Select Page

An upwards day was expected for Friday. Price made a lower low and lower high, the definition of a downwards day, but the session closed green.

Price remains above the near by invalidation point on the hourly Elliott wave count.

Summary: Aggressive and more risk tolerant traders may like to trade this last wave up before a larger pullback arrives. Stops may be set just below 2,371.54. The 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
Click chart to enlarge.

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
Click chart to enlarge.

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 28 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 6 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 5 is very close to completion; it is possible that it could any day now. 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
Click chart to enlarge.

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. The next likely target for minor wave 5 would be 1.618 the length of minor wave 1.

The target is widened to a 6 point zone. Minute wave v should be longer than minute wave i to avoid a truncation. A target at 2,418 is close to the target calculated at minor degree, so this has a higher probability. The lower end of the zone is favoured because it is calculated at a lower degree.

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
Click chart to enlarge.

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. The short term target zone is also the same.



S&P 500 weekly 2017
Click chart to enlarge. Chart courtesy of

There are now nine green weekly candlesticks in a row. A larger correction may be expected soon.

Volume this week is stronger than the three weeks prior. There was good support this week for upwards movement.

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
Click chart to enlarge. Chart courtesy of

Friday saw overall downwards movement and a decline in volume. However, the session closed green and the balance of volume was upwards. This is bearish; there was not good support during the session for upwards movement.

ADX is now very extreme. Traders are advised to be very cautious with long positions.

Look out for a pullback soon. If the last breakaway gap is closed, then expect a pullback has begun. Stops may be moved up to the lower edge of the breakaway gap.


VIX daily 2017
Click chart to enlarge. Chart courtesy of

Normally, volatility should decline as price moves higher and increase as price moves lower. This means that normally inverted VIX should move in the same direction as price.

Bearish divergence and bullish divergence spanning a few short days used to be a fairly reliable indicator of the next one or two days direction for price; normally, bearish divergence would be followed by one or two days of downwards movement and vice versa for bullish divergence.

However, what once worked does not necessarily have to continue to work. Markets and market conditions change. We have to be flexible and change with them.

Recent unusual, and sometimes very strong, single day divergence between price and inverted VIX is noted with arrows on the price chart. Members can see that this is not proving useful in predicting the next direction for price.

Divergence will be continued to be noted, particularly when it is strong, but at this time it will be given little weight in this analysis. If it proves to again begin to work fairly consistently, then it will again be given weight.

During Friday price moved lower, but the session closed green and the balance of volume was up. Volatility declined. This would normally be read as bullish.


AD Line daily 2017
Click chart to enlarge. Chart courtesy of

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.

Short term bullish divergence noted in yesterday’s analysis has not been followed by upwards movement. However, price did rebound strongly at the end of Friday’s session. This divergence may yet be resolved by an upwards day on Monday.

While divergence between price and inverted VIX does not appear to be working well lately, it is still working well for the AD line. Any divergence between price and the AD line will be given more weight at this time.


The DJIA, DJT, S&P500 and Nasdaq continue to make new all time highs. This confirms a bull market continues.

This analysis is published @ 12:35 a.m. EST on 4th March, 2017.