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End of week analysis expected Monday to see strong downwards movement.

This is exactly what happened.

Summary: The trend is down and a strong third wave is building. Expect surprises to be to the downside. A small quick second wave correction may move price a little higher when markets open tomorrow. It should be over quickly, lasting less than 11 hours in total. Use the upper edge of the orange channel on the hourly chart for resistance. In the short term, targets are 1,797 which may be met in 6 more sessions, and then 1,511 which may possibly be met in 16 more sessions.

To see how each of the bull and bear wave counts fit within a larger time frame see the Grand Supercycle Analysis.

To see detail of the bull market from 2009 to the all time high on weekly charts, click here.

Last published monthly charts can be seen here.

If I was asked to pick a winner (which I am reluctant to do) I would say the bear wave count has a higher probability. It is better supported by regular technical analysis at the monthly chart level, it fits the Grand Supercycle analysis better, and it has overall the “right look”.

New updates to this analysis are in bold.



S&P 500 daily 2015
Click chart to enlarge.

This wave count is bullish at Super Cycle degree.

Cycle wave IV may not move into cycle wave I price territory below 1,370.58. If this bull wave count is invalidated by downwards movement, then the bear wave count shall be fully confirmed.

Cycle wave II was a shallow 0.41 zigzag lasting three months. Cycle wave IV should exhibit alternation in structure and maybe also alternation in depth. Cycle wave IV may be a flat, or combination.

Cycle wave IV may end within the price range of the fourth wave of one lesser degree. Because of the good Fibonacci ratio for primary wave 3 and the perfect subdivisions within it, I am confident that primary wave 4 has its range from 1,730 to 1,647.

Primary wave C should subdivide as a five and primary wave Y should begin with a zigzag downwards. This downwards movement is either intermediate waves (1)-(2)-(3) of an impulse for primary wave C or minor waves A-B-C of a zigzag for intermediate wave (A). Both these ideas need to see a five down complete towards the target, so at this stage there is no divergence in expectations regarding targets or direction. When and if these two ideas diverge, I will separate them out into two separate charts. For now I will keep the number of charts to a minimum.

Primary wave A or W lasted three months. Primary wave C or Y may be expected to also last about three months. It is now in its second month at this stage and may not be able to complete in just one more. It may be longer in duration, perhaps a Fibonacci five months. That would still give a combination the right look at higher time frames.

Within the new downwards wave of primary wave C or Y, a first and second wave, or A and B wave, is now complete. Intermediate wave (2) or minor wave B lasted a Fibonacci 13 days exactly. At 1,693 intermediate wave (3) would reach 4.236 the length of intermediate wave (1).

This daily chart and the hourly chart below both label minor wave 3 as complete. It is also possible that the degree of labelling within minor wave 3 could be moved down one degree, because only minute wave i within it may be complete. Within minor wave 5, no second wave correction may move beyond its start above 1,947.2.

Price has come up to find resistance at the upper cyan trend line. This line goes back to 20th July, 2015, (its first anchor) and is reasonably shallow, has been repeatedly tested, and has reasonable technical significance. It should be expected to offer reasonable resistance.

Price has now broken below the lower cyan line. It looks like a downwards breakout is underway; the next wave down is unfolding. The lower cyan line may now provide resistance for upwards corrections.


S&P 500 hourly 2015
Click chart to enlarge.

At this stage, the corrective structure for minor wave 4 which has the best fit is a double zigzag. This movement now has a clear three wave look to it on the daily chart.

If this is a fourth wave correction, then the least likely structure for it would be a zigzag or zigzag multiple. That would not provide adequate alternation with the second wave zigzag.

However, alternation is a guideline, not a rule, and it is not always seen.

The probability that the correction was a fourth wave is reduced. The probability that this bounce is a second wave has increased.

Because both bull and bear wave counts see this structure in the same way on the hourly chart, further comment will be with the bear wave count.



S&P 500 daily bear 2015
Click chart to enlarge.

This bear wave count fits better than the bull with the even larger picture, super cycle analysis found here. It is also well supported by regular technical analysis at the monthly chart level.

Importantly, there is no lower invalidation point for this wave count. That means there is no lower limit to this bear market.

Downwards movement so far within January still looks like a third wave. This third wave for intermediate wave (3) still has a long way to go. It has to move far enough below the price territory of intermediate wave (1), which has its extreme at 1,867.01, to allow room for a following fourth wave correction to unfold which must remain below intermediate wave (1) price territory.

