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Upwards movement continued past the target, which was at 2,199.

Summary: A target for upwards movement to end is now at 2,206. The limit is at 2,213.03. A pullback is still expected to begin soon and to find support about 2,120 and the lilac trend line for a test of support.

Last monthly chart for the main wave count is here.

Last weekly chart is here.

New updates to this analysis are in bold.



S&P 500 daily 2016
Click chart to enlarge.

Primary wave 2 now looks to be complete as a double zigzag. Within primary wave 2: intermediate wave (W) was a very shallow zigzag lasting a Fibonacci 13 sessions; intermediate wave (X) fits perfectly as a triangle lasting 20 sessions, just one short of a Fibonacci 21; and intermediate wave (Y) also lasting 20 sessions deepens the correction achieving the purpose of a second zigzag in a double.

Primary wave 2 looks like it has ended at support about the lower edge of the maroon channel about primary wave 1, and at the 200 day moving average.

With upwards movement slicing cleanly through the lilac trend line, this behaviour looks to be more typical of an upwards trend. At this stage, corrections within primary wave 3 may be expected to turn down to test support at this trend line.

At 2,500 cycle wave V would reach equality in length with cycle wave I.

At 2,467 primary wave 3 would reach equality in length with primary wave 1. This is the ratio used in this instance because it fits with the higher target at 2,500.

Intermediate wave (2) may not move beyond the start of intermediate wave (1) below 2,083.79.

Primary wave 3 may show some strength compared to primary wave 1, but it does not have to. This wave count sees price in a final fifth wave at cycle degree, within a larger fifth wave at Super Cycle degree. The upcoming trend change may be at Grand Super Cycle degree, a once in generations trend change. This final fifth wave should be expected to exhibit great internal weakness; this market may appear broken. That would be typical behaviour for a final fifth wave of this magnitude.


S&P 500 hourly 2016
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There is no Fibonacci ratio between minor waves 1 and 3. Minor wave 3 is slightly shorter than minor wave 1. Because a core Elliott wave rule states a third wave may not be the shortest, this limits minor wave 5 to no longer than equality in length with minor wave 3 at 2,213.03.

At 2,206 minute wave v would reach equality in length with minute wave i.

Minor wave 2 is a shallow 0.34 zigzag and minor wave 4 is a shallow 0.46 regular contracting triangle. This gives perfect alternation in structure and some alternation in depth.

Minor wave 5 is showing weakness. MACD has failed to make a new high while price has moved upwards. This wave lacks momentum.

Downwards movement broke below the lower edge of the best fit channel. The S&P can breach channels yet continue in the old direction, and that is what has happened. The channel breach may only be read as a warning of weakness.

A parallel copy of the lower edge of this channel is drawn today in green. This shows where price is finding resistance at the lower edge of the blue channel and support at the green line. A breach of the green line with downwards movement would be a small indicator of a potential trend change. While price remains above this trend line expect price to continue to find support there and bounce up.

Intermediate wave (2) may be expected to last about a Fibonacci 5, 8 or 13 days. It is most likely to be a single or double zigzag structure. It is most likely to correct to close to the 0.618 Fibonacci ratio of intermediate wave (1), which should be close to support about 2,120 and the lilac trend line.



S&P 500 weekly 2016
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A smaller range upwards week on lighter volume looks like bulls are tiring. Some downwards or sideways movement this week is a reasonable expectation.

There is no close by resistance line on On Balance Volume to stop a rise in price. There is no divergence between OBV and price to indicate weakness here.

RSI is not extreme. There is room for price to continue to rise.


S&P 500 daily 2016
Click chart to enlarge. Chart courtesy of

This classic technical analysis section is updated at 10:23 p.m. EST.

Another upwards day has support from volume. This is not a hanging man candlestick because the upper wick is too large.

All three short, mid and long term moving averages are pointing up. Price is above all three. ADX is increasing and Bollinger Bands are widening. There is an upwards trend in place currently. Corrections are an opportunity to join the trend.

ATR is declining, so this trend is looking tired.

RSI is not yet overbought though. There is room for more upwards movement.

