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A bounce was expected for Thursday’s session and this is exactly what happened.

Summary: This upwards bounce may be a counter trend bounce. If price makes a new low below 2,344.51 tomorrow, then the wave count would see either intermediate wave 4 or primary wave 4 continuing lower for at least a few weeks. There is enough bearishness today to have some doubt on the main wave count, so it requires confidence with a strong upwards day or a new all time high.

If price makes a new low below 2,353.29, members may like to consider entering short on a bounce. A new low below 2,344.51 should see only short positions held. Pullbacks can have strong whipsaws and only experienced traders should trade them. Others should wait patiently for the correction to be over.

Always use a stop and do not invest more than 1-5% of equity on any one trade. Manage risk carefully.

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structure from the daily alternate wave count below, so for clarity and to keep the number of charts manageable it will not be published on a daily basis.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.

If it continues any lower, 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.

At the new low today, minute wave c is now 4.28 points longer than 2.618 the length of minute wave a.

The channel about minute wave c, which was drawn on yesterday’s main hourly chart, was breached by upwards movement today. This adds a little confidence to a low being in place, at least for the short term. Minor wave 2 could be over for this wave count.

A new all time high would see the alternate below discarded and this main wave count confirmed.

Within minor wave 3, which may only subdivide as an impulse, the first wave up for minute wave i would likely be incomplete. When it is a complete five, then a three down for minute wave ii may not move beyond the start of minute wave i below 2,353.29.


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 55 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 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.

Minute wave c must subdivide as a five wave structure, either an impulse (much more common) or an ending diagonal (less common). So far it looks likely to be an impulse.

Minuette wave (i) looks to be complete. Minuette wave (ii) may have unfolded today, ending close to the 0.382 Fibonacci ratio. This is a relatively shallow second wave correction though, so look out for the very real possibility that minuette wave (ii) may continue higher as a double zigzag to end close to the 0.618 Fibonacci ratio, about 2,387.

Minuette wave (ii) may not move beyond the start of minuette wave (i) above 2,405.77.


S&P 500 Weekly 2017
Click chart to enlarge.

This idea is new.

What if the last all time high just ended primary wave 3? What if primary wave 4 began with the strong drop yesterday? At the weekly chart level, this labelling has a good look that will also fit on the daily chart.

This only works if intermediate wave (4) was over as a relatively quick single zigzag. This does not offer good alternation nor good proportion with the double zigzag of intermediate wave (2). However, this wave count is still considered because the S&P just does not always exhibit nice proportions nor does it always exhibit good alternation.

Primary wave 2 was a regular flat correction lasting 10 weeks. Given the guideline of alternation, primary wave 4 should be expected to most likely be a single or multiple zigzag and so more brief than 10 weeks. It may find support at the lilac trend line.

This idea will be developed further this weekend. If it has a very good fit and good Fibonacci ratios, then it may be published on a daily basis. At this early stage, primary wave 4 would require a five down to complete at the daily chart level, so at this early stage a new all time high would see this new idea discarded.



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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Price bounced up exactly from the triangle trend line and a strong horizontal line of prior support and resistance about 2,350. This was expected, but how high will it go now?

Volume remained fairly heavy today (compared to recent days) although it is lighter than yesterday’s downwards day. Reasonable volume today will be read as bullish for the very short term at least.

The long upper wick on today’s candlestick is fairly bearish. This supports the alternate wave count and the new weekly wave count.

Expect the larger trend still remains up. The short term Fibonacci 13 day moving average is above the mid term Fibonacci 55 day moving average, and both are above the long term 200 day moving average.

On Balance Volume fairly strongly supports the main wave count.


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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Breadth has remained essentially flat, so the rise in price today did not have support from market breadth. This is not clear divergence, but it will be read as at least slightly bearish. It makes the bounce today look more likely to be a counter trend bounce than the start of a new healthy trend. It supports the alternate wave count.


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 @ 05:50 p.m. EST.