Intermediate wave (2) was a very deep 0.93 zigzag. Because intermediate wave (2) was so deep the best Fibonacci ratio to apply for the target of intermediate wave (3) is 2.618 which gives a target at 1,428. If intermediate wave (3) ends below this target, then the degree of labelling within this downwards movement may be moved up one degree; this may be primary wave 3 now unfolding and in its early stages.

Intermediate wave (2) lasted 25 sessions (no Fibonacci number), minor wave 2 lasted 11 sessions (no Fibonacci number), minute wave ii lasted 10 sessions (no Fibonacci number), minuette wave (ii) lasted a Fibonacci 8 sessions, and subminuette wave ii lasted just two sessions. Each successive second wave correction of a lower degree has a shorter duration which gives the wave count the right look, so far.

If subminuette wave ii continues any higher, it may not move above the start of subminuette wave i at 1,947.20.

The degree of labelling within minute wave iii may also be moved up one degree. This correction may be minute wave iv. I will wait to see how momentum behaves for the next wave down to make a final decision on which degree of labelling is correct. For now I will leave the labelling as the most likely for a second wave due to the duration and the structure of a double zigzag.

If the next wave down shows a strong increase in momentum, then it would be the middle of a big third wave.

If the next wave down shows weaker momentum than minuette wave (i), then it would be a fifth wave to end minor wave 3.


S&P 500 daily bear 2015
Click chart to enlarge.

Subminuette waves i and ii are complete within minuette wave (iii).

Subminuette wave ii was a deep 0.60 expanded flat lasting just 11 hours.

The pattern so far within this third wave is typical. Each successive second wave correction is more brief than its predecessor one degree higher. Micro wave 2 may be reasonably expected to be over more quickly than 11 hours. It may end about either the 0.382 or 0.618 Fibonacci ratios, neither one is favoured at this stage. If it gets up high enough, it should find very strong resistance at the upper edge of the orange base channel.

Micro wave 2 may not move beyond the start of micro wave 1 above 1,927.35.

At 1,797 subminuette wave iii would reach 2.618 the length of subminuette wave i.

Subminuette wave i lasted one session and subminuette wave ii lasted two sessions. If subminuette wave iii is extended in price, it would also extend in time. A reasonable expectation would be for it to last a total Fibonacci 8 sessions. So far it has lasted 2.

At 1,511 minuette wave (iii) would reach 1.618 the length of minuette wave (i).

Minuette wave (i) lasted 14 sessions, one more than a Fibonacci 13. Minuette wave (ii) lasted a Fibonacci 8 sessions. If minuette wave (iii) is extended in price, it would also be extended in time. A reasonable expectation would be for it to last a total Fibonacci 21 sessions, give or take one or two either side of this number. So far it has lasted 5 sessions.

These expectations regarding time are rough estimates only. The S&P sometimes exhibits waves which have Fibonacci numbers for how many days / sessions they last, but not always.

Micro wave 2 may not move beyond the start of micro wave 1 above 1,927.35.



S&P 500 daily 2015
Click chart to enlarge. Chart courtesy of

A stronger downwards day with stronger volume than any of the recent upwards days removes any doubt about the volume profile. The volume profile is again bearish. This fall in price for Monday is well supported by volume.

ADX is now again beginning to turn upwards indicating the market is again trending. The trend is down.

ATR also is beginning to agree as it is increasing. This market is trending.

On Balance Volume gives another bearish signal today with a break below the green trend line. The next lines to offer support are the pink line which is not very technically significant, and the lower blue line which has more technical significance.

RSI and Stochastics are not yet oversold. There is room yet for this market to fall.


For the bear wave count I am waiting for Dow Theory to confirm a market crash. I am choosing to use the S&P500, Dow Industrials, Dow Transportation, Nasdaq and I’ll add the Russell 2000 index. Major swing lows are noted below. So far the Industrials, Transportation and Russell 2000 have made new major swing lows. None of these indices have made new highs.

I am aware that this approach is extremely conservative. Original Dow Theory has already confirmed a major trend change as both the industrials and transportation indexes have made new major lows.

At this stage, if the S&P500 and Nasdaq also make new major swing lows, then my modified Dow Theory would confirm a major new bear market. At that stage, my only wave count would be the bear wave count.

The lows below are from October 2014. These lows were the last secondary correction within the primary trend which was the bull market from 2009.

These lows must be breached by a daily close below each point. So far the S&P has made a new low below 1,821.61, but it has not closed below 1,821.61.

S&P500: 1,821.61
Nasdaq: 4,117.84
DJT: 7,700.49 – this price point was breached.
DJIA: 15,855.12 – this price point was breached.
Russell 2000: 1,343.51 – this price point was breached.

This analysis is published @ 08:07 p.m. EST.