S&P Index Analysis

I just wanted to drop a quick note on something I'm seeing in the S&P cash index. You can see my custom indicators at the bottom which tracks signals in all of the S&P 500 stocks. The top indicator has a yellow histogram showing how many stocks are oversold minus stocks overbought, which stands at 173. Although this is a very high number, it can stay oversold for a long period of time. So next, I look at the bottom indicator which tells me how man stocks have CONFIRMED. a bearish reversal minus those with bullish reversals.  You can see that there are 157 more confirmed bearish stocks. This is an extremely high number and predicts a pullback in the S&P very soon, either later today or early next week. This is on a 5min chart so the decline may only be 10 points or so, but if bigger timeframes start showing me bearish confirmations then this could be predicting a much larger reversal is coming.

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PLEASE NOTE: THIS IS AN ELLIOTT WAVE BLOG EXPRESSING AN OPINION AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. TRADE AT YOUR OWN RISK.

Elliott Wave Forex Signals - Adding to GBPNZD Position

This is a wild pair and the recent decline and bottoming attempt is worth adding another 1/3 position long at market (1.7982).  Here is the original trade setup here.

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Elliott Wave Futures - ES

On the daily chart, my projected forecast has played out as expected. And on the intraday charts, my sell signal for 20+ points also materialized. But now I have no signals or bias as the market is at a fork in the road at current levels. Staying under 2120 keeps a bearish outlook on the table, but a break above 2120 opens the door for Minor wave 3 to run significantly higher. I'm neutral until the market makes a decisive move from here.

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Elliott Wave Forex Signals - Building Long Position in GBPNZD

The pound has been pounded the past couple weeks as a result of Brexit but I have been watching buy signals and confirmations over the past week.  I exercised patience with these signals since I wanted the dust to settle a bit on the whole Brexit thing first before I try to get long a pound pair.  Wave structure shows a very mature Intermediate wave (3) unfolding.  You can see that Minor wave 3 contained the sharp selloff after the Brexit vote, and although it has continued lower the following week or so, it has done so in a choppy and weak manner.  This is indicative of a weakening trend, and a 5th wave nearing completion.  I also anticipate that because of this structure, when the pound reverses higher, it will be a very fast and sharp affair.

According to FXCM's sentiment index, the retail side of the trade is heavily long the pound in general.  So that does not support an attempt on my part to get long the GBPUSD.  Instead, I will look to the pound crosses with buy signals confirmed.  I see that in GBPCAD and GBPNZD.  Although retail sentiment is firmly bullish on the pound, it is extremely bearish on the NZDUSD.  As a nice contrarian indicator, this means the NZDUSD will likely continue higher.  So these two sentiment indications should cancel each other out on the cross GBPNZD.  So I can now just focus on my custom indicators and the confirmed buy signal which is in place right now.  I want to put in a 1/3 long position on a big trade.  I don't want a stop loss in place because I want the trade to work, but I will put in a catastrophic stop loss in at 1.7200 and will quickly tighten that significantly once the trade moves in my favor.  Here's the setup:

Long GBPNZD at market (currently 1.8135)

Profit target is 1.8900

Catastrophic stop loss (optional) 1.7200

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PLEASE NOTE: THIS IS AN ELLIOTT WAVE BLOG EXPRESSING AN OPINION AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. TRADE AT YOUR OWN RISK.

Elliott Wave Option Signals - Short NVDA

NVIDIA (NVDA) is in the middle of a major bull run that should last several months if not years.  However, the shorter term picture shows an Intermediate degree wave (1) ending, and a wave (2) in the works.  More importantly, and more desirable, is that a Minor wave C down is about to get underway.  C waves are third waves and so they are impulsive and very strong.  I expect this stock fall around the 50% Fibonacci retracement level at $41.47 before looking for any meaningful bottom.  Here is my short trade:

Buy to open NVDA Aug  40/47 put spread for $2.09

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PLEASE NOTE: THIS IS AN ELLIOTT WAVE BLOG EXPRESSING AN OPINION AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. TRADE AT YOUR OWN RISK.

