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Another downwards day has unfolded as expected to start the new trading week. The Elliott wave count remains the same and has support from volume and ADX.

Summary: A shallow pullback looks very likely now to have arrived. It may continue for another few days and possibly a few weeks longer. Target zones are 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.

Downwards movement to find support at the blue channel on the daily and hourly charts is now expected as most likely.

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 incomplete or it may be complete (alternate wave count below).

Primary wave 4 may not move into primary wave 1 price territory below 2,111.05.

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.


S&P 500 Daily 2017
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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 wave count expects the current correction is minor wave 4, which 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. So far minor wave 4 has lasted only 13 days, so it may continue for another 13 if it is even in duration with minor waves 1, 2 and 3.

At this stage, it is looking like this wave count may be more likely than the alternate wave count. A correction at minor degree for minor wave 4 should look similar in range and strength to minor wave 2, which so far it does.

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

This wave count now expects support at the wider blue Elliott channel.


S&P 500 hourly 2017
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Minor wave 4 looks still like an incomplete zigzag. Within it minute wave b now looks like a complete zigzag.

Use the blue channel to show where minor wave 4 is most likely to end. Expect price to find support at the lower edge.

The target zone of 2,368 to 2,353 is the price territory of the fourth wave of one lesser degree (minute wave iv within minor wave 3 is seen on the daily chart).

So far, within minute wave c, there may be a five down complete for minuette wave (i). Minuette wave (ii) may also be complete as a regular flat correction. Downwards movement for Monday has shown some increase in momentum.

Within minuette wave (iii), no second wave correction may move beyond the start of its first wave above 2,385.71.

At its end, if this wave count is correct, minor wave 4 may offer a good entry point to join the upwards trend.

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
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The subdivisions of upwards movement from the end of intermediate wave (2) are seen in the same way for both wave counts. The degree of labelling here is moved up one degree, so it is possible that primary wave 3 could be over.

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.

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.

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 weekly 2017
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A red doji for the previous week to last week and a small real body for last week look corrective. A small correction looks to be unfolding within a larger upwards trend.

A small increase in volume last week offers some support for upwards movement, but to read this more accurately we should look inside the week at daily candlesticks.

RSI is still extreme, but it may remain so for reasonable periods of time during a trending market. ADX is not yet extreme, so there is room for this trend to continue.


S&P 500 daily 2017
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Price is still range bound with resistance about 2,400 and support about 2,355.

Overall, this chart strongly suggests that price is consolidating within a larger upwards trend.

A new support line is drawn on On Balance Volume. It has only been tested twice before, so at this time it does not have good technical significance.


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.

There is no new divergence between price and inverted VIX.


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.

Two days of bullish divergence has been followed by another downwards day. This divergence is now considered to have failed.

There is no new divergence today between price and the AD line as both moved lower.


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

This analysis is published @ 07:21 p.m. EST.