TRADING JOHN MURPHY

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11/19/2018 CORRECTION: ... My message from last Wednesday showed negative readings on weekly and monthly stock charts, and referred back to an earlier message on that same topic. However, I incorrectly gave a date of May 13. The correct date of that earlier article is October 13, 2018. I also mentioned that Elliott Wave Analysis done at that time supported the view that the nine-year bull market in stocks was probably ending. I'm repeating a portion of that October message here with the same charts. I've highlighted a few sentences for emphasis. The earlier analysis speaks for itself. And it speaks of a stock market that appears to have peaked.

WEEKLY CHART LOOKS TOPPY (October 13)... The weekly bars of the S&P 500 in Chart 2 paint a more negative view of the stock market. The top box shows the recent peak in the 14-week RSI line ending well below its higher peak reached at the start of the year. To a chartist, that's a serious "negative divergence" and warns of a potential market top. So do the two weekly MACD lines in the second box which show a similar negative divergence. The two weekly MACD lines also turned negative this week for the first time since the spring. What makes those two negative divergences even more serious is that they're occurring in the fifth wave of the market rally that started at the beginning of 2016. According to Elliott Wave analysis, market rallies normally take place in five waves. That includes three upwaves (1,3,5) and two intervening corrections (waves 2 and 4). The red numerals in Chart 2 suggest to me that the five-wave advance since the start of 2016 has probably been completed. Negative divergences in a fifth wave carry more serious warnings. Notice the triangle wave 4 that's identified by two red converging trendlines that formed during the first half of this year. Since triangles are normally fourth waves, that increases the odds that the last upleg that started this spring may be the fifth and final wave of the two-year rally. To put that in a longer-term perspective, I refer back to a January 6 message I wrote on that subject. That earlier message is repeated below with its accompanying Elliott Wave chart interpretation.

http://stockcharts.com/members/analysis/images/2018/20181119002-sc.png