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Holiday Update I - 12/24/2015

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Based on chart #1 published on Tuesday, we allowed the ES H6 (S&P 500 March futures contract) more leeway, specifically up to 2041.50, to exhaust its reserves in what we had considered to be a relief rally ahead of one final down leg.  That said, we were also fully aware of the presence of a potential inverse Head and Shoulders on (hourly) chart #2 below.


Chart 1. We gave the ES H6 more relief leeway, i.e., up to the weekly vPOC to exhaust its "Santa" reserves. 


Chart 2. We were fully aware of the ES H6's potential iHS, albeit unconfirmed, as early as Tuesday.

On Wednesday morning, the wave structure no longer looked corrective, leading me to publish chart #3 below.


Chart 3. By Wednesday morning, the way structure began to look more impulsive than corrective. 

And by the closing bell, the forecast was finally on track, as depicted in chart #4. Wave 3, as expected, reached the ~2057 target, setting the stage for some profit taking in the ongoing wave 4


Chart 4. The ES H6 finally reached the ~2057 to complete wave 3 in what should prove to be a sustainable uptrend. 

In 2011, the S&P 500 (cash) opened the year at 1257.62 and closed it at 1257.60. In 2015, It opened at 2058.90. If Thursday morning's dip find buyers near 2041.50, will it rally back to breakeven? The profit-taking wave 4 is analyzed in chart #5 below. Should it reach its "textbook" bottom, wave 5 should subsequently take charge, aiming for its ideal 0.618 projection (i.e., the 0.618 ratio of the total distance measured from the start of wave 1 to the end of wave 3, projected from the bottom of wave 4). This is depicted in chart #4 above. 


Chart 5. A double zigzag appears to be underway. Wave a of the second zigzag ended at the 0.886 retracement, which would normally be a bullish Bat.
However, we're expecting a bullish Crab, given the incomplete wave structure. 

3PDh Status

I recently brought to everyone's attention the developing 3PDh pattern. Should this turn out to be valid, the current rally off last Friday's low (point 20) is the "second floor wall" phase. This pattern is to be always tracked by way of the Dow Jones Industrial Average ($DJIA, $INDU), as George Lindsay insisted.


Chart 6. The developing 3PDh pattern (in red).

AAPL Traders

AAPL showed some signs of life yesterday, and we were ready for it. As shown in charts #7 and #8 below, a move above 108.85, should immediately target 112-113. However, make no mistake about it; The overall picture remains bearish, as suggested in charts #9 and #10.


Chart7. A leading diagonal foreshadows more upside ahead.


Chart 8. A move above 108.85 would bode well for the short-term bull.


Chart 9. Wave 5 of the largest degree of trend (since company inception) ended in 2015, later confirmed by a Head and Shoulders top. Yet, the media and 
the
actors who play "traders" on CNBC, keeps loving it. (AAPL will do well in 2016 because...)


Chart 10. A massive Head and Shoulders top. The "head" section itself was identified as a Head and Shoulders top this past summer.

Trade smart,

 Peter 


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