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New all time highs were expected for this week and that is exactly what has happened this Monday.

Summary: The target remains at 2,459 or 2,469. However, ADX on the weekly chart remains extreme, so extreme caution is still advised. If price closes the gap by moving below 2,376.98, then look out for a deeper pullback.

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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This wave count sees the middle of primary wave 3 a stretched out extension, which is the most typical scenario for this market.

Primary wave 3 may be incomplete. A target is now calculated for it on the daily chart.

There is alternation within primary wave 3 impulse, between the double zigzag of intermediate wave (2) and the possible triangle or combination of intermediate wave (4).

When primary wave 3 is a complete impulse, then a large correction would be expected for primary wave 4. This may be shallow.

Thereafter, primary wave 5 may be expected to be relatively short, ending about the final target at 2,500.

It is also still possible that primary wave 3 was over at the high labelled intermediate wave (3) (this idea has been published previously) and that would mean that price should currently be within primary wave 4. This idea does not at this stage diverge in terms of expected direction or structure from the daily alternate wave count below, so for clarity and to keep the number of charts manageable it will not be published on a daily basis. I will follow the idea and will again publish it when it begins to diverge from the main wave count.


S&P 500 Daily 2017
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Intermediate wave (4) may be a complete regular contracting triangle. It may have come to a surprisingly swift end with a very brief E wave.

There is already a Fibonacci ratio between intermediate waves (3) and (1). This makes it a little less likely that intermediate wave (5) will exhibit a Fibonacci ratio to either of intermediate waves (1) or (3); the S&P often exhibits a Fibonacci ratio between two of its three actionary waves but does not between all three.

Within intermediate wave (5), minor waves 1 and now 2 look to be complete.

Within minor wave 3, no second wave correction may move beyond its start below 2,379.75. However, an alternate idea below at the hourly chart level looks at the possibility that minor wave 2 may not be over and may continue lower. This idea has an invalidation point at the start of minor wave 1 at 2,344.51.

The structure of intermediate wave (5) on the daily chart does not look complete. So far it looks like a possible three up. Minor wave 3 still needs to complete, then minor waves 4 and 5. This may last another couple of weeks at least.


S&P 500 hourly 2017
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Minor wave 2 may have completed as a double zigzag.

This main wave count still expects to see a further increase in upwards momentum over the next few days.

Minute wave iii may only subdivide as an impulse. Within minute wave iii, minuette wave (iv) may not move into minuette wave (i) price territory below 2,395.72.

The channel drawn about upwards movement is a best fit. When minuette wave (iii) is complete, then the lower edge may show where minuette wave (iv) may find final support.


S&P 500 hourly 2017
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It is also possible that minor wave 2 is continuing further as an expanded flat correction. Minute wave b may be incomplete.

The normal range for minute wave b within a flat correction is from 1 to 1.38 the length of minute wave a, giving a range from 2,398.16 to 2,405. There is no maximum limit for minute wave b within a flat, but when it reaches twice the length of minute wave a at 2,416.57 the idea of a flat correction continuing for minor wave 2 should be discarded based upon a very low probability.

When minute wave b may be complete with one more small high, then this alternate wave count would require a few days of downwards movement to complete minute wave c. Minute wave c would be very likely to make at least a slight new low below the end of minute wave a at 2,379.75 to avoid a truncation and a very rare running flat.

A new low below 2,395.72 would invalidate the main wave count at the hourly chart level and provide some confidence in this alternate.


S&P 500 Daily 2017
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What if intermediate wave (4) was not a complete triangle but is still unfolding as a double combination? The subdivisions of this wave count would be labeled in the same way, with the exception of the degree of labelling, if the correction were to be primary wave 4.

Double combinations are very common structures. This would still provide perfect alternation in structure with the double zigzag of intermediate wave (2). Although double zigzags and double combinations are both labelled W-X-Y, they are very different structures and belong to different groups of corrections.

The purpose of combinations is the same as triangles, to take up time and move price sideways. Intermediate wave (2) lasted 58 days. So far intermediate wave (4) has lasted 52 days. If it continues for another one to two weeks, it would still have excellent proportion with intermediate wave (2).

This alternate wave count still has some support from classic technical analysis, particularly extreme ADX at the weekly chart level.


S&P 500 Hourly 2017
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Minute wave b is longer than the common range of up to 1.38 times the length of minute wave a, but still within allowable limits of up to 2. The higher minute wave b goes the lower the probability that this wave count is correct.

However, I have seen plenty of expanded flat corrections with B waves longer than 1.38 times the length of their A waves. This wave count remains entirely acceptable.

Minute wave c would be very likely to end at least slightly below the end of minute wave a at 2,322.25 to avoid a truncation and a very rare running flat.



S&P 500 weekly 2017
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An upwards week is completed but closes red. The balance of volume is down and it shows a decline. Downwards movement during the week did not have support from volume. This looks like a pullback within a larger upwards trend.

ADX is extreme and nearing very extreme. A bigger consolidation or deeper pullback should be expected.

Within this bull market, beginning in March 2009, this has happened at the weekly chart level on four occasions: January 2010, the end of February 2011, early June 2013, and late July 2014. On each occasion it was immediately followed by three to four weeks of downwards movement.


S&P 500 daily 2017
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Bullish long lower wicks on five daily candlesticks have now been followed by an upwards day to a new all time high. Today’s green candlestick is bullish and has some support from volume.

However, volume is relatively light. Towards the end of a primary degree third wave this would be expected.

The trend is weak; it lacks range and volatility.

On Balance Volume may find resistance 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.

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.

Price moved higher today, but inverted VIX moved lower. The rise in price today did not come with a normal corresponding decline in volatility; volatility increased. This single day bearish divergence may be followed by one or more days of downwards movement.

There is also short term bearish divergence between price and inverted VIX today.


AD Line daily 2017
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Short term bullish divergence noted in analysis two sessions ago has now been followed by upwards movement. It is considered to have worked.

Price and the AD line both made new all time highs today. Upwards movement has support from an increase in market breadth.


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 @ 12:02 a.m. EST on 16th May, 2017.