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Upwards movement continues as expected. The target is also now a short term limit.

Summary: The next target is also a limit at 2,840.

The alternate is invalid. Bullish signals today from On Balance Volume and the AD line are given weight.

The biggest picture, Grand Super Cycle analysis, is here.

Last historic analysis with monthly charts is here. Video is here.



S&P 500 Weekly 2018
Click chart to enlarge.

Cycle wave V must complete as a five structure, which should look clear at the weekly chart level. It may only be an impulse or ending diagonal. At this stage, it is clear it is an impulse.

Within cycle wave V, the third waves at all degrees may only subdivide as impulses.

Within cycle wave V, the corrections for primary wave 2 and intermediate wave (2) both show up clearly, both lasting several weeks. The respective corrections for intermediate wave (4) and primary wave 4 should also last several weeks, so that they show up at weekly and monthly time frames. The right proportions between second and fourth wave corrections give a wave count the right look. This wave count expects to see two large multi week corrections coming up.

Cycle wave V has passed equality in length with cycle wave I, which would be the most common Fibonacci ratio for it to have exhibited. The next most common Fibonacci ratio would be 1.618 the length of cycle wave I.

Intermediate wave (3) has passed equality in length with intermediate wave (1). It has also now passed both 1.618 and 2.618 the length of intermediate wave (1), so it may not exhibit a Fibonacci ratio to intermediate wave (1). The target calculation for intermediate wave (3) to end may have to be done at minor degree; when minor waves 3 and 4 are complete, then a target may be calculated for intermediate wave (3) to end. That cannot be done yet.

When minor wave 3 is complete, then the following multi week correction for minor wave 4 may not move into minor wave 1 price territory below 2,400.98. Minor wave 4 should last about four weeks to be in proportion to minor wave 2. It may last about a Fibonacci three, five or even eight weeks if it is a time consuming sideways correction like a triangle or combination. It may now find support about the mid line of the yellow best fit channel. If it does find support there, it may be very shallow. Next support would be about the lower edge of the channel.

A third wave up at four degrees may be completing. This should be expected to show some internal strength and extreme indicators, which is exactly what is happening.


S&P 500 Daily 2018
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Keep redrawing the acceleration channel as price continues higher: draw the first line from the end of minute wave i to the last high, then place a parallel copy on the end of minute wave ii. When minute wave iii is complete, this would be an Elliott channel and the lower edge may provide support for minute wave iv.

Minute wave iii has passed 1.618 the length of minute wave i. The next Fibonacci ratio in the sequence is used to calculate a target for it to end.

Minute wave iii may only subdivide as an impulse, and within it minuette wave (i) only may have recently ended as a long extension. This main wave count fits with MACD: upwards momentum is showing an increase as a third wave continues upwards.

Within the impulse of minute wave iii, the upcoming correction for minuette wave (iv) may not move back into minuette wave (i) price territory below 2,694.97.

Because minuette wave (i) with this wave count is a long extension, it is reasonable to expect minuette wave (iii) may only reach equality in length with minuette wave (i). This target fits with the higher target for minute wave iii one degree higher.


S&P 500 Hourly 2018
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Always assume that the trend remains the same until proven otherwise. At this stage, there is no technical evidence for a trend change; we should assume the trend remains upwards.

Subminuette wave iii is shorter than subminuette wave i. This limits subminuette wave v to no longer than equality in length with subminuette wave iii at 2,840.12, so that subminuette wave iii is not the shortest and the core Elliott wave rule is met.

The structure is still incomplete within subminuette wave v, which needs to complete as a five wave structure, either an impulse or an ending diagonal. At this stage, it looks like an incomplete impulse.

Within submineutte wave v, micro waves 1 and 2 look complete. Micro wave 3 may be very close to completion. Micro wave 4 may not move into micro wave 1 price territory below 2,805.83.

Minuette wave (ii) was a very shallow combination lasting eight days. Minuette wave (iv) may also last about a Fibonacci eight days.



S&P 500 weekly 2018
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This upwards trend is extreme and stretched, but there is still no evidence of weakness at the weekly time frame.

As a third wave at multiple degrees comes to an end, it would be reasonable to see indicators at extreme levels.

A correction will come, but it looks like it may not be here yet.


S&P 500 daily 2018
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On Balance Volume today has broken out of its new small range to give a bullish signal. This signal is weak because the trend line was only just drawn, but it is still another bullish signal.

Although volume today did not support the rise in price, this is given little weight as declining volume both short and long term has been a feature of this market for a long time.

Overall, this chart remains bullish. The trend is extended and overbought, so it might be useful to look back at prior third waves in the S&P to see how extended a strong trend may become and for how long overbought conditions may be maintained. This is done below.


VIX daily 2018
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So that colour blind members are included, bearish signals will be noted with blue and bullish signals with yellow.

Normally, volatility should decline as price moves higher and increase as price moves lower. This means that normally inverted VIX should move in the same direction as price.

Bearish signals from VIX have not been followed by any downwards movement. They may have all failed, or it could be that these signals are early.

There is still strong short term divergence between price and inverted VIX. The new high in price has not come with a normal corresponding decline in market volatility. This is bearish.


AD Line daily 2018
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There is normally 4-6 months divergence between price and market breadth prior to a full fledged bear market. This has been so for all major bear markets within the last 90 odd years. With no longer term divergence yet at this point, any decline in price should be expected to be a pullback within an ongoing bull market and not necessarily the start of a bear market.

All of small, mid and large caps last week made new all time highs. This market has good support from rising breadth.

Breadth should be read as a leading indicator.

All recent bearish signals from the AD line have failed. Both price and the AD line have made new all time highs today. The rise in price now has support from rising market breadth. This is bullish.


The S&P500, DJIA, DJT and Nasdaq last week all made new all time highs. The ongoing bull market is confirmed.

The following lows need to be exceeded for Dow Theory to confirm the end of the bull market and a change to a bear market:

DJIA: 17,883.56.

DJT: 7,029.41.

S&P500: 2,083.79.

Nasdaq: 5,034.41.

Charts showing each prior major swing low used for Dow Theory are here.


AD Line daily 2018
Click chart to enlarge. Chart courtesy of

This monthly chart shows a possible wave count for the last cycle degree fifth wave within the Grand Super Cycle analysis.

If this historic and the current wave counts are both correct, then the equivalent position for the current day would be towards the end of the segment delineated by dates December 1994 to May 1996.

The technical analysis chart below looks at this portion of the wave.

AD Line daily 2018
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The purpose of this exercise is to see how regularly used indicators behaved in a market which may be a reasonably close equivalent to the current market.

First, it should be noted that on this weekly chart the longest duration for a pullback from an all time high is two weeks. This does look somewhat similar to the current market conditions.

Divergence between RSI and price and Stochastics and price was not always reliable. Sometimes it simply disappeared.

ADX may remain very extreme for several weeks. ADX may even decline from very extreme yet price may continue higher for many more weeks.

When normal volatility returns, MACD may not be a reliable guide to when to enter and exit a market, as it can whipsaw for many weeks while price may continue overall higher.

Putting this next to the current market conditions, it seems clear that overbought and extreme conditions have persisted for long periods in the past when the S&P has a strong bull market. If the Elliott wave count is currently correct at intermediate, primary and cycle degree, then current market conditions may certainly persist for many more weeks.

Published @ 09:51 p.m. EST.