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Executive Summary

Our standard sub division (SSD) Elliot Wave count for the S&P500 continues to track the market well, and we’ll keep

it as is until the market once again will tell us different. We expect the market to now reach SPX2370 +/- 5 p for

micro 3. The alternate count is a top around SPX2355 followed by a 20p pullback and then higher highs as the daily

and weekly charts all do tell us to expect higher prices going forward. Which is supported by market breadth after a

reading >60 the past week.

The CPCE remains low, suggesting too many traders and investors are now starting to expect higher prices, which

does fit well with our preferred “Nano-iv underway” count. Interestingly the AAII sentiment survey shows even less

Bulls and more Bears compared to last week while the S&P500 gained 2.4% during that time. Most individual

investors are wrong once again, thus the market can continue to rise.

There’s a Bradley turn date for 2/20 as well as a Fib-based trading interval at the same time. Given the signals the

charts give us, we are uncertain what turn these dates exactly signal. Note that all are within +/- 3 trading days so

there’s no reason to expect a top or bottom exactly at those dates. The low could have been in already on Friday, or

we can expect high by next Friday. Both are possible, both fit our EWT count.

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S&P500

Per

form

ance

(%

gai

n)

YTD

Trading week ending

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Elliot wave updates

This week the market made minced meat of the ending diagonal triangle possibility and the standard sub-dividing

count is our primary focus. Our preferred count is shown below in Figure 1, and has Nano-iii and likely Nano-iv

completed. But we need price >SPX2356 to be entirely certain of that. With two >10p pullbacks off the SPX2267 low

we can count 11 waves up so far (Figure 1 and insert). This tells us we need at least 2 more waves up to complete a

full impulse sequence as impulse waves always consist of 5, 9, 13, 17, etc waves: Can we say Micro 3 and 4? We

expect micro 3 to top around SPX2370 +/- 5

The alternate is that off the SPX2284 low we can count 4 waves up (1?, 2?, 3?, 4?) and since in this case the 3rd wave

was shorter than the 1st wave, the –now underway- 5th wave should be even shorter and could end at SPX2356.

Based on the daily, and weekly charts etc we find this possibility less likely. Regardless, support is clearly at SPX2340,

and below that SPX2332-2322.

Figure 1. Preferred counts: Ideally Nano iv of micro 3 underway.

1?

2?

3?

4?

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Our next Fibonacci-timed trading interval is set February 20/21, and the next Bradley Turn date is set for March 20th

as well. We are uncertain what turn these dates signal, although all are within +/- 3 trading days so there’s no reason

to expect a top or bottom exactly at those dates. A low could thus well have been in already on Friday, or we can

expect a high by next Friday. Both are possible as both fit the wave count and charts.

Figure 2. Fibonacci-based Trading interval set for February 21 on the S&P500 and February 20 on the Dow Jones

Note: horizontal support is at SPX2340, 2320 and 2300. We would like to refer to our recent public post about the

fact that the S&P500 reached our long term SPX2350 target: see here.

Figure 3. SPX2350 target reached. What’s next? See here and page 6

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Technical Market update

All TIs continue to point up, wanting to see higher price. Price is well-above all SMAs (From 5d to 200d), and the

Bollinger bands are expanding with price hugging the upper band: it continues to have strength. Hence, the chart

tells us to expect higher price. But, in the case of a drop, support is now at SPX2340, the upper black trend line

(SPX2330), followed by the 20d SMA at (SPX2305). The RSI5 is possible setting up for negative divergence, but it

needs to start to point down first. The fact that it is extremely overbought is a sign of a healthy, strong Bull, and no

major corrections occur from peak overbought. We need serious negative longer term negative divergences first.

Figure 4. SPX daily chart. All TIs pointing up. No sell signals anywhere yet.

