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Upwards movement continues, which fits the larger picture of the main Elliott wave count.

Summary: Price has broken out upwards from a flag pattern. A target using the measured rule is 2,323 and an Elliott wave target is 2,382. Classic analysis today is very bullish. This market may not see a pullback yet until targets are met.

New updates to this analysis are in bold.

Last monthly and weekly charts are here. Last historic analysis video is here.



S&P 500 Weekly 2017
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Cycle wave V is an incomplete structure. Within cycle wave V, primary wave 3 may be relatively close to completion.

When primary wave 3 is complete, then the following correction for primary wave 4 may not move into primary wave 1 price territory below 2,111.05.

Primary wave 2 was a flat correction lasting 47 days (not a Fibonacci number). Primary wave 4 may be expected to most likely be a zigzag, but it may also be a triangle if its structure exhibits alternation. If it is a zigzag, it may be more brief than primary wave 2, so a Fibonacci 21 sessions may be the initial expectation. If it is a triangle, then it may be a Fibonacci 34 or 55 sessions.


S&P 500 Daily 2017
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It is possible that intermediate wave (4) is a complete combination: zigzag – X – flat. It would have been even in duration with intermediate wave (3), both lasting 26 days.

Intermediate wave (3) is shorter than intermediate wave (1). One of the core Elliott wave rules states a third wave may never be the shortest wave, so this limits intermediate wave (5) to no longer than equality in length with intermediate wave (3) at 2,450.76.

Within intermediate wave (5), no second wave correction may move beyond its start below 2,257.02.

The proportion here between intermediate waves (2) and (4) is acceptable. There is alternation. Both are labelled W-X-Y, but double zigzags are quite different structures to double combinations.


S&P 500 hourly 2017
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Intermediate wave (5) must subdivide as a five wave structure, either an impulse or an ending diagonal. At this stage, it is not possible to eliminate either option.

A best fit channel is drawn about upwards movement. When this channel is clearly breached by downwards (not sideways) movement, that may be the start of minor wave 2. At that stage, a Fibonacci retracement should be drawn along the length of minor wave 1 and the 0.382 and 0.618 Fibonacci ratios would be the targets.

Minor wave 2 may be relatively brief and shallow. Minor wave 2 within intermediate wave (3) lasted only 4 hours and was shallow at only 0.34 of minor wave 1. Look out for this possibility here within intermediate wave (5), especially as intermediate wave (5) needs to be shorter in length than intermediate wave (3).

Members wishing to find an entry point to hold a long position may look for relatively quick shallow corrections to join the trend, and exercise patience.

As always, use a stop. If a mental stop is used, then apply discipline and watch the position carefully. Invest no more than 1-5% of equity on any one trade. Less experienced members invest only 1-3% of equity on any one trade.

Stops may be set at the lower edge of today’s gap, or at the invalidation point. Adjust position size until the rule regarding % of equity is met. Be aware of greed: do not let it make your trading decisions. Accept and understand the possibility of losses.

Expect price to keep going upwards towards targets while price remains within the channel.

Intermediate wave (5) has a limit of equality in length with intermediate wave (3), so that intermediate wave (3) is not the shortest wave and the core rule is met.



S&P 500 weekly 2017
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A very small range inside week completes a small green doji candlestick. Price is consolidating.

A decline in volume last week supports the idea that price is consolidating. This supports the main Elliott wave count that sees a correction unfolding for intermediate wave (4).

On Balance Volume last week has come down to the long held yellow support line. This line goes back to September 2015 and it has been tested four times so far. This would be the fifth test. This line has good technical significance. It looks like OBV may be breaking below this line, but there is a little leeway in exactly how this line is drawn, so a clearer break is required before it may be read as a bearish signal.

A break below the long yellow support line by OBV would be a good bearish signal supporting the main Elliott wave count.

RSI is not extreme. There is room for the upwards trend to continue.

ADX is still increasing and is above 15 indicating the market may be in the early stages of an upwards trend.


S&P 500 daily 2017
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A bull flag pattern has completed and an upwards breakout closed above prior resistance. The flag pole is short, only 48.48 points, so a target using the measured rule would be about 2,323.

Today’s upwards day comes with a further increase in volume to support the rise in price. Volume today is highest since the 16th of December, so this increase is significant. The rise in price is supported by volume.

The breakaway gap may now offer support. If any members hold long positions, this may be used to pull up stops. Or if entering a long position, the lower edge of the gap may provide a good point for a stop.

The next strong resistance may be the next round number pivot about 2,300.

ADX today is increasing from yesterday and it is above 15. An upwards trend is indicated, which is not extreme, so there is room for this trend to continue for a reasonable distance.

ATR is now increasing. This new upwards trend looks healthy and strong.

On Balance Volume gives a bullish signal today with a break above the purple line. This is a strong signal because the line is almost horizontal, repeatedly tested, and long held. This signal adds confidence to targets.

There is still strong and long held divergence between price and RSI at today’s new high. This may disappear, but it does offer some support to the Elliott wave count which sees this upwards wave as a fifth wave. Fifth waves very commonly exhibit divergence as they end.

RSI is not yet overbought, so there is room still for price to rise further.

There is strong and long held divergence between price and Stochastics.

MACD may be about to give a bullish crossover.

Bollinger Bands today began to expand. Volatility may be returning to the market after the breakout. There is plenty of room for volatility to increase further.

Price closed above the upper edge of Bollinger Bands today, but this does not necessarily mean that price must move lower tomorrow. The last upwards trend saw price close above the upper range of Bollinger Bands for three days in a row, but the end of that trend was still not seen for a following three days. Price can sit at the extreme of Bollinger Bands for several days when a trend is strong.


VIX daily 2017
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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 mostly 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.

There is no new divergence between price and inverted VIX at today’s new high.


AD Line daily 2017
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No new divergence at today’s new high is noted between price and the AD line. Upwards movement today has support from rising market breadth.


The DJIA, DJT, S&P500 and Nasdaq have made new all time highs in December of 2016. This confirms a bull market continues.

This analysis is published @ 09:32 p.m. EST.