Executive Summary Although 5 waves up off the SPX2557 low can be counted, because of the -what in my book counts best as- 3 wave structures both up and down since that mid-november low, the ending diagonal triangle (EDT) I showed in last weekend s update is gaining probability and is now the preferred count. The S&P should now be in micro-e to SPX2675-2725, and the NAS and NDX in their minor-5 waves to $6955, 6555; respectively. Why? market breadth is still on a buy for the SPX, continues to improve (A.D line), the long term and short term SMAs are both and still 100% Bullish, VIX is low, the TIs on the daily charts all turned back up and gave buy signals, price is still above all trendlines and the 20d to 200d SMAs, and other breadth charts remain strong as well. Sounds all Bullish enough to me. This fits with what I wrote last week: All market breadth indicators and the simple moving averages charts are not suggestive of a top, but the wave count does shows it s very possible. If anything, a final push higher may very well not exceed much above SPX2670. Once major-3 completes, if it already hasn t than expect a 120-250p retrace in the S&P. Please compare that to the 30-40 of points potential upside Overall December looks like a topping process month. I don t expect the serious sell off (wavec) to happen until January next year. Not much has changed since and this remains the preferred view as long as price remains above SPX2624. A break below that level will be the first warning for the Bulls, the 2 nd warning a break below SPX2606, and full confirmation of a major-4 at SPX2557. Please note that we need to continue to approach this market from a Bullish perspective, even longer term as I still see SPX2800-3000 once major-4 has completed. However, in this update I also reviewed the DAX and FTSE and our European friends do look in worse shape. The wave count below shows my road map: the crucial and critical juncture from last week continues until a breakout or breakdown happens. SPX2665? SPX2597 Minute-iii Or 2675-2725 Major-3 SPX2578 Micro-3 Micro-4 SPX2544 Minute-iv SPX2557 You are here Major-4 SPX2500-2400 1 P a g e
Trading Performance Update with North Post Partners, LLC NPP provides neither a boom, nor a bust. Just consistency. Moving along nicely in a very tough market environment currently. Our goal is +20% by year end. Please contact me or Rus Chao directly (rustinchao@gmail.com) for more information. Joining NPP is absolutely free, and we charge no service or maintenance fees. Please follow NPP on TWTR: @NPPtrades (all intra-day trades are provided there in real time) Please bookmark NPP s website: http://northpostpartners.com/ (weekly digest/trading plans are posted there) *It should not be assumed that future performance will always be guaranteed and/or profitable. Nor will future performance necessarily equal past performance or past performance trends. All trading and investment decisions are the sole responsibility of NPP. Joining NPP is free, but does not exclude commission costs, and other possible charges. 2 P a g e
Elliot Wave Updates On Friday price reached the price target zone as forecasted and thus: so far so good. That was as easy a forecast as it gets. Thus, while there certainly are enough waves in place to consider a full count, i.e. 5 waves up off the mid- November SPX2557 low may very well have completed, and the recent bounce has reached what it needed to: so far so good, but something just ain t right. Let me explain. In last weekend s update, I had two counts a) possible major-3 top at SPX2658, b) an ending diagonal triangle (EDT). Reason is because I prefer to not micro-count anything below a 10p move on the S&P, as smaller waves really become subject to interpretation. That continues to leave me with 3 waves up off the SPX2557 low to the SPX2658 high, 1 wave down to SPX2606, and then 3 waves up to SPX2665, and again 3 waves down to SPX2624; See Figure 1A. During the week I presented the possible way to count 5 waves down from SPX2665 to SPX2624, but because wave ii was <10p I disregard it. This, by logical deduction, leaves the EDT still very much on the table, where wave-d completed at SPX2624 and wave-e to new highs is underway. Cont d next page. Figure 1. S&P 1 min charts: Sticking to my guns, as all I can count are 3 waves up and down. EDT most likely on break higher. Below SPX2624 is Bulls first serious warning. A B 3 P a g e
The rest of this update with the accompanying charts and analyses do mostly support higher prices as well, as they have turned favorable for the Bulls over the past 2 days and especially on Friday. Now for those who trade the indices ETFs, before we get all upset that we may miss the next and final leg higher, please remember what I wrote there certainly are enough waves in place to consider a full count, i.e. 5 waves up off the mid-november SPX2557 low may very well be completed! Hence, what is left are small scraps and the final waves up; lower probability set ups. Banking on fifth waves is often not advisable. And it s better to wish you are in than out. The same setups apply to the RUT (IWM) and the NAS/NDX (QQQ); the latter of which I ve constantly shown to have a very high likely hood of still needing a final 5 th wave higher. It may actually be better if it did as it certainly would make the waves/patterns even fuller/more complete than they already are. And staying strongly bullish once this 5 th wave completes will then be even less profitable and less advisable. RUT target: $1560-1580 still possible. NAS/NDX targets: Ultimate long-standing target of $6955 remains / $6525-$6595 with an ideal of $6550 SPX targets: SPX2675-2725 How to interpret these two counts/how to trade this? A break above SPX2665 targets SPX2675-2725. A break below SPX2624 is a first warning for the Bulls that major-4 is underway. A break below SPX2606 will be the 2 nd serious warning and a break below SPX2557 will confirm. Long stops can be placed accordingly for those how are inclined to milk a final advance up. 4 P a g e
