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Upwards movement was expected. Price did move higher to begin the session, but fell strongly in the final hours to close red. An outside day was completed.

Summary: If the main wave count is correct, then price should now begin to move strongly higher. An upwards breakout above resistance at 2,370 should happen tomorrow or very soon. An alternate hourly wave count expects tomorrow to begin with some downwards movement to 2,337 before a trend change.

Reduce position size at this time to only 1-3% of equity due to bearishness in classic analysis.

There is still some concern from classic technical analysis 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.

A target for minor wave 5 is calculated.

The Elliott channel about minor wave 4 is drawn on the daily chart. The upper edge may be providing some resistance. Once price can break above this channel, then upwards momentum may build.

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 waves i and ii may be complete. Minute wave iii may have begun. If this first hourly chart is correct, then tomorrow should see an upwards breakout.

This wave count must see minuette wave (i) end with a very slightly truncated fifth wave for subminuette wave v. This slightly reduces the probability of this main wave count.

Although this wave count is labelled the main wave count, it would be my judgement today that this wave count may have about an even probability with the alternate below.

Minute wave iii must subdivide as an impulse. Within minute wave iii, minuette wave (ii) may not move beyond the start of minuette wave (i) below 2,344.73.

The upper edge of the Elliott channel, which contained minor wave 4, may be providing resistance. Once price can break above it, then upwards momentum may begin to build.

If price makes a new low below 2,344.73 tomorrow, then this first hourly chart would be invalidated and the alternate hourly chart below should be used.


S&P 500 hourly 2017
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Minute wave ii may be continuing further as an expanded flat correction.

The subdivisions of upwards movement, labelled minuette wave (b), do fit slightly better as a zigzag than an impulse. A truncation is avoided.

Tomorrow’s session may begin with a little more downwards movement. Thereafter, a third wave up would be expected to begin.

Minute wave ii may not move beyond the start of minute wave i below 2,322.25.


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 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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Last 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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Volume is bearish. On Balance Volume is bearish. These offer reasonable support to the alternate daily Elliott wave count.

Overall, this chart at this time offers more support for the alternate daily Elliott wave count.

A correlation to $GOLD is added today. I have been concerned recently that my analysis for both Gold and the S&P expect both to move higher. However, these markets are not always correlated; in fact, they are more often non correlated. It is entirely possible they may move together as they sometimes do.


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 continue 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 short term bullish divergence today between price and inverted VIX: while inverted VIX has made a new low below the prior low of the 3rd of April, price has not made a corresponding new low. This divergence indicates weakness in price for today’s downwards movement.


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 short term divergence today between price and the AD line. The AD line made a new low below the prior low of the 3rd of April, but price has not made a corresponding new low. This divergence is bullish and indicates weakness within downwards movement from price 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 @ 01:05 a.m. EST on 6th April, 2017.