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A little upwards movement was expected from the hourly Elliott wave count published in last analysis. This is exactly what happened for Friday’s session.

A target may now be calculated for the short term at two degrees.

Summary: A deeper pullback looks very likely now to have arrived. It may last about one to three months and may end either 2,368 – 2,353 or 2,282 – 2,234. A new low below 2,277.53 would indicate the lower target range should be used.

For the very short term, a second wave correction may move higher over the next one to few days. The target is at 2,383 – 2,385.

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 now be complete.

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.

As price moves lower look for support at each of the longer term trend lines drawn here across previous all time highs. Next support at the cyan line may be met soon.

A new low below 2,277.53 would invalidate the daily alternate wave count below and provide confidence that the pullback is at primary degree.


S&P 500 Daily 2017
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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). If intermediate wave (5) is now over, then this rule is met.

Minor wave 3 has no Fibonacci ratio to minor wave 1. If minor wave 5 is now over, then it is 4.14 points longer than equality in length with minor wave 3. Price has printed a full daily candlestick below and not touching the lower edge of the channel. This is defined as a breach of the channel. Further confidence in a multi week pullback may be had.

Intermediate wave (5) may have ended in 27 days, just one longer than intermediate waves (3) and (4). This gives the wave count good proportions.

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 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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The last gap is now closed, so it is correctly named an exhaustion gap.

A new wave down at primary degree should begin with a five down on the hourly and daily chart levels. This may be complete. The following correction for minute wave ii may not move beyond the start of minute wave i above 2,400.98.

The lower edge of the blue Elliott channel is not providing resistance. Minute wave ii may be expected now to end within the channel, close to the 0.618 Fibonacci ratio of minute wave i. A 2 point target zone calculated at two degrees should have a reasonable probability.

Minute wave i lasted six days. Minute wave ii may last another one to few days to be in proportion.

For more aggressive traders, the end of minute wave ii may present an opportunity to join the new short term downwards trend.

Less aggressive traders may choose to patiently wait for this correction to end before entering long. The larger trend is still upwards and this is expected to be a counter trend movement. Counter trend movements do not usually offer good trading opportunities as they are choppy and overlapping. If trading during a counter trend movement, it is more important to take profits more quickly when they appear.

Always remember my two Golden Rules:

1. Always use a stop.

2. Do not invest more than 1-5% of equity on any one trade.


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 a 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.

Minor wave 4 may last about 26 days if it is even in duration with minor waves 1, 2 and 3. That would give the wave count good proportions and the right look.

Minor wave 4 may end within the price territory of the fourth wave of one lesser degree about 2,368 to 2,353.

Price printed a full daily candlestick below the channel, so this adds confidence in a pullback being underway here. This wave count now expects choppy overlapping movement to find support at the wider blue Elliott channel.

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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This week completes a red doji, which moved price lower, after nine green weekly candlesticks in a row. The trend has changed from up to neutral. Volume is lighter this week and the fall in price is not supported by volume. This looks like a pause within a trend and not a new trend.

There is a long way for On Balance Volume to go to find support.

RSI may now return from oversold.

ADX did not reach extreme. There is room for the trend to continue further.


S&P 500 daily 2017
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Friday moved price higher and the balance of volume was upwards. A slight increase in volume from the prior downwards day offers some small support for upwards movement. This offers small support to the hourly Elliott wave count.

On Balance Volume is at resistance.

Overall, it still looks very likely that a pullback has arrived. It needs to continue further to bring ADX down from extreme and Stochastics into oversold.


VIX daily 2017
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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.


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.

Mid term bullish divergence has now been followed by one upwards day. It may be followed by at least one more before it is resolved. This supports the hourly Elliott wave count.


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

This analysis is published @ 01:16 a.m. EST on 11th March, 2017.