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The main hourly Elliott wave count was invalidated within the first hour of the session. Two alternate hourly wave counts remained.

Summary: Price is at support and On Balance Volume is at support, and for these reasons the main wave count will expect an end to the pullback here or very soon. Look for a bounce tomorrow, and if the S&P makes a new all time high, the alternate will be discarded. Alternatively, a new low below 2,344.51 would see the main wave count discarded.

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structure from the daily alternate wave count below, so for clarity and to keep the number of charts manageable it will not be published on a daily basis.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 wave 1 is complete. Minor wave 2 should be complete today or very soon indeed.

Minor wave 2 may not move beyond the start of minor wave 1 below 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 fits as a very common expanded flat. Within minor wave 2, minute wave b is a 1.41 length of minute wave a, only a little longer than the common range of up to 1.38.

If minor wave 2 is over at today’s low, then there is a Fibonacci ratio between minute waves a and c.

However, it must be accepted that price could certainly continue lower while it remains within the best fit channel. On the five minute chart, there is no five up at the end of the session to signal a possible low in place.

Only when the channel is properly breached will enough confidence be had that a low is in place in order to calculate a target for minor wave 3.


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 54 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. Minute wave b is a 1.55 length of minute wave a.

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 2,328.95 to avoid a truncation and a very rare running flat.

The target is checked and today recalculated. The new target today would see minor wave Y end very close to the same level as minor wave W, within 4 points. The whole of intermediate wave (4) would have a big sideways look, typical of combinations.

There may be a five down complete today. This may be followed by a three up that may reach up to the 0.382 Fibonacci ratio, or slightly more likely the 0.618 Fibonacci ratio.



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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Today’s strong downwards day closes the two gaps up from the large symmetrical triangle.

Price may now find some support about the upper edge of the triangle structure, and about 2,350 which was a prior area of support and resistance.

Volume is bearish, ADX is slightly bearish, and MACD today is bearish.

Neither RSI nor Stochastics are oversold. There is room for price to fall further if it can overcome support.

However, there may be strong enough support from On Balance Volume today to halt the fall in price. Look most likely for a bounce tomorrow.


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.

No new divergence is noted today.


AD Line daily 2017
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There is no new divergence between price and breadth today. Price has made new lows below the last swing low of the 3rd and 4th of May, and the AD line has also made a very slight new low. The fall in price today had support from a decline 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 @ 11:33 p.m. EST.