Downwards movement was expected to most likely be a small pullback within an ongoing upwards trend.

The pullback has remained above the invalidation point, as expected. The target is slightly adjusted; the Elliott wave target is now only 2 points from the classic analysis target.

Summary: While price remains above 2,418.71, then expect it is more likely that this downwards movement is a smaller pullback within an ongoing upwards trend. The target is now at 2,450 with the classic analysis target at 2,448.

A new low below 2,418.71 would see the pullback as either intermediate (4) or primary 4. At that stage, expect it to be deeper and longer lasting.

New updates to this analysis are in bold.

Last monthly and weekly charts are here. Last historic analysis video is here.

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART

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This wave count has a better fit with MACD and so may have a higher probability.

Primary wave 3 may be complete, falling short of 1.618 the length of primary wave 1 and not exhibiting a Fibonacci ratio to primary wave 1. There is a good Fibonacci ratio within primary wave 3.

The target for cycle wave V will remain the same, which has a reasonable probability. At 2,518 primary wave 5 would reach 0.618 the length of primary wave 1. If the target at 2,500 is exceeded, it may not be by much.

There is alternation between the regular flat correction of primary wave 2 and the triangle of primary wave 4.

Within primary wave 3, there is alternation between the double zigzag of intermediate wave (2) and the double combination of intermediate wave (4).

If primary wave 4 is over and primary wave 5 is underway, then within primary wave 5 intermediate wave (2), if it moves lower, may not move beyond the start of intermediate wave (1) below 2,344.51 (this point is taken from the triangle end on the daily chart).

DAILY CHART

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Primary wave 5 must complete as a five wave motive structure, either an impulse (more common) or an ending diagonal (less common). So far, if this wave count is correct, it looks like an impulse.

Intermediate wave (3) now looks best on the daily chart if it is incomplete (so the hourly charts are swapped over today). The current correction may only be minor wave 4. Thereafter, minor wave 5 should move price higher, and this looks like it should begin tomorrow.

The alternate hourly chart now considers the possibility that intermediate wave (3) was over at the last all time high.

Intermediate wave (4) may not move into intermediate wave (1) price territory below 2,398.16.

HOURLY CHART

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If this labelling of intermediate wave (3) is correct, then within it minor wave 3 is shorter than minor wave 1. Minor wave 5 is limited to no longer than equality in length with minor wave 3, so that minor wave 3 is not the shortest actionary wave and the core Elliott wave rule is met. That limit is now at 2,461.36.

Minor wave 4 may not move into minor wave 1 price territory below 2,418.71.

There is no longer adequate alternation between minor waves 2 and 4. Minor wave 2 is a very shallow 0.23 single zigzag whereas minor wave 4 is now a deeper 0.42 double zigzag. Alternation is a guideline, not a rule.

Minor wave 4 may have ended at today’s low when price came down to touch the lower edge of the Elliott channel.

With minor wave 4 today moving lower, the target for minor wave 5 is recalculated. It is now just 2 points above the target calculated using classic analysis. This area looks like a reasonable point to expect strong resistance.

ALTERNATE HOURLY CHART

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This labelling also remains entirely viable, but it does not have as good a look at higher time frames due to the disproportion between minor waves 2 and 4. Here, there is also no alternation between minor waves 2 and 4; they are both zigzags.

A new low below 2,418.71 would indicate that the correction should be deeper and longer lasting, at least at intermediate degree.

Intermediate wave (4) may not move into intermediate wave (1) price territory below 2,398.16.

ALTERNATE WEEKLY CHART

Click chart to enlarge.

This weekly chart has been published with a slight variation before.

It is still possible that intermediate wave (4) is incomplete and may be continuing as a very common expanded flat correction.

This weekly wave count expects a slow end to Grand Super Cycle wave I at the target at 2,500. Once intermediate wave (4) is over, then intermediate wave (5) would be expected to move above the end of intermediate wave (3) at 2,400.98 to avoid a truncation; it need not make a new all time high (but would be likely to do so).

Thereafter, another multi week sideways correction for primary wave 4 may unfold that must remain above primary wave 1 price territory, which has its extreme at 2,111.05.

Finally, a last upwards wave for primary wave 5 towards the target at 2,500 should show substantial weakness.

This wave count allows for the target at 2,500 to be reached possibly in October.

When looking at upwards movement so far on the monthly chart, the corrections of intermediate waves (2) and (4) show up. This is how the labelling fits best at that time frame.

It is also still possible that the expanded flat correction could be labelled primary wave 4 as per the alternate published here.

ALTERNATE DAILY CHART

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Expanded flat corrections are very common structures. They subdivide 3-3-5. Within this one, minor wave B would now be just beyond the common range of 1 to 1.38 the length of minor wave A.

The target for minor wave C is recalculated.

The target calculated expects price to find strong support at the lower edge of the black Elliott channel, which is copied over from the weekly chart.

TECHNICAL ANALYSIS

WEEKLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

On Balance Volume gives the most recent signal as a weak bearish divergence with price.

Volume is bearish. RSI divergence is bearish. ADX at extreme is bearish.

MACD is now bullish.

Although this chart is bearish, we have been here before. The reality is price keeps rising although indicators are bearish. This bearishness should tell traders to protect long positions with stops, and be aware the market is currently vulnerable to a pullback. It does not tell traders to enter short here; that would be premature.

DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

If the widest part of the symmetrical triangle is taken from the high of the 1st of March to the low of the 27th of March, then a measured rule target would be at 2,448. Use this target and the Elliott wave target at 2,450 as a zone for long positions.

Volume today is bullish. The long lower wick on today’s candlestick is bullish.

Overall, this chart looks mostly bullish. It looks reasonable to expect price to continue towards the target.

VOLATILITY – INVERTED VIX CHART

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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.

There is now weak single day bullish divergence between price and VIX: price made a lower low and lower high, but VIX showed a decline in volatility. The downwards movement during this session lacked a normal increase in volatility and may be judged to be internally weak.

BREADTH – AD LINE

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With the last all time high for price, the AD line also made a new all time high. Up to the last high for price there was support from rising market breadth.

There is normally 4-6 months divergence between price and market breadth prior to a full fledged bear market. With no divergence yet at this point, any decline in price should be expected to be a pullback within an ongoing bull market and not necessarily the start of a bear market.

There is no divergence for the short term at this time to indicate weakness.

At the end of last week, it is noted that the mid caps and small caps have failed to make new all time highs. There is some internal weakness with increasing selectivity in this market.

DOW THEORY

At the end of last week, Nasdaq, DJIA and the S&P500 have all made new all time highs. DJT has failed to confirm an ongoing bull market because it has not yet made a new all time high. However, at this stage that only indicates some potential weakness within the ongoing bull market and absolutely does not mean that DJT may not yet make new all time highs, and it does not mean a bear market is imminent.

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 @ 11:27 p.m. EST.