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A downwards day was expected for Tuesday’s session.

There are only now two hourly Elliott wave counts.

Summary: The situation is unclear: volume is bearish short term while divergence between price and VIX, and price and the AD line, is bullish short term.

Assume more downwards movement as most likely to a target at 2,354. But if price makes a new high above 2,367.79, then expect more upwards movement with an increase in momentum to a target about 2,382*edit: 2,397.

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.

Primary wave 3 is now close to complete.


S&P 500 Daily 2017
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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.

Minor wave 3 has no Fibonacci ratio to minor wave 1. It is more likely that minor wave 5 will exhibit a Fibonacci ratio to either of minor waves 3 or 1.

Minor wave 2 was a deep 0.77 zigzag lasting three days. Minor wave 4 may be an incomplete double flat correction (first hourly chart) or it may be a complete single flat correction (alternate hourly chart). There is perfect alternation between minor waves 2 and 4 and they have better proportion now on the daily chart.

Intermediate wave (5) has so far lasted 25 days. If it is incomplete, then it is not going to be shorter in duration than intermediate wave (3). It does not have to, but it must be shorter in length. At this stage, an expectation of a Fibonacci 34 days total for intermediate wave (5) looks reasonable, so it may now continue for another 9 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.

Minor wave 4 may be still incomplete. It may not move into minor wave 1 price territory below 2,300.99.


S&P 500 hourly 2017
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The structure of minor wave 4 is relabelled. It will fit as a more simple expanded flat. Because this has a good fit and because it is a much more common structure than a double flat, this is more likely.

This allows for a new target calculation that would see price continue to find support at the gap, which may have been a breakaway gap after the last consolidation. If support continues here, then it would be correctly labelled as a breakaway gap (these are usually not filled). But if price closes the gap, then it would more correctly be labelled an exhaustion gap. It may be either at this stage.

The target expects to see the most common Fibonacci ratio for minute wave c to minute wave a. The target would see minute wave c move below the end of minute wave a, avoiding a truncation and a very rare running flat. The target would see minute wave c not make a new price extreme below the end of minuette wave (b) within minute wave b, and that’s okay because it would not technically be a truncation. Sometimes B waves have price extremes within them.

Minute wave b is longer than the common length of up to 1.38 the length of minute wave a, but within the allowable limit of up to 2 times the length of minute wave a.

When minor wave 4 is complete, then the target for primary wave 3 may be calculated at minor degree as well. At that stage, it may widen to a small zone or it may change.

Within minute wave c, the correction for submineutte wave ii may not move beyond the start of subminuette wave i above 2,367.79. If that happens before downwards movement, then this main wave count would be invalidated and the alternate hourly wave count below should be used.


S&P 500 hourly 2017
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Alternatively, it is possible that minor wave 4 could be a completed regular flat.

Within the regular flat, minute wave a is a three, itself a flat correction. Minute wave b is a zigzag. Minute wave c moves below the end of minute wave a.

Minute wave ii looks like it may be a complete zigzag. This wave count now expects to see an increase in upwards momentum tomorrow. If minute wave ii continues lower as a double zigzag, then it may not move beyond the start of minute wave i below 2,352.87.



S&P 500 weekly 2017
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There are now eight green weekly candlesticks in a row. A larger correction may be expected soon, but not quite yet.

There has been some decline in volume over the last three weeks. This trend is showing early signs of weakening.

On Balance Volume remains very bullish.

RSI is overbought, but in a bull market this can remain extreme for a reasonable period of time. If it begins to exhibit divergence with price at the weekly chart level, then a larger correction may be expected to begin. There is no divergence at this time.

This trend is not yet extreme.


S&P 500 daily 2017
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Price moved lower today, with a lower low and lower high, to close red. A strong increase in volume supports the downwards movement. This is bearish.

ADX, RSI and Stochastics are all extreme. The classic technical analysis picture looks to be more bearish than bullish short term and this favours the main hourly wave count.

Initially, look for price to find support at the Fibonacci 13 day moving average.

At this stage, the last gap may be either an exhaustion gap or breakaway gap. If it is closed tomorrow, then it would be an exhaustion gap. Next support would be about 2,340.


VIX daily 2017
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Normally, volatility should decline on rising price. There is double multi day divergence now between price and inverted VIX. This is bearish.

Either VIX is now decoupled from this market, or this persistent divergence will be resolved by primary wave 3 ending sooner than expected and primary wave 4 beginning very strongly. This divergence signals traders to be very cautious; assume the trend remains the same, but if entering the trend be aware for the potential here of a swift drop in price and use stops accordingly. Risk no more than 1-3% of equity.

Recent strong bearish divergence between price and VIX has now been followed by one downwards day. However, this is not a strong downwards day and more downwards movement may be required to resolve this bearish divergence.

There is today short term bullish divergence between price and VIX: price moved lower and volatility increased, but volatility is now stronger than it was on the 15th of February while price has not made a low below the 15th of February.

There are three prior instances of hidden bullish divergence noted on this chart for recent movement. Two of these three were followed by upwards movement. This divergence may work more often than it does not work, but it will not always correctly predict the next direction for price.


AD Line daily 2017
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The rise in price has support from a rise in market breadth. Lowry’s OCO AD line also shows new highs along with price. Normally, before the end of a bull market the OCO AD line and the regular AD line should show divergence with price for about 4-6 months. With no divergence, this market has support from breadth.

There is new short term divergence today between the lows of the 24th of February and today’s low. Price made a higher low today, but the AD line made a lower low. This is hidden bullish divergence.

There is only one other instance on this chart of hidden bullish divergence and it was followed by upwards movement.

Divergence today between the AD line and price, and VIX and price, favours the alternate hourly Elliott wave count. Volume however favours the main Elliott wave count.


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 @ 07:42 p.m. EST.