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The main Elliott wave count again expected upwards movement. Monday has made a higher high and a higher low above Friday, the definition of upwards movement. This was expected.

Summary: While we should always assume the trend remains the same until proven otherwise, divergence today between price and the AD line and inverted VIX is bearish. This may be resolved by one or two days of downwards movement.

If price makes a new high above 2,453.82, then the target is still at 2,500.

A new low below 2,422.88 would confirm a deeper pullback to last weeks is underway. The target zone is 2,400 to 2,322.

Always use a stop. Invest only 1-5% of equity on any one trade.

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 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 2,530 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 the final wave of intermediate wave (5), no second wave correction may move beyond its start below 2,422.88.


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 be a complete triangle.

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

Within intermediate wave (5), minor wave 1 is now complete. Minor wave 2 may not move beyond the start of minor wave 1 below 2,422.88.


S&P 500 hourly 2017
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Minor wave 2 is now a very deep correction and fits as a double zigzag.

Downwards movement for minor wave 2 does look choppy and corrective, compared to prior upwards movement for minor wave 1 which looks clearer and impulsive.

Minor wave 3 may