JTH's Account Talk

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Going into this Monday, both the Wilshire 4500 and the Russell 2000 gave us fair warning for a potential pullback.

1) W4500 stalled at September's previous high, alongside the upper red 45° trendline, creating a column of Os.
2) The Fibonacci range I've identified is fairly tight, with less than a -3.00% pullback from the most recent top to bottom.
3) At current price, a reversal gets triggered at 1028.31 or roughly another -2.00%.
4) For myself, I'll be judging the strength of this most recent decline by watching the 50% 1045.23 level.
5) With only 1 higher x, trailed by 1 lower O, I would consider price to be expanding.
5) Looking at the 1025 area, we count 4 Os, so if this area breaks, then I'd advise caution.

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For the week, W4500 closes up .24% and looks to be in a 4-week narrow-ranged tilted flag pattern. For the Bulls, this week put in a higher high & low, for the bears, this week gave back most of the gains. For the month, W4500 closed up 1.35% putting in a spinning candlestick, hinting at indecision.

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Despite the recent drop in oil potentially cutting off the knees of some of the more heavily weighted energy companies, the S&P 500 still looks strong. As you may have guessed, I've been pretty impressed (and concerned) with the performance of the large caps, enough so that I chose to enter the C-Fund on 12 Nov vs. my usual entry into the S-Fund. With 2 higher Xs, and 1 higher O, perhaps this week we can establish the next column of Os and crank out another higher low.

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For the week, the S&P 500 closes flat but up .20%, for the month up 2.45% both timeframes close with a higher high/low.

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This has been an impressive run for AGG we can see the strong breakout with column X,3. I initially misjudged the strength, thinking we would establish another column of Os before breaking out. As of now, we are currently just 2 boxes away from reaching the 50% range. I'm honestly expecting some sort of rejection in the orange zone, so for me, I'm not inclined to chase this wave unless stocks give us a substantial pullback, or AGG builds some support (a higher low). But that's what I think, not what the PnF chart says, the bullish price objective was revised, claiming to reach the 112.63 level which is 1.83% away.

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For the week, AGG closes up .65% this is the biggest weekly gain over the past 6-months. For the month, AGG gains .66%

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Wrapping up the week, all stocks/indexes listed below have bullish price objectives.

1) AGG/W4500/TRANs bullish price objectives were revised upwards (highlighted in yellow).
2) AGG exhibit's unusually strong price action, are bonds the canary in the coalmine?
3) SPX still holds strong, Friday put in a bearish engulfing candlestick (an outside day) further downside may provide confirmation of an impending pullback.
4) W4500 is the closest to putting in a price reversal, just 1.86% away from current price, (compared to large caps) small caps took a significant hit on Friday.
5) Transports should be close to creating another column of Os, from which point I'll look for either a higher low or a 2nd lower low.
6) NASDAQ 100 is crazy strong, with 4 higher highs/lows (trending nicely).

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My Outlook: The markets gave us a strong warning sign on Friday. We've been watching the topping action over the past 2 weeks, and now things appear to be escalating. A quick glance at the number of S&P 500's stocks above their 50/150/200 day moving average, shows us the appearance of rolling over. Take notice of the Bollinger bands and their severe compression, the last 2 times we saw Bollinger Band Width this low, it produced 2 significant pullbacks (although it didn't happen right away on 1 of them).

As we know, when prices are compressed, they become coiled, eventually price tends to expand rapidly and it's when the Bollinger bands get broken, that I'll expect this type of "jack in the box" maneuver to trigger. For now, we'll need to wait and see how these markets are going to digest the recent development of OPECs "full steam ahead" oil production.

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Beautiful day in the markets, we have some high pole warnings on W4500 & TRAN, with TRAN at a double bottom,

Deleted: very close to triggering a price reversal.

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Last edited:
Just an observation based on some of my past expierence. It's never a good sign when the markets both end the month and start the new month on a bad note...
 
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Transports take a beating today, declining -2.71% and triggering a Double Bottom Breakdown with a 8550.1 -4.46% price objective.

1) After 6 higher Xs, column O2 creates a 2nd lower O
2) After the minor Fibonacci levels were broken, I revised them to reflect the larger move, where we currently have retraced just above the 76.4% level
3) Notice the low O on the last 3 O columns are spaced evenly apart (pink line.)

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W4500, declines -1.50% creating a new column of Os and giving us a High Pole Warning (demand yields to supply). Price retraces nearly all of the minor Fibonacci wave, another -.37% should trigger a Double Bottom Breakdown. Afterward we have strong support to test at 1025 (an area with 4 low Os)

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