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An upwards breakout may have come sooner than expected. The final target remains the same.

Summary: Assume the trend remains the same, upwards, until proven otherwise. This looks like an upwards breakout. Any small correction now is an opportunity to join the trend. The target zone calculated at two wave degrees is 2,500 to 2,501.

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 has a better fit with MACD and so may have a higher probability. However, at this stage it expects the bull market to come to an end quickly. With market breadth not yet exhibiting any divergence with price this looks unlikely. The alternate should be taken very seriously.

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 triangle of intermediate wave (4).

Within primary wave 5, the correction for intermediate wave (4) may not move into intermediate wave (1) price territory below 2,398.16.


S&P 500 Daily 2017
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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) is a complete impulse. Intermediate wave (4) may now be a complete triangle, or it may continue as an expanded flat. Because an expanded flat would not see alternation with the expanded flat of intermediate wave (2), it is now more likely today that intermediate wave (4) is a complete triangle.

If intermediate wave (4) does continue further, then it may not move into the price territory of intermediate wave (1) below 2,398.16.

Intermediate wave (5) must be a five wave motive structure.


S&P 500 hourly 2017
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Intermediate wave (4) fits as a regular contracting triangle, which again may have come to a more swift end than expected.

Intermediate wave (5) may have begun on Friday.

The opening gap for Monday is a breakaway gap. If this is correct, then the lower edge should provide support. Stops for long positions may be set just below this gap at 2,433.15.

So far in the latter stages of this old bull market corrections within impulses have been remarkably quick and shallow. Look out for minor wave 2 to continue this pattern; it may reach down only to the 0.236 or 0.382 Fibonacci ratios.

It is also possible that minor wave 1 may not be over at today’s high; it may move higher tomorrow. If it does, then the Fibonacci retracement for minor wave 2 must be redrawn.


S&P 500 hourly 2017
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The lack of alternation between the completed expanded flat of intermediate wave (2) and this possible incomplete expanded flat of intermediate wave (4) means this wave count has a substantially reduced probability.

This wave count should only be taken seriously if price makes a new low below 2,422.88.

This wave count is published primarily to illustrate the higher probability of the main hourly wave count today. If intermediate wave (4) is not over at this stage, then the problem of a lack of alternation is a serious one.



S&P 500 Weekly 2017
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This alternate weekly chart is a new variation of prior published alternates.

It is possible that primary wave 3 is either over now or may be very soon indeed. It is possible that a deep multi week or multi month pullback may begin for primary wave 4.

This wave count would allow for primary wave 4 to unfold with a corresponding decline in market breadth. Primary wave 5 may then continue higher towards the target, allowing for at least 4 months of divergence between market breadth and price to develop before an end to the ageing bull market. This would have a neat fit with prior major trend changes from bull to bear of every single bear market in the last 90 odd years.

Primary wave 2 was a regular flat correction lasting 10 weeks. Primary wave 4 may exhibit alternation as a single or multiple zigzag, or as a triangle. It should last at least 10 weeks and possibly longer.

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


S&P 500 Daily 2017
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Minor wave 5 of intermediate wave (5) of primary wave 3 may be over here, or it may continue higher.

Always assume the trend remains the same until proven otherwise; assume the trend is upwards until price makes a new low below 2,422.88.

If price moves below 2,422.88, then this would be the main wave count.

Primary wave 4 may end within the price territory of the fourth wave of one lesser degree. The price range for intermediate wave (4) gives a target range for primary wave 4.



S&P 500 weekly 2017
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An inside week completes a small spinning top candlestick pattern. This puts the trend from up to neutral; price is consolidating. A spinning top is a pause within a trend.

An increase in volume suggests that the breakout after consolidation is likely to be upwards.

On Balance Volume trend lines are adjusted.


S&P 500 daily 2017
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The upwards breakout lacks support from volume, so it is suspicious. However, light and declining volume has been a feature of this ageing bull market, so on its own at this stage it is not a great cause for concern.

There is now double divergence at highs between price and RSI. There is single divergence between price and On Balance Volume. There is single divergence between price and Stochastics. Upwards movement is weak, but that should be expected towards the end of an ageing bull market. This weakness does not signal that price must move lower here, only that there is weakness and traders should exercise caution.

Price is bullish. MACD is bullish. ADX indicates an upwards trend.


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.

There is strong divergence today between the new all time high and the prior high of the 2nd of June: price has made a new all time high today, but inverted VIX has not. This indicates weakness within upwards movement today from price and is bearish.


AD Line daily 2017
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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. This has been so for all major bear markets within the last 90 odd years. 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.

Prior bullish divergence has now been followed by upwards movement. The new all time high for price was matched by a new all time high for the AD line today. The rise in price has support from market breadth.

Because divergence between price and the AD line has recently been more reliable than divergence between price and VIX, this will be given more weight. The absence of divergence with the AD line will be read as bullish and will be given more weight than the bearish divergence noted today with VIX.

The mid caps and small caps have made new all time highs along with recent last all time high for large caps. The rise in price is seen across the range of the market, so it has internal strength.


At the end of last week, DJIA, Nasdaq 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 new a 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 @ 10:32 p.m. EST.