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A brief shallow pullback was expected for Friday. Price moved overall sideways meeting the expectation.

Summary: The main Elliott wave count expects a little more downwards movement on Monday to either 2,358 or 2,354. If using this small pullback to enter the longer term upwards trend, it is essential stops are used; ideally, they should be placed just below 2,322.25. Do not invest more than 1-3% of equity on this trade at this time.

There is some concern from classic technical analysis at the end of this week for the main Elliott wave count. ADX at the weekly chart level indicates now the trend is extreme. This is most commonly (not always) followed by a few weeks of downwards movement. On Balance Volume at the daily chart level gives a bearish signal.

The alternate wave count is possible.

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.


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 just completed correction is minor wave 4. Within minor wave 5, minute wave ii may not move beyond the start of minute wave i below 2,322.25.

Minor wave 4 is a little below the fourth wave of one lesser degree. Because it has now clearly breached an Elliott channel drawn using the first technique, the channel is now redrawn using Elliott’s second technique. 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.

The cyan line may now offer some support.

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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Minute wave i looks complete.

Price has broken below the lower edge of the best fit channel drawn about it and movement since looks like minute wave ii.

Minute wave ii may be unfolding as a zigzag. It looks likely to move a little lower at least to start on Monday’s session; the long upper wick of the candlestick labelled minuette wave (b) is bearish.

Within minute wave ii, the correction for minuette wave (b) looks like a combination: flat – X – zigzag.

If the target is wrong, it may not be low enough. The next target would be the 0.382 Fibonacci ratio at 2,354. This may also coincide with the cyan trend line which may offer support.

When minute wave ii is complete, then some increase in upwards momentum would be expected for minute wave iii.

Minute wave i lasted a Fibonacci three days. If minute wave ii ends on Monday, it may total a Fibonacci two days.


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 unfolding as a double zigzag. It may total a Fibonacci 34 or 55 sessions.

Within double zigzags, the X wave is almost always brief and shallow. There is no rule stating a maximum for X waves, but they should not make a new price extreme beyond the start of the first zigzag in the double.

X waves within combinations may make new price extremes (they may be equivalent to B waves within expanded flats), but in this instance primary wave 4 would be unlikely to be a combination as it would exhibit poor alternation with the flat correction of primary wave 2.

For this alternate wave count intermediate wave (X) may now be complete. Both wave counts expect downwards movement: this alternate wave count to new lows for a second zigzag, which would be labelled intermediate wave (Y), and the main wave count for a brief shallow pullback labelled minute wave ii. How low the next wave goes should indicate which wave count is correct. A new low now below 2,322.25 would see the main wave count discarded and this alternate confirmed.

If a new high above 2,400.98 is seen, then this alternate would be discarded.

The 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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This week completes a downwards week with a lower low and a lower high, but the week closes green and the balance of volume for the week is upwards. Although price has moved lower, the bulls rallied through to the end of the week to push price up above the open. This is bullish.

On Balance Volume now has a small range and it is constrained within. A breakout above or below would be a reasonable signal.

RSI is not overbought. There is room for price to rise.

ADX is now above both directional lines, so the trend is extreme. Looking back over the last 15 years at instances at the weekly chart level where ADX rose above both directional lines, this was most often followed by at least three or four downwards weeks. In one instance in December 2006 it was not, and this was towards the end of a third wave. In that instance, price continued overall higher for several weeks before a reasonable pullback.

ADX at the weekly chart level favours the alternate wave count, but it does not rule out the main wave count.


S&P 500 daily 2017
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For confidence that the next wave up is underway, On Balance Volume needs to break above resistance at the purple line.

The small red candlestick with a long upper wick is not a Gravestone doji because the real body is too large, but it is fairly bearish. Support from volume is also bearish.

The signal from On Balance Volume is bearish. MACD remains bearish.

ADX, ATR and contracting Bollinger Bands are all neutral. They all indicate a small consolidation and not yet a new trend.

Overall, this analysis is neutral to bearish but does offer a little more support to the alternate Elliott wave count than the main Elliott wave count at this stage.


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.

Bearish divergence noted in last analysis has been followed by a red daily candlestick. This divergence is considered to have been useful in predicting the direction for the following day. It may now be followed by one more downwards day before it is resolved.

There is no new divergence noted today 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.

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 still short term bearish divergence today between Thursday’s high and the high of the 17th of March. This indicates weakness in price and it may be followed by one or two downwards days. This divergence has now been followed by one small red daily candlestick, so it may be resolved.

There is new single day divergence for Friday’s session: price moved overall lower during the session, but market breadth increased. This is interpreted as bullish, but only weak as Friday did not make a lower low.


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

This analysis is published @ 11:01 p.m. EST on 1st April, 2017.