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A little downwards movement to below 2,340.51 but not below 2,336.45 was expected during Friday’s session.

Price did move lower, but it made a slight new low below 2,336.45, which was not expected.

Summary: Volatility declined and market breadth improved while price moved lower for Friday. Taken together this is reasonably bullish. It does look very likely that Monday should be an upwards day. The confidence point is still at 2,377.18. The target for the next wave up is at 2,455 and the limit is now at 2,486.09.

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 may provide support. (The trend line has been copied over to hourly charts.) The cyan line is drawn from the prior all time highs of 16th August, 2016, at 2,193.81, to 13th December, 2016, at 2,277.53. Weekly and daily charts are on a semi-log scale.

If price keeps falling here, then look for next support about the lilac line. The lilac line is drawn from the prior all time highs of 20th July, 2015, at 2,132.82, to 15th August, 2016, at 2,193.81.


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 with a small overshoot of the blue Elliott channel and finding support about the cyan trend line. There is good alternation between the very 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.

It is concerning at the end of this week that price has breached the lower edge of the Elliott channel and turned up for a test of resistance at the lower edge. This looks like a classic breach and throwback, and it has a bearish look. For this reason members are advised that we do not have confidence yet that minor wave 4 is over, and the alternate wave count may yet turn out to be correct.

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.


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) continues further, 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 moved lower during Friday’s session. Minute wave c does now have a better look as a five wave structure. Within minute wave c, the correction of minuette wave (ii) is a flat and minuette wave (iv) is a zigzag. There is still no Fibonacci ratio between minute waves a and c.

Minor wave 4 has breached the blue Elliott channel copied over from the daily chart. Sometimes fourth waves are not contained neatly within these channels, which is why Elliott developed a second technique to redraw the channel when the fourth wave breaches it. If price begins to move up strongly next week, and moves above the confidence point, then the channel shall be redrawn.

While price has not moved above 2,377.18, we may not have any confidence that minor wave 4 is over. The invalidation point must remain at 2,277.53.


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 must be incomplete. When it is complete, then the invalidation point for this alternate will move down to the end of minor wave 1 at 2,354.54.

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

The blue base channel on this alternate is the same as the pink Elliott channel on the main hourly chart. For this alternate, minor wave 3 should have the power to break below the lower edge of the base channel, but it has not done that and seems to be finding strong support about this area. This reduces the probability of this wave count.



S&P 500 weekly 2017
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Last week completed a green weekly candlestick that moved price upwards on some increase in volume. Now this week completes a red weekly candlestick that moves price lower on a slight decline in volume. The volume profile short term looks bullish.

New trend lines are drawn across On Balance Volume, but these do not yet have any reasonable technical significance.

RSI is now back down from overbought.

ADX still indicates an upwards trend that is not yet extreme, but it is nearing extreme.


S&P 500 daily 2017
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The last three days of sideways movement look corrective, so this may be a small consolidation within a short term downwards trend. There is reasonable risk at this stage to any long positions here.

Volume has fallen for Friday’s downwards day, but this does still support the main Elliott wave count over the alternate.

On Balance Volume is still bearish. This is concerning for the main Elliott wave count.

Overall, the larger trend remains up. Corrections should still be used as an opportunity to join the trend. However, the risk is entering a correction too soon before it is over. Either exert a strong degree of patience and wait for confidence points to be passed, or accept the risk of an underwater position for a few days if entering long here.


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.

Inverted VIX diverges with price for Friday’s session. Price moved lower to a new low and normally this should come with an increase in volatility. However, volatility declined as inverted VIX moved higher. This divergence is bullish, but it will be given very little weight in this analysis today.


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 between the AD line and price from yesterday’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.

There is again single day bullish divergence between price and the AD line for Friday’s session: the AD line moved higher while price moved lower to make a new low. There was weakness during the session within price and market breadth improved even as price moved lower. This divergence is bullish and supports the main 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 @ 09:09 p.m. EST.