Price has made a lower high and a lower low, although it closed green.

Summary: It is still more likely today that the next wave up has just begun. Confidence would be had above 2,289.14. The target is 2,338 for the short term and 2,382 for a longer term trade. If price breaks below 2,257.02, then a deeper pullback would be expected to be underway to end at the purple trend line.

New updates to this analysis are in bold.

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

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART

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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.

Primary wave 3 at this stage though is incomplete and may continue to move price higher.

DAILY CHART

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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.

Intermediate wave (5) has so far lasted just eight days. It may be expected to be shorter both in length and duration compared to intermediate wave (3). At this stage, an expectation of a Fibonacci 21 days total for intermediate wave (5) looks reasonable, so it may now continue for another thirteen days or sessions.

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.

HOURLY CHART

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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.

Within intermediate wave (5), minor waves 1 and 2 may be complete.

Within minor wave 3, minute waves i and ii may be complete. If minute wave ii moves lower, it may not move beyond the start of minute wave i below 2,267.21.

A base channel is drawn about minute waves i and ii. If minute wave ii is complete, then lower degree corrections along the way up should find support at the lower edge of the base channel. Eventually, when it gets there, the third wave should break above the upper edge of the base channel.

A new high above 2,289.14 would add some confidence to this wave count. A new high above 2,300.99 would confirm it and invalidate any alternate. At that stage, reasonable confidence in targets may be had.

The target for minor wave 3 assumes the most likely Fibonacci ratio for it to minor wave 1. Minor wave 3 may last about a Fibonacci five days.

A new low below 2,267.21 could possibly be a continuation of minor wave 2, but this does look unlikely.

If price moves below 2,257.02, this main wave count would be invalidated and the alternate below would be confirmed.

ALTERNATE ELLIOTT WAVE COUNT

DAILY CHART

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It remains possible that intermediate wave (4) is an incomplete expanded flat correction.

So far intermediate wave (4) may have lasted 34 sessions.

No target is given for minor wave C downwards because a target calculated using the Fibonacci ratio of 1.618 to minor wave A results in price falling short of the purple trend line. Minor wave C may end only when price comes down to touch the trend line again.

Minor wave B is now a 1.53 length to minor wave A. This is longer than the normal length of up to 1.38 but within the allowable convention of 2. The length of minor wave B has reduced the probability of this wave count.

Intermediate wave (4) may not move into intermediate wave (1) price territory below 2,193.81. It should find very strong support at the purple trend line and stop there.

HOURLY CHART

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Minor wave C must subdivide as a five wave structure. At this stage, it may be an impulse.

There is alternation between the expanded flat of minuette wave (ii) and the zigzag of minuette wave (iv).

Minute wave iv should now be over. It is nicely in proportion to minute wave ii; minute wave ii lasted four hours and minute wave iv lasted six.

Within minute wave v, no second wave correction may move beyond the start of its first wave above 2,289.14.

If minute wave iv is over, then upwards movement should now find resistance at the upper edge of the Elliott channel. A breach of this channel would add doubt to this wave count.

A new low now below 2,267.21 would add some confidence to this wave count.

A new low below 2,257.02 would add substantial confidence to this wave count. At that stage, look for downwards movement to continue and end only when price comes to touch the purple trend line on the daily and weekly charts.

TECHNICAL ANALYSIS

WEEKLY CHART

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A strong upwards week comes with an increase in volume. The rise in price is supported by volume.

On Balance Volume has found support and moved up and away from the long yellow support line. This is a bullish signal. OBV has not yet reached resistance. It may find some resistance at the purple line.

RSI is not yet overbought and exhibits no divergence with price. There is room still for price to rise further.

ADX indicates the beginning of an upwards trend. This is not extreme. There is plenty of room for the trend to continue.

DAILY CHART

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Thursday’s session moved price slightly lower, but it closed green. The bulls were active towards the close. The balance of volume during the session was upwards and it was slightly lighter than yesterday’s upwards movement. The rise in price during the session today did not have good support from volume.

Price continues to find support at the upper edge of the flag pattern.

ADX indicates the market is still consolidating, not trending. ATR agrees as it is flat.

RSI is not extreme. There is plenty of room for price to rise or fall.

Stochastics is returning from overbought. A range bound approach to this market would expect the continuation of a downwards swing here to end only when Stochastics is oversold and price finds support. Support is about 2,255.

MACD is bearish.

Bollinger Bands are tightly contracted.

This market should be put on life support. It will break out again and start trending, and the probability of an upwards trend is higher than downwards when looking at the weekly chart technicals.

All three short, mid and long term moving averages have a positive slope. The shorter averages are above the longer and price is still above all three. Assume the longer term upwards trend is intact, until proven otherwise.

VOLATILITY – INVERTED VIX CHART

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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.

No new divergence is noted between price and inverted VIX today. Price moved overall lower with a lower low and lower high, and volatility slightly increased.

BREADTH – AD LINE

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Price moved overall lower today. However, the balance of volume during the session was upwards and the candlestick closed green. The AD line indicates an improvement in market breadth during the session. This may be bullish.

DOW THEORY

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 @ 10:13 p.m. EST.