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Downwards movement continued, as expected, and found support at three different trend lines.

Summary: It is reasonably likely that downwards movement may halt here because price is at multiple support lines and exhibits bullish divergence with the AD line. A new high above 2,377.18 would confirm a low in place and the next wave up. A green daily candlestick tomorrow would add confidence in this view.

It is possible that a deeper correction may continue here for another few weeks while price remains below 2,377.18, as per the alternate wave count.

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. The cyan trend line, which was met today, may provide support. (The trend line has been copied over to hourly charts.) If price keeps falling here, then look for next support about the lilac line.


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 is a little below the fourth wave of one lesser degree and may have ended today with a small overshoot of the blue Elliott channel and finding support at the cyan trend line. There is good alternation between the shallow combination of minor wave 2 and the deeper zigzag of minor wave 4.

If minor wave 4 is over, then a target for minor wave 5 is calculated. If minor wave 4 continues lower, then this target must also move correspondingly lower.

Minor wave 3 is shorter than minor wave 1. So that the core Elliott wave rule stating a third wave may not be the shortest is met, minor wave 5 is limited to no longer than equality in length with minor wave 3. If minor wave 4 continues lower, then this limit must also move correspondingly lower.


S&P 500 hourly 2017
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Minor wave 4 may now be seen as a complete structure. The impulse of minute wave c may be complete.

Within minute wave c, if the correction for minuette wave (iv) is time consuming and moves sideways, then it may not move into minuette wave (i) price territory above 2,377.18. A new high above this point would indicate the structure of minute wave c should be over, and so minor wave 4 in its entirety would be very likely then to be over.

Minor wave 4 may have ended with a small overshoot of the blue Elliott channel, a very small overshoot of the pink Elliott channel, and a minuscule overshoot of the cyan trend line.

Minute wave c is just 1.67 longer than equality in length with minute wave a.

If tomorrow prints a green daily candlestick, the probability of a low in place for minor wave 4 would increase.


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 Hourly 2017
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In the short to mid term, the wave counts now diverge, so it is time to publish an hourly chart for this alternate.

Primary wave 2 was a flat correction, so it is most likely that primary wave 4 would unfold as a zigzag. So far, within the zigzag, intermediate wave (A) may be an incomplete impulse.

So far minor waves 1 and 2 may be complete within intermediate wave (A). Minor wave 3 may be incomplete. If it was over at today’s low, there is hardly enough room for the following correction of minor wave 4 to unfold and remain below minor wave 1 price territory.

Within minor wave 3, the correction for minute wave iv may not move into minute wave i price territory above 2,377.18.



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 has broken out of a consolidation zone, which had support about 2,400, on a downwards day with an increase in volume. The fall in price today was supported by volume; bears were active. The next support is about 2,340.

ADX has still not been able to move back below both directional lines after reaching extreme for the prior upwards trend; it has only just moved below 35. ADX today signals a potential trend change from up to down with the -DX line crossing above the +DX line. The ADX line needs to increase for a new trend to be indicated though and currently ADX is still declining.

On Balance Volume gives a bearish signal today, but this is not strong. This line has only been tested twice before, so it does not have good technical significance. A prior support line is added today to OBV in purple. Notice the false bearish signal given on the 31st of January. The current bearish signal should be stronger for it to be more reliable. It would have more weight if tomorrow also moves OBV lower.

Neither RSI nor Stochastics are oversold. There is room for downwards movement to continue.


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 mid term divergence today between inverted VIX and price from today’s low to the low of 28th of February. This divergence is bullish, but it will be given very little 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.

There is short term bullish divergence today between the AD line and price from today’s low to the low of 14th of March (and also back to the 9th of March). Price has not come with a corresponding decline in market breadth while it has made a new low. There is weakness within this downwards movement from price. This supports the main hourly Elliott wave count which sees a low in place today.


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

This analysis is published @ 12:10 a.m. EST on 22nd March, 2017.