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Executive Summary

The market didn’t reach our preferred SPX2342-2325 target zone last week, and instead stalled at SPX2353 after

only a 1-day correction before embarking on the next rally to SPX2401. We now anticipate the S&P500 to reach

SPX2407-2415; which fits with the major, intermediate, and micro-wave extensions for a 3rd wave top (see ideal-

wave tracker tables for the S&P500 below). Based on the major-wave and intermediate-wave degree Fib-extensions

that are close to overlapping at current price levels; the DOW may in fact be putting in a major 3 top; whereas we

expect an intermediate-iii top for the S&P500. Intermediate iv should then retrace back to SPX2280-2330 before

intermediate v targets SPX2500.

Despite continued higher (weekly closing) price, market breadth ended the week negative, and although it can of

course rally back up; its suggests the market is wrapping up its final waves into the target zone as less and less stocks

are participating in the rally, typical at the end of a rally.

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Trading Performance Update with North Post Partners, LLC

NPP provides neither a boom, nor a bust. Just consistency. That’s how the real money is made. This week we netted

1.3% of our entire portfolio-size in realized profits, whereas current holdings are at -1.7% of our entire portfolio-size.

Hence, the small decline in YTD performance. But trading is all about cashing in profits.

Please contact me or Rus Chao directly (rustinchao@gmail.com) for more information. Joining NPP is absolutely free!

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.

NPP

S&P500

Per

form

ance

(%

gai

n)

YTD

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Elliot wave updates

Last weekend we continued to expect a deeper Micro-4 correction, as “we ha[d] a hard time labeling the SPX2353

low as Micro-4; because we only got a 1-day correction that fell well short of even the minimum target (SPX2342),

while Micro-2 lasted two weeks and retraced a perfect ~50% of Micro-1”. The market proofed us wrong (we are

wrong till proven right) as SPX2353 was all we got and it gapped up on Wednesday, but gave up all gains made in

the case market (!) the next two days. We adjusted our count as necessary (anticipate, monitor, and adjust), and

now find it most likely that the market is wrapping up its last wave before embarking on a more serious correction.

There are many ways one can count the current advance, but most lead to the same outcome, and we decided to

upgrade our count to a “looming” intermediate iii top based around SPX2407-2415, based on the fact that the 1.618x

extension of (red) intermediate i, from ii, is at SPX2408 and the 1.382x extension of (yellow) major 1, from 2, is at

SPX2411: see Figure 1. Both are typical 3rd wave and 3rd of 3rd wave targets; respectively. This fits also well with the

count on the NYA that we presented in last weekend’s digest, and with the DOW (see page 5), which may even be

putting in a major 3 top. Hence, although tops take time to form (as there’s a lot of residual bullishness left) the

markets may soon be embarking on a more serious correction then most anticipate: forewarned is forearmed.

Figure 1. Preferred counts: Minute v of minor 5 of intermediate iii underway; a 17th wave up would be ideal.

4?

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Technical Market update

The negative divergence remains on the daily RSI5, as well as the MACD-histogram, and a continued non-ideal A.I.

sell signal: the rally is losing momentum. However, a green Monday will likely give us a renewed non-ideal A.I. buy

signal, support the POV that the last scribbles to SPX2407-2415 are underway. Support is now at SPX2380-70, then

SPX2360-2350, followed by SPX2340 and SPX2330-SPX2320. Below that and SPX2300 comes into play. These levels

coincide well with our ideal Micro-4 target zone of SPX2342-2325. Note the lower Bollinger Band is starting to point

back up, and price is moving away from the upper Band: momentum is weakening

Figure 2. SPX daily chart. Negative divergence remains. Alternate count shown.

