wave correction, which should revisit SPX2540s. For now, especially based on the NAS (see Figure 2 next page), I find this possibility much less likely. 2 P a g e
The hourly chart below of the S&P shows price found support right at the upper end of the ideal target zone for (orange) micro-4, and how price moved back above the black and green uptrend lines: uptrend continues. (Orange) micro-5 should target the SPX2591-2603 zone, with an ideal target of SPX2596. For the NAS (white) minute-v of (green) minor-3 should ideally complete at the 1.382x Fib-extension ($6755). Note how this index continues to follow the ideal Fib-extensions for an impulse wave (see here). Figure 2: S&P hourly chart: price targets for minute-iii. NAS daily chart: continues to follow standard impulse pattern. Copyright Intelligent Investing, LLC. May not be copied and/or distributed without permission. www.investingintelligent.com Copyright Intelligent Investing, LLC. May not be copied and/or distributed without permission. www.investingintelligent.com 3 P a g e
The daily Technical Indicators (TIs) chart of the S&P continues to look strong despite Thursday s pullback. Price is above all SMAs (5d to 200d) and above all up trendlines. The TIs are pointing back up, with the A.I. giving a non-ideal buysignal (all 3 lines point back up, but from >20) wanting to see higher prices, in line with the preferred count. Figure 3. S&P daily TI chart: micro-5 of minute-iii underway. TIs pointing back up. 4 P a g e
The weekly S&P chart shows the index is still nicely on track to the next higher symmetry break out level of SPX2600 (SPX2425, 2485 have both been reached ). All TIs are pointing up, and there are no sell signals. Hence, over the next few weeks we can expect higher prices, which fits with the preferred view that micro-5 of minute-iii is wrapping up (ideally by the end of next week), then a multi-week minute-iv followed by a multi-week minute-v to complete major- 3 Figure 4: S&P weekly chart: all symmetry break out price targets reached. SPX2600 remains on track. 5 P a g e
Market breadth & Simple Moving Averages Charts Despite the strong rally on Friday, the SPXSI (Summation Index for the S&P500, derived from the McClellan Oscillator for S&P500 (SPXMO)) gave a sell signal on Friday, as breadth remained negative: -14. Down 34p over last Friday and thus not confirming this week s higher close. The SPX-SI has now joined the NAS-SI, NDX-SI and NYA-SI as those are on sell signals as well. The similarities with April-2016, orange band and as shown before, thus continues to strengthen. Back then the market was also in a 5 th of a 3 rd wave. The stocks in the S&P above their 50d and 200d SMA ended the week at +70 and+72; neither confirming the higher prices, but still high enough to continue to sustain the current rally. Note the negative divergences that are now starting to build, supporting the case for weakening rallies that will eventually turn into the anticipated larger (major-4 correction) as less and less stocks are participating. Next week I will review the Bullish Percent Index (BPI) charts for the major indices as many are starting to show cracks. Figure 5. SPXSI gave a sell signal on Friday. Percent stocks above their 50d and 200d SMA diverging. 6 P a g e
The VIX gave a sell the VIX, buy the SPX signal on Friday as it completed it s 3-step signal. Albeit this is not the most reliable of indicators, it adds to the thesis that micro-5 to SPX2596 +/- 5 over the next few days is underway. Figure 6. VIX gave a sell the VIX, buy the SPX signal. 7 P a g e
Both the long term and short-term simple moving averages charts remain 100% Bullish. The former has been 100% Bullish since late-september last year. For trend followers among us, you know what this means: higher prices can be expected going forward. Figure 7. Long Term Simple Moving Averages: 100% Bullish. Short term Simple Moving Averages: 100% Bullish Copyright Intelligent Investing, LLC. May not be copied and/or distributed without permission. www.investingintelligent.com Copyright Intelligent Investing, LLC. May not be copied and/or distributed without permission. www.investingintelligent.com 8 P a g e
Fib-based Trading Interval Turn dates & Remaining Bradley Turn Dates for 2017 The market peaked exactly on October 23 (Monday), but as usual the issue with turn dates is they don t foretell the magnitude of the move. That s why all other charts and analytical techniques are used. Together with the Bradley turn dates, there is a cluster of turn dates early/mid-december; major-3 top? Figure 8. Fib-based turn dates. December 3 (23/100 Bradley Siderograph Power) December 6 (100/100 Long Terms Power) 2017, 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 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 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. We reserve the right to refuse service to anyone for any reason. 9 P a g e