Elliott Wave Option Signals - Short NSP

Insperity Inc. (NSP) has been on a huge monster rally the past several weeks but it has become quite choppy and is starting to roll over to the downside.  Today's sharp pop is just an exhaustion rally with the tired and tapped out bulls throwing everything they have at it today for one final push.  The next move of consequence should be to the downside.  I show a large Intermediate "flat correction" unfolding with today's rally part of wave (B) which should soon give way to a strong impulsive decline for wave (C) towards Fibonacci support at the $66.72 level (38% Fibo), which is also near the previous Minor wave 4, another typical draw for larger degree corrections.  So I went short with a put spread.  Here is the trade:

Buy to open NSP Aug 19  70/80 put spread at $4.13

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PLEASE NOTE: THIS IS AN ELLIOTT WAVE BLOG EXPRESSING AN OPINION AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. TRADE AT YOUR OWN RISK.

Elliott Wave S&P Futures and VIX Analysis

The 30min chart of the VIX has been triggering a buy signal for most of the week as you can see from the green paint bars in the chart.  However, the official buy signal was not triggered until today when price closed above the signal line.  This is a short signal for the S&P.  Since it's a 30min chart, it usually means at least a 20 point move that will occur within the next few days.  You can see how accurate and forward looking this indicator can be by looking at the VIX sell signal confirmed early this week which signaled the large rally we've been engaged in all week.  Now the VIX is signaling the stock market's rally is ending, or has ended, and will pullback 20+ points soon.

The wave count shows an impulsive rally that is incomplete.  Wave ((4)) is most likely unfolding which means it's possible some boring price action may be ahead of us the rest of the week. I do expect a quick new high for wave ((5)) eventually, and that will be followed by a sharp decline.  The VIX sell signal I mentioned above supports this.  Depending on structure and magnitude of that decline, it will help confirm my long term bullish count, or if perhaps something much more bearish is unfolding since the Brexit vote.

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PLEASE NOTE: THIS IS AN ELLIOTT WAVE BLOG EXPRESSING AN OPINION AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. TRADE AT YOUR OWN RISK.

Elliott Wave S&P Futures

Although fundamentally and logically it does not seem accurate to think that the decline from last week is over, the wave count certainly suggests that it is.  There are signs both ways that build a logical case, so I don't want to get too into the weeds on where the market is going long term.  For the bullish case, the wave count, and current rally strength, support a long sustained bullish move.  On the other hand, I think it's unlikely that the S&P drop over 100 points in just a couple days and then bottom and shoot higher.  Usually tops and bottoms to big moves are a "process" that takes a while.  They tend to not be a quick "event".  Also, a "Flat Correction" is a sideways correction that is usually part of a 4th wave, not a wave 2.  2nd waves tend to be sharp and deep.  So although the count looks good, it's not really what I'd expect to see for a second wave.

So the longer term may be a bit fuzzy, but what is clear though, is that for the short term, the market is still quite strong and bullish.  There are not signs of the rally letting up.  So I will remain a bull until I see some weakness and signs of a reversal.

On a side note, I just wanted to point out how forward-looking my custom indicators really are.  Yesterday, you can see that my indicator registered over 170 stocks in the S&P with confirmed buy signals.  This was accompanied by choppy, and hard fought, price action sideways-to-down during that period.  Then, as the signals declined, which usually means the stocks have since bottomed, reversed, and have shot higher therefore alleviating the overbought condition and no more registering a signal, the stock market as a whole shot higher about 40 points.  I use this indicator, which is comprised of several custom indicators, to help make my stock selections as well.

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PLEASE NOTE: THIS IS AN ELLIOTT WAVE BLOG EXPRESSING AN OPINION AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. TRADE AT YOUR OWN RISK.