Stochastics is overbought and today shows divergence with price at today’s high. Price today made a new high, but Stochastics did not. This indicates weakness for bulls. This is not a signal of a trend change though. It is a warning to be alert for an upcoming trend change.

On Balance Volume today broke above the new short term yellow line. This is a weak bullish signal. Weak only because the line is short held and only tested twice before. There is strong divergence between price and On Balance Volume from the high on 10th of November and today, but divergence between OBV and price is not always reliable.

MACD is still bullish.

Overall, there is clearly an upward trend in place, but it is nearing an end. The end may come tomorrow or in another week. If RSI moves to overbought and then shows divergence with price, then an end will be expected to be imminent. That is not the case today.


VIX daily 2016
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There are a few instances of multi day divergence between price and inverted VIX noted here. Bearish divergence is blue. Bullish divergence is yellow. It appears so far that divergence between inverted VIX and price is again working to indicate short term movements spanning one or two days. While this seems to be working more often than not, it is not always working. As with everything in technical analysis, there is nothing that is certain. This is an exercise in probability.

No new divergence is noted today between price and VIX. Inverted VIX is moving higher as price is moving higher. Volatility is declining, which is normal for an upwards trend.


AD Line daily 2016
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Short term bullish and bearish divergence is again working between price and the AD line to show the direction for the following one or two days.

On Friday price moved overall higher with a higher high and a higher low than Thursday. The AD line however moved lower. This single day divergence is also bearish. It was not followed by a downwards day though, so it is considered to have failed.

The mid term bearish divergence between the highs of the 24th of October and yesterday has now disappeared today. The AD line has caught up to price and has also made a new high today. This divergence is considered to have failed also.

This upwards movement has the support of market breadth.


AD Line daily 2016
Click chart to enlarge. Chart courtesy of

On the 21st August, 2015, the McClellan Oscillator reached -71.56. Price found a low the next session, 104 points below the closing price of the 21st August. This very extreme reading for the 24th August would have been a strong indicator of a low in place.

On the 11th December, 2015, the McClellan Oscillator reached -80.82. It moved lower the next session to -92.65 and price moved 19 points lower. The extreme reading of 11th December might possibly have led to an expectation of a bigger bounce than the one that occurred, and might have misled analysis into missing the strong fall from 29th December to 20th of January.

The next most recent occasion where this oscillator was extreme was the 8th January, 2016. It reached -66.25 on that date. The low was not found for seven sessions though, on the 20th January 2016, almost 110 points below the closing price of the 8th January. At the low of the 11th February, there was strong bullish divergence with price making new lows and the oscillator making substantially higher lows. This may have been a strong warning of a major low in place.

The most recent occasion of an extreme reading was -75.05 on the 2nd of November. The last low came two days later.

As an indicator of a low this is not it. It is a warning of extreme levels. The next thing to look for would be some divergence with price and this oscillator at lows. Divergence is not always seen at lows, but when it is seen it should be taken seriously. Any reading over 100 should also be taken very seriously.

This indicator will be approached with caution. It is one more piece of evidence to take into account.

Recent hidden bearish divergence between price and the McClellan Oscillator has today disappeared. This too is considered to have failed.

The McClellan Oscillator is not yet extreme. Extreme is considered above +60 or below -60. There is still some room for price to rise.


Major lows within the old bull market:

DJIA: 15,855.12 (15th October, 2014) – closed below on 25th August, 2015.

DJT: 7,700.49 (12th October, 2014) – closed below on 24th August, 2015.

S&P500: 1,821.61 (15th October, 2014) – has not closed below this point yet.

Nasdaq: 4,117.84 (15th October, 2014) – has not closed below this point yet.

Major highs within the bear market from November 2014:

DJIA: 17,977.85 (4th November, 2015) – closed above on 18th April, 2016.

DJT: 8,358.20 (20th November, 2015) – closed above this point on the 9th of November, 2016.

S&P500: 2,116.48 (3rd November, 2015) – closed above this point on 8th June, 2016.

Nasdaq: 5,176.77 (2nd December, 2015) – closed above this point on 1st August, 2016.

Dow Theory Conclusion: The transportations indicate an end to the prior bear market. The transportation index confirms a bull market.

This analysis is published @ 04:40 p.m. EST.