Today s drop came as expected and the S&P moved as low as SPX2562, but as said yesterday A move below today s low SPX2569 will be a first sign intermediate-b is underway, with confirmation below SPX2545. Thus, we got a warning but no confirmation The drop and pop today have made the exact wave count off the minor-b SPX2644 low a bit unclear, but if we can get a move over SPX2600 we should see SPX2625. Why? See Figure 1A: note how EXACTLY the (orange) 1.618x extension of today s pop from today s secondary SPX2572 low targets SPX2625 (the c=a extension). In Fig 1B you can see the same Fib-extension overlap for the NAS where a move higher in a standard 5-wave sequence (orange 200% Fib-extension) would target the green 138.2% wave-a Fib extension for minor-c to the T as well. This would coincide perfectly with the 50% retrace for the NDX as well (see Fig 2 next page). BUT, a move below SPX2572 is a first warning we may not get there, and a move below SPX2562 will now confirm intermediate-b is underway. Figure 1. SPX 60 min & NAS 1-min chart. Price failed to confirm intermediate-a, and is still within the ideal SPX2582-2625 zone, with SPX2625 and NAS7136 now as the ideal target for Hourly and RSI5 negatively diverging. 1 P a g e
If the NDX can move above yesterday s high, it should target the c = 1.382x a relationship and the 50% retrace of major-a at around $6795 (2.6% upside). As shown on the previous page, this would fit well with a standard 5-waves sequence off today s lows for the NASDAQ as well. With all TIs pointing up, albeit the RSI5 is overbought, but no sell signals anywhere, they tell us for now to continue to look higher. Figure 2. NDX daily charts. Ideal intermediate-a target zone reached but can extend to 50% retrace where c=1.382x a. 2 P a g e
The RUT (Russell2000) appears to try to reach the 38.2% retrace ($1448) and 50d SMA ($1456), but may even try to hit the upper end (c=1.618x a) of the ideal intermediate-a target zone: $1470 (1.7% above current levels) Considering the daily RSI5 is now getting very overbought it is clear the risk reward is diminishing, but all the TIs are still pointing higher and on are on a buy, hence we need to look higher as well. Figure 3. RUT daily charts. Ideal intermediate-a target zone now reached but overbought. May still try to go for 50d SMA / 38.2% retrace. 3 P a g e
Yesterday I showed The DJIA could still tag on another ~400p to try to tag the 50% retrace, which by then would likely coincide with its 50d SMA. It would also allow for the DIA (ETF) to reach the blue Support/Resistance zone. Note how the DIA is rising with decreasing volume. Today didn t change anything for this assessment, other than that we can now add a symmetry target box (grey) which shows that a break out above 24000 targets exactly the 50% retrace as well as completes the c=a target. Hence, additional weight of the evidence for slightly higher prices ahead. Figure 4. DJIA and DIA daily chart. 50% retrace/50d SMA most likely next. DIA keeps moving higher and less volume. 4 P a g e
Today market breadth -per the McClellan Oscillators (MO)- closed in the +100s for the S&P and NYA, while the NAMO set a record ATH close of >+100 yesterday. See table 1. Extremes galaro in this market as not too long ago the SPXMO set its ATL But, with all these breath surges all Summation Indices are now back on Buy Signals. Thus the Bulls are in charge. In addition, such high readings tell us to expect that any pullback will result in higher prices eventually. The put/call ratios -CPC (total put/call ratio) and CPCE (equities only)- ended neutral today, while the 1-min TICK wasn t really very Bullish with only two >+800 peaks and three < -800 peaks (max +982, min -1123). Figure 5. NYMO: Well over >100; rally will continue even after a pullback. SPXSI: Buy signal today. All SIs now on buy. 5 P a g e
Bottomline: Today s pullback in the morning suggested intermediate-a had topped, but the subsequent rally suggest a further subdividing wave-c up, and we should see ideally SPX2625, NAS7135, NDX6795, DIA24325 and RUT1470 to complete intermediate-a as long as price remains above today s lows. These higher prices would allign all indices smaller and larger wave counts, Fib-extensions, and retraces. Because as said yesterday not until all indices have completed their own respective advances can we see a larger pullback. Breadth is extremely strong, but also extremely overbought and a cool down, the b-wave down- to burn some of these excess off is most likely coming to our door steps soon. But because breadth is so strong we can then still expect higher prices, the c-wave back up. With price most likely moving to the upper end of my target zone I ve had for some time (SPX2582-2625), the subsequent pullback will also bottom higher: SPX2500 + /- 20p. Table 1. Buy/Sell Signals based on Summation Indices. Table 2. Buy/Sell for the Exchanged Traded Funds (ETFs) SPY & SH and performance (intermediate- and long-term only) based on mechanical trading system. Short-term and intermediate-term is now available on my private twitter feed. Aloha, Dr. Arnout, aka Soul, ter Schure 2019, 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. 6 P a g e