Elliott Wave Options Signals - Short ULTA

ULTA confirmed a short signal on my custom indicators and has a completed 5 waves that should accompany such a signal.  Since wave (3) at Intermediate degree is over, a long 4th wave should now unfold.  It should make it to at least $220.22, even if it's just a triangle correction, but it could possibly continue lower to fill around $215.  Here is the trade I made near the close today:

Buy to open ULTA Aug 05  217.5/237.5 put vertical at $5.75

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PLEASE NOTE: THIS IS AN ELLIOTT WAVE BLOG EXPRESSING AN OPINION AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. TRADE AT YOUR OWN RISK.

Elliott Wave S&P Analysis

Well it was a killer day for me in the markets as I did not lose a single trade, both in futures and options trading.  I love this volatility, and it is unusual to get this in the summer.  Albeit, it took a major event in England to do it, it was still a pleasant surprise and I'm going to have a nice weekend with the profits.

The S&Ps dropped about 30 points from my post this morning and did not reach my projection of 2000 by the end of the day, which means the bears will be back in charge early next week.  Remember, the S&Ps were down 110 points in the Globex session and once the US session started, a tone of buying entered the market pushing the index up from about 75 points down, to around 45 points down.  So 30 S&P points were bought up in the early US session, and when you add the other 35 points bought up in the late Globex session, there was a ton of buying power used up early this morning.  So, how much more bulls are left?  And how many bulls still have enough buying power, and feel comfortable using that buying power, going into next week.  I will argue - not many.  So, expect lower levels early next week and watch the S&Ps drop to 2000, then to possibly 1980, and perhaps even lower than that.

You can check out my 4hr chart I posted from this morning to see the bigger picture, and then check out my chart above with a 10min chart and wave count to break down the analysis with greater detail.  You can see from this 10min chart wave count that the S&Ps have a lot of bearish potential.  But don't overthink it and try to get this decline narrowed down to a mathematical certainty.  Just note that the bottom line is that the market is very bearish right now, surprises will be to the downside, and the bulls have a lot of work to prove they are back in charge.

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PLEASE NOTE: THIS IS AN ELLIOTT WAVE BLOG EXPRESSING AN OPINION AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. TRADE AT YOUR OWN RISK.

Elliott Wave Option Signals - Closed JEC (+60% profit) and DNB (+57% profit)

Jacobs Engineering Group (JEC) tanked hard with the rest of the market today.  Although it outpaced the S&P's decline as the S&P dropped 3.6% and JEC dropped 6.46%.  I do feel that it will continue to make its way lower towards 38% Fibonacci at $48.38, but with a 6.46% drop that has significantly outpaced the stock market's decline, I wanted to take profits on this right now as a sharp rally to get back on pace with the overall market can easily happen Monday.  Plus, with options, I don't want too much meandering around before getting to my target as it can erode premium.  The original trade setup is here.  And here is the final trade result:

Closed JEC Aug 19  47.5/52.5 put spread at $2.53 for a 60% profit

Dun and Bradstreet (DNB) fell hard today as well, -4.9% at the close.  I may regret closing this one as I do strongly feel it was too early, but with such a huge down day in the market I want to take profits where I could and this was the best choice of the other options available.  With that said, I still pulled a 57% profit on this guy.  This stock has the potential to move significantly lower, with the first stopping point $118.75, but potentially to 50% Fibonacci retracement and a prior 4th wave at $107.43.  I'm happy with my gain though, so I will count my money and skip off into the sunset with it.  The original trade setup is here.  And here is the final trade result:

Closed DNB Aug 19  115/130 put vertical at $7.37 for a 57% profit


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PLEASE NOTE: THIS IS AN ELLIOTT WAVE BLOG EXPRESSING AN OPINION AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. TRADE AT YOUR OWN RISK.

