Select Page

Price continues to move sideways.

Summary: Only one wave count is left now, which expects sideways movement to continue for another 20 sessions. Thereafter, the upwards trend should resume towards the final target at 2,500.

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
Click chart to enlarge.

It is possible that primary wave 3 may be over.

There is another idea which sees only intermediate wave (3) within primary wave 3 complete (thank you to our new member Peter for emailing me his chart) and intermediate wave (4) now continuing.

At this stage, I will follow these ideas but publish only one, primary wave 4. If the alternate idea of intermediate wave (4) begins to diverge substantially in terms of direction expected, then it will be published.

Primary wave 4 may continue.

Primary wave 2 was a flat correction. Primary wave 4 may be exhibiting alternation as a triangle.

Primary wave 2 lasted 47 days (not a Fibonacci number). So far primary wave 4 is incomplete. If it exhibits a Fibonacci duration, it may end in another 20 days to total a Fibonacci 55.

Primary wave 4 may not move into primary wave 1 price territory below 2,111.05.


S&P 500 Daily 2017
Click chart to enlarge.

This wave count looks at the possibility that a large regular contracting triangle may be completing for a fourth wave. This may be primary wave 4, but it may also be intermediate wave (4) within primary wave 3. Both ideas would have subdivisions labelled the same way and both ideas would see the triangle incomplete.

This idea is now supported by MACD hovering about the zero line as the triangle unfolds.

There would still be adequate alternation between the shallow 0.40 expanded flat of primary wave 2 and the more shallow triangle.

Primary wave 2 lasted 47 days. Triangles are some of the longest lasting corrective structures. So far this one may have lasted 35 days. It may end in a total Fibonacci 55 days.

A contracting triangle may not have intermediate wave (D) move beyond the end of intermediate wave (B) at 2,378.36.

A barrier triangle may have intermediate wave (D) end about the same level as intermediate wave (B) at 2,378.36; as long as the (B)-(D) trend line remains essentially flat the triangle would remain valid. In practice, this means that intermediate wave (D) can move a little above 2,378.36. This is the only Elliott wave rule which is not black and white.

For both contracting and barrier triangles, intermediate wave (E) may not move beyond the end of intermediate wave (C) below 2,327.58.


S&P 500 hourly 2017
Click chart to enlarge.

Only one of a triangle’s five subwaves may subdivide as a more complicated multiple. So far this may be intermediate wave (C).

Intermediate wave (D) may be an incomplete zigzag. The common range is based upon my experience over the years with triangles; they often exhibit subwaves which are about 0.8 to 0.85 the length of the prior wave.

When intermediate wave (D) is over, then a final zigzag down for intermediate wave (E) may unfold. This would be most likely to end short of the (A)-(C) trend line. If it doesn’t end there, then it may slightly overshoot the trend line.

This chart is somewhat squashed up; it does not show that the triangle is expected to continue for another few weeks.

The purpose of triangles is to take up time, move price sideways, and test our patience. They do the latter extremely well.

If this structure unfolds as expected, then we shall have a good entry at the end of the triangle to join the larger upwards trend for a fifth wave up to 2,500. More experienced traders may try to trade the subwaves of the triangle, but this does involve a greater level of risk. Trading a consolidation using a reversion to the mean approach or a swing system from support to resistance and back again necessarily involves more risk than trading a trending market.



S&P 500 weekly 2017
Click chart to enlarge. Chart courtesy of

Although a strong downwards week has lighter volume, because last week was a short week this should not be read as bullish.

The signal from On Balance Volume should be given weight; it supports the main Elliott wave count. In conjunction with MACD, this is overall a fairly bearish weekly chart.


S&P 500 daily 2017
Click chart to enlarge. Chart courtesy of

A large symmetrical triangle looks like is forming. With two minor swing highs and two minor swing lows, trend lines may now be drawn about this pattern.

Volume usually trends downwards during a triangle pattern (86% of the time). In this case, that is not happening yet but may still do as the triangle continues.

More white space is added to the right hand side of the chart. The apex (or cradle) will be seen as the triangle continues. A breakout from a triangle commonly occurs between 73% to 75% of the length of the triangle from base to apex (Kirkpatrick and Dhalquist, page 318).

After the breakout, pullbacks occur 59% of the time. High volume on the breakout should be expected, which would increase the performance of the breakout.

ADX and Bollinger Bands support the idea of a consolidating market.

MACD remains bearish. On Balance Volume remains bearish.

RSI and Stochastics remain neutral.


VIX daily 2017
Click chart to enlarge. Chart courtesy of

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.

It is noted that there are now six multi day instances of bullish divergence between price and inverted VIX, and all have been followed so far by at least one upwards day if not more. This signal seems to again be working more often than not. It will again be given some weight in analysis.

There is no new divergence today noted between price and VIX.


AD Line daily 2017
Click chart to enlarge. Chart courtesy of

The rise in price has support from a rise in market breadth. Lowry’s measures of market breadth do not at this stage warn of an impending end to this bull market. They show an internally healthy bull market that should continue for at least 4-6 months.

No new reasonable divergence is noted today between price and the AD line. The AD line has made a very slight new high above the high for the 11th of April, and price has also made a new high above this point.


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

The following lows need to be exceeded for Dow Theory to confirm the end of the bull market and a change to a bear market:

DJIA: 17,883.56.

DJT: 7,029.41.

S&P500: 2,083.79.

Nasdaq: 5,034.41.

Charts showing each prior major swing low used for Dow Theory are here.

This analysis is published @ 10:33 p.m. EST.