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Downwards movement for the day remains above the invalidation point and the breakaway gap is offering support. Volume analysis today may help to determine the direction for tomorrow.

Summary: The picture is very bullish. Volume and divergence with VIX and the AD line all point to an upward day tomorrow. The breakaway gap may offer support. Move stops up to protect profits. The new target is at 2,424 and the limit is at 2,450.76.

If price makes a new low below 2,371.54, exit all long positions because a deeper pullback may have arrived.

Always follow my two Golden Rules:

1. Always use a stop.

2. Invest only a maximum 1-5% of equity on any one trade.

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 a complete single flat correction. 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 27 days. At this stage, an expectation of a Fibonacci 34 days total for intermediate wave (5) looks reasonable, so it may now continue for another 7 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.

The invalidation point is now adjusted significantly. Minor wave 5 is very close to completion; it is possible that it could end tomorrow. When it is complete, then that would complete for this wave count the entire wave of primary 3. The following correction for primary wave 4 should be a multi week pullback, and it may not move into primary wave 1 price territory below 2,111.05.


S&P 500 hourly 2017
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Another breakaway gap should provide support while the trend continues. So far this gap is providing support. If it is closed, then it would be possible that primary wave 3 could be over. That would indicate a substantial trend change.

There is no Fibonacci ratio between minute waves iii and i.

Minor wave 5 has passed equality with minor wave 1 and the structure is incomplete. A new target is calculated using the next likely Fibonacci ratio to minor wave 1.

Minute wave iv may not move into minute wave i price territory below 2,371.54.

At this stage, invalidation of this hourly wave count would indicate primary wave 3 may be over and primary wave 4 may have begun.


S&P 500 Daily 2017
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What if recent strong upwards movement was the middle a third wave at three degrees? This is supported by a fairly bullish look for the classic technical analysis chart.

All subdivisions are seen in exactly the same way for both daily wave counts, only here the degree of labelling within intermediate wave (3) is moved down one degree.

This alternate also expects an upcoming correction, but for minor wave 4, that may not move into minor wave 1 price territory below 2,277.53. A new low below this point would confirm the correction could not be minor wave 4 and that would provide confidence it should be primary wave 4.

Both wave counts expect essentially the same direction next, so the hourly chart for this alternate would look the same with the exception of the degree of labelling.



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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A new trend line is added now to On Balance Volume. If that is breached by more downwards movement tomorrow, it would offer a reasonable bearish signal. In the first instance, expect this line to offer support.

A decline in volume today for a downwards day, after strong volume for yesterday’s upwards movement, indicates today may more likely be a small counter trend pullback.

There is still a bit of room for the upwards trend to continue as ADX is not yet very extreme.


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.

There is single day divergence between price and inverted VIX today: inverted VIX moved strongly higher while price moved lower today. This divergence indicates there was something possibly wrong with price during today’s session. This divergence is interpreted as bullish. This supports the Elliott wave count, which expects upwards movement tomorrow.


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 again short term bullish divergence today. The AD line has made a new low below the prior low of the 28th of February, but price has not made a corresponding new low. This divergence indicates weakness in downwards movement today. Tomorrow may be an upwards day.


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 @ 08:56 p.m. EST.