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The weekly chart has the 4th weekly higher close in a row; can we say 3rd wave!? We still can’t observe any negative

divergences, the MACD remains on a buy, the Money Flow remains positive, and the price-Bollinger Band set up also

remains bullish. In addition, all the weekly Simple Moving Averages (20, 50, 100, 150, 200 SMAs) keep all pointing

up and are all bullishly stacked. The three vertical dotted lines show a “you are here” type of reference; with the

most recent (black) line our current position and the two earlier blue dotted lines as reference because in November

2013 the weekly RSI5 was similar to this week’s and in June 2014 the weekly MFI14 was similar to this week’s.

Hence, and in summary there is absolutely nothing bearish about the weekly chart. As such the symmetry break out

target of SPX2400-2425 –blue arrows- remains well intact and coincides nicely with our ideal intermediate iii of major

3 of Primary V target. We added the general big picture EW count to this chart to provide a simple easy to

understand idea where we believe the market currently is in this Bull.

Figure 4. SPX weekly TI chart. All TIs pointing up, all SMAs pointing up and bullishly stacked. No divergences.

Current TI readings tell us to expect higher prices in the weeks and months ahead.

1

2

i

3

4

5

ii

iii

iv

III

IV

V

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Market breadth

The McClellan Oscillator for S&P500 (SPX-MO) reached >60 last week, telling is this rally has longer term legs. The

SPXSI (summation index of the SPXMO) remains therefore on a buy after the buy signal from Friday 2/10. But, we’ll

keep an eye on a possible similar development of the SPX-SI as in June last year (see dotted red line). That scenario

would fit with the minor 3 count and forewarned is forearmed. It would require however the SPX-MO to turn

negative rapidly, which often is not the case after readings >60.

Figure 5. SPX-MO firmly positive. SPX-SI remains on buy.

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Miscellaneous

Nothing to add, take this as a FYI that adds weight to the evidence, supporting our view of the markets short to long

term!

Our long-term Simple Moving Averages only chart (LT-SMA, for trend followers and long term investing) continues

to be 100% bullish: the long term trend remains up. This chart remains in line with our overall view of the market

and where it will head over the next several months. Our short term chart (ST-SMA, for traders to swing traders)

also continues to be 100% bullish.

Please note that these charts are reactionary to price and don’t foretell any price swings. They do tell us that the

chances of continued higher prices are much higher than lower prices

Figure 6. LT-SMA chart 100% bullish ST-SMA chart 100% Bullish.

Below is how a 100% bullish chart look likes, everything points up. Price > fastest SMAs > slowest SMAs.

The CPCE (put/call ratio) –our contrarian indicator at extreme levels-

continues to remain low (<0.60s) suggesting many traders and investors now

start to believe in this rally. However, this doesn’t fit with AAII’s (individual

investors, not institutional) latest survey, showing that for the week ending

2/15 there are even less Bulls and more Bears than a week ago (2/8), while

the S&P500 added 55p (2.4%)… As usual individual investors are once again

wrong.

The low CPCE ratio suggest we may be getting close to our micro 3 top.

The “Ebola scare” correction

in 2014 didn’t even register

on the LT chart!

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All Bradley Turn Dates for 2017

January 18 (50/100 Long Terms Power)

January 30 (55/100 Middle Terms Power)

March 20 (100/100 Long Terms Power)

April 3 (31/100 Declinations Power)

April 17 (19/100 Bradley Siderograph Power)

April 19 (59/100 Middle Terms Power)

April 29 (19/100 Bradley Siderograph Power

May 5 (30/100 Declinations Power)

June 9 (61/100 Long Terms Power)

June 21 (100/100 Bradley Siderograph Power)

June 30 (100/100 Declinations Power)

July 4 (100/100 Middle Terms Power)

August 19 (17/100 Bradley Siderograph Power)

September 5 (17/100 Declinations Power)

September 7 (29/100 Bradley Siderograph Power)

October 7 (48/100 Middle Terms Power)

December 3 (23/100 Bradley Siderograph Power)

December 6 (100/100 Long Terms Power)

ALOHA

Soul, Ph.D.

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