In last week s update I summarized the daily chart as Set up not (yet) ideal for a top. So far this remains the case as due to Friday s rally the daily A.I. gave a non-ideal buy/long signal. The MACD is still on a buy and the RSI5 is back up and in overbought. Price is still above all important Simple Moving Averages (20d to 200d SMA) as well as above all trendline support. Hence, despite the four down days in a row, at the end of the week (and even after those four days) in the end very little damage has been done to the daily chart. The Bollinger Bands are still wide, and price is at the upper band: it has strength. Before a larger decline takes place, the bands should be narrow. As such, the chart remains predominantly bullish. Figure 2: S&P daily TI chart: renewed non-ideal A.I. buy signal, still 100% Bullish setup. 5 P a g e
Because I have many premium members in Europe, several requested if I could analyze the DAX and FTSE (German and UK s major indices). Since the US and EU markets are highly correlated longer term, knowing what Europe is doing will help us interpreting the US markets. What I find is that the DAX has a potential complete/full count as well for a (black) major-3 top. Note how major-3 hit the 238.20% extensions, whereas the internal (red intermediate) waves iii, iv, v hit the standard 161.80%, 100.00% and 200.00% extensions of wave-i, measured from-ii, for a 3 rd, 4 th and 5 th wave; respectively. Major-3 can still extend to the 261.80% extension, but the picture-perfect Fib-extensions of the internal waves make that a lower odds possibility, and a break below $12,800 will take that possibility off the table. For now, the technical indicators are pointing back up, wanting to see higher prices. Please remember that b-waves can move beyond the major-3 high. Figure 3. SPX-DAX-FTSE highly correlated long term (not always short term). DAX can be counted very well as having completed five intermediate waves to major-3. 6 P a g e
The FTSE looks both from a wave perspective as well as from a technical (Simple Moving Average, SMA) perspective in worse shape. Why? Here it is very possible to count 5 major waves up, with major wave 3, and 5 hitting the standard 1.618x and 1.764x Fib-extensions. Wave 4 fell short of it s ideal 100% Fib-extension target, but there were clearly five waves up to the possible major-5 high. The only way for the Bulls to see higher prices is if those 5 waves up were only intermediate-i of major-5. Please note how all SMAs have flattened out and are not Bullishly stacked anymore. In fact, they are starting to roll over. No surprise since the FTSE as essential gone nowhere the whole year This is more how larger tops look like. For now, the TIs are starting to point back up wanting to see higher prices. Again, I want to reiterate that also here the wave count can be viewed as full. But a strong break above $7600 will have me considering a subdividing 5 th wave to as high as $8200. Figure 4. FTSE daily chart. Also here 5 waves can be counted as complete. SMAs are rolling over. 7 P a g e
Moving back to the USA, here s the same section of last week: When we look at the NAS and the NDX, the two counts I showed (see here) remain. In fact, the NAS bottomed right at the lower trendline of the green uptrend channel for a possible minor-4 low with minor-5 now underway to finally reach my ultimate target of $6955 I ve had all along. This would fit with the EDT count on the S&P. The recent 3-day advance off that trendline certainly gives credence to this count. Figure 5. COMPQ daily candle stick chart: minor-5 up underway!? 8 P a g e
Market breadth, Simple Moving Averages Charts & Sentiment The SPXSI (McClellan Oscillator derived Summation Index for the S&P500 has been increasing the last two days, and ended the week at +30. Up for the 4 th week in a row (added 1p over last Friday). That s still a positive. This improvement in market breadth is across indices and the SPX-SI remains on a buy. Of all the other SIs, the NDX-SI and NAS-SI remain on a sell, but the DJIA-SI and NYA-SI remain on a buy. Bit of a mixed bag, but that s 3 out of 5 on a buy. The S&P s cumulative A/D line made a new ATH on Friday. That s still Bullish. The percentage of stocks in the S&P above their 50d and 200d SMA remain in the mid to high 70s: levels that can sustain a rally. On Friday the $TICK 1 had an >1000 reading, and such readings often mean we should expect higher prices. The Bullish Percent Index for the INDU is at 93, for the SPX at 76, for the NYA at 70, and for the NDX at 56. Except for the last, these readings also suggest higher prices. Figure 6. SPXSI and all other SIs, except TECH, remain on a buy. SPX Cumulative A/D line at new ATHs 1 Each individual move from one stock trade to another. An UP-TICK means the price moved up on the last trade and a DOWN-TICK means it moved down. The TICK indicator shows the net of all UP-TICKs minus all DOWN-TICKs on the NYSE exchange at a given point during the day. 9 P a g e
Not much to add to last week: The Simple Moving Averages (SMAs) charts below only show SMAs and not price. This reduces the day-to-day noise of the price charts and help us determine very easily what the trend is; both long term and short term. These charts can t really predict the market s next move, as these are simple trend following, but these can help traders and investors determine easily what the most likely direction is: up or down. Both the long term and short-term simple moving averages charts are 100% Bullish; supporting the notion of higher prices as well. 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 10 P a g e
Fib-based Trading Interval Turn dates & Remaining Bradley Turn Dates for 2017 We had December 3 and December 6 Bradley turn dates: the first signaled Monday s drop, the 2 nd the end of the decline and the subsequent rally. There are no more Bradley Turn dates for this year. The next is on January 29, 2018. I ve turn dates on the 11 th and 14 th. Since these are +/-3 days the former could have been the mid-week low. The 14 th could signal a high. I ve two turn dates lined up early January. Figure 9. Fib-based turn dates. 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 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. 11 P a g e