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Again, upwards movement was expected. The session closed green although it completed with a lower low and a lower high, the definition of downwards movement. Price remains range bound between resistance at about 2,370 and support at about 2,340. The breakout will probably come tomorrow during Non Farm Payroll data release.

Summary: If the main wave count is correct, then tomorrow price should break above resistance at 2,370. The hourly wave count expects 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 reasonable 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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Only one hourly wave count will be provided today. Yesterday’s main hourly wave count does not have the right look.

It is my judgement at this stage that this idea has a better probability.

Minute wave ii may be an incomplete expanded flat correction. Within minute wave ii, minuette wave (c) must complete as a five wave structure. At this stage, it may be an almost complete impulse.

Minuette wave (c) would be extremely likely to make at least a slight new low below minuette wave (a) at 2,344.73 to avoid a truncation and a very rare running flat. The target expects the most common Fibonacci ratio to minuette wave (a), so it has a reasonable probability.

Minute wave ii may not move beyond the start of minute wave i at 2,322.25. A new low by any amount at any time frame below this point would see the main wave count invalidated and the alternate daily wave count below as the only wave count.


S&P 500 Daily 2017
Click chart to enlarge.

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.

A new short term support line is added today to On Balance Volume. This line has very little technical significance at this stage.

The S&P, like Gold, remains range bound. The breakout is very likely to come with a price shock tomorrow, which may be instigated by the release of Non Farm Payroll data. This classic analysis suggests the breakout is more likely to be downwards than upwards.

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.

Short term bullish divergence noted yesterday remains, but today is slightly weaker. Today’s session technically completes a day of bullish single divergence: price moved lower, but inverted VIX moved higher. This will be given no weight as during the session price moved higher and closed green.


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 still 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. This divergence remains but today is slightly weaker.

There is now mid term bearish divergence between the new high for the AD line today and the prior high of the 1st of March. While the AD line today made a new high, price has not made a corresponding new high. This indicates weakness in price and supports the alternate 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 @ 08:15 p.m. EST.