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Waves often extent to certain key Fibonacci-levels: 3rd of 3rd waves mostly to the 1.000x to 1.382x extension of wave-

1; 3rd waves to the 1.236x to 1.618x extension of wave-1, and 5th waves to the 1.764x to 2.000x extension of wave-

1. All measured from a 2nd wave low (see here and here for example). This of course assumes no extensions (3rd

waves can travel as far as 2.618x 1 or even higher) as those cannot be anticipated beforehand. When we then look

at the DOW; we have Major-1 and 2 (black) complete as well as intermediate-i and ii (Red). What we then observe

is that on Wednesday price hit the 2.000x extension of intermediate-i to the T (red arrows), which is also very close

the 1.618x extension of Major-1 (black arrows), and reversed. Note that Major-1 can be counted in two ways, “1”

and “Alt: 1”, with the latter 1.618x extension just a little bit above the former. Regardless, the fact that price is so

close to these important Fib-extensions suggests an important top may be at hand; likely more significant than many

would anticipate. This fits with the negative divergences that is building on the MACD, paltry market breadth (See

page 9), the NYA (see here) and the Russell 2000 (see here); although these appear to carve out an intermediate-iii

top; like the SPX. Regardless, even an intermediate-iii top should see a ~5% correction (SPX2280-2230)

Figure 3. DOW daily TI chart. Possible major 3 top in the making?

Alt: 1

Alt: IV

Alt: a

Alt: b

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The weekly SPX TI chart shows that price is now extremely overbought, but the MACD continues to point up, while

the weekly A.I. gave an initial sell-signal. Note the A.I. responds faster than the MACD, but can therefore also give

more “false” signals. The weekly candle does show a wig that is equal to the body; suggesting some buyer exhaustion.

But that needs to be followed up with a red candle next week to confirm. On the next page, Figure 5, we’ll go back

20 years in time to see how the market faired after such extreme overbought conditions.

Figure 4. SPX weekly TI chart. 2440 target remains in sight.

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The black vertical lines show when the weekly RSI5 closed >90, while the blue lines show when the MFI14 (Money

Flow Index) closed >80. There have not been many occasions with such high RSI5 reading (8 in total). In all cases the

market continued higher longer term; but in all cases we also see corrections of varying degrees happen directly

(within 1-2 weeks) or shortly after (within 1-2 months). This observation fits with our POV of the market.

There were 17 MF14 >80 readings over the past 20 years. In all occasions the market moved higher longer term

(months to years), while in 11 of those the market corrected, at varying degrees, shortly after first before moving

higher. This observation fits with our POV of the market.

Figure 5. SPX weekly TI chart last 20 years; assessing extreme overbought conditions.

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Market breadth

The McClellan Oscillator for S&P500 (SPX-MO) dropped to negative by the end of this week; despite Wednesday’s

rally. Breadth therefore remains lower than it was a month ago; while the index continues to move higher. The SPXSI

(summation index of the SPX-MO) remains on a buy after the buy signal from Friday 2/10, but starts to look toppy

and the negative divergence (red dotted line) we’ve been eluding too over the past weeks, similar to June last year,

starts to set up. The NYSE, NASDAQ, NDX had breadth readings of -22, -18 and -7 on Friday. Not the breadth readings

one would like to see at ATHs, but the NYMO (McClellan Oscillator for the NYSE) closed back inside its lower Bollinger

Band on Friday after having closed outside it on Thursday; this giving a “buy signal”.

Figure 5. SPX-MO turned negative despite higher weekly closing prices. SPX-SI remains on buy, but looks toppy.

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Miscellaneous

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. That’s all there is to it

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.

Our next Fib-based trading interval is set for March 14 for the SPX; which is in line with the next very strong Bradley

turn date on March 20 (see page 11; 100/100 long terms); as turn dates are +/- 3 trading days. Given where the

market currently is, where we expect it to go, and the strength of the Bradley turn date we could very well have the

anticipated Major-3/Intermediate-iii top around that time.

Figure 7. Next Fib-based trading interval March 14 (+/- 3 days). Bradley turn date March 20 (+/- 3 days)

The “Ebola scare” correction

in 2014 didn’t even register

on the LT chart!

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The CPCE (put/call ratio) –our contrarian indicator at extreme levels- increased on Friday to 0.70 again; while the VIX

dropped hard (talk about opposite signals). The CPCE:VIX ratio (Figure 7b) is therefore spiking again; which it often

does closer to price tops.

Figure 7. CPCE and VIX support idea a top is closer than a bottom.

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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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