Elliott Wave S&P Futures

Brexit wins, the UK is going to progressively negotiate its way out of the EU, and the markets are in turmoil as no one knows what this will really mean for the global markets.  My guess is, not much.  However, markets hate uncertainty, so you're seeing this panic selling today.  Last night when the vote tallies showed that the "Leave" side was probably going to prevail, the S&Ps dropped 110 points.  This after it was up about 12 points that afternoon.  So that's a 122 point drop! 

The market will head lower.  Remember, this is a ((c)) wave within a Minor wave 2, both of which are strong and sharp moves.  The rally from this morning were bargain hunters getting "discounts" on stocks at the open.  Long term, they will be right, but short term, they will be hurt as this market should roll over and decline towards 2000 by the end of the day.  The market rallied for several days, with the anticipation that the UK would vote "Stay".  Not sure why that increases stock values if everything remains the same, but it did rise.  I suspect that was just speculators, day traders, etc. pushing the markets higher to play with the market while the big players stayed on the sidelines until after the vote.  Now that the vote is in, all that rallying needs to be unwound, and many people will be bailing on stocks until certainty and stability returns to the global markets.

There should be at least one more push down towards the 1980-2000 range before any meaningful bottom can be considered.

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PLEASE NOTE: THIS IS AN ELLIOTT WAVE BLOG EXPRESSING AN OPINION AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. TRADE AT YOUR OWN RISK.

Elliott Wave Options Signals - Closed JCI for 48% Profit

JCI decided to traverse higher for several days in what appears to be a "flat correction" with wave ((b)) [not shown] testing the Minor wave 1 high and reversing.  The decline this morning as part of Minor wave 2 satisfies my objective and therefore I closed the position at a nice 48% profit.  The original trade setup is located here.  Here is the trade conclusion:

Closed JCI July 15  41/45 put spread at $1.85 for 48% profit

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PLEASE NOTE: THIS IS AN ELLIOTT WAVE BLOG EXPRESSING AN OPINION AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. TRADE AT YOUR OWN RISK.

Elliott Wave Options Signals - Closed NOC for 83% Profit

Northrop Grumman fell hard with the rest of the market this morning and hit my target level and I closed the trade at a hefty 83% profit.  Minor wave C just needed to clear wave A to satisfy EWP's "flat correction" rule and that's what it did.  I think this can easily fall further to the 38% Fibonacci but it will do so without me in the trade as my objective was met.  Click here for the original trade setup, and here's the conclusion:

Closed NOC July  210/220 put vertical at $6.75 for 83% profit


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PLEASE NOTE: THIS IS AN ELLIOTT WAVE BLOG EXPRESSING AN OPINION AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. TRADE AT YOUR OWN RISK.

Elliott Wave Forex Signals - Closed 2nd Half of GBPNZD for 156 Pip Profit

Sometimes I'm amazed at how well Elliott Wave and Fibonacci levels can project the market.  Look at the charts I've had on this pair the several days (below).  You can see the pair has traced out exactly as I projected.  Unfortunately, I did not profit from the entire move, I exited the remainder of my position at 2.0375.  So a 103 pip profit on half position and 156 pip profit on half position results in an average profit of 130 pips on a full position.  Here is a previous post illustrating my projections on the GBPNZD

The markets are positioned where they want to be before the British vote a little over 12 hours away.  So I don't expect much action unless something is leaked about the results, or projected results.  I am going into that vote as light as possible, i.e. no forex or futures positions.  I would be very careful for anyone holding forex positions into that vote as currencies have the potential to move extremely fast, and stops may not get triggered as intended.

As for the S&Ps, the bullish move I projected from the 130min VIX buy signal has been fulfilled as is no longer valid.  I have no signals either way on the market now, but the wave count I have is bearish.  I plan to wait for the dust to settle from the vote tomorrow before I make any more trades.  

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PLEASE NOTE: THIS IS AN ELLIOTT WAVE BLOG EXPRESSING AN OPINION AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. TRADE AT YOUR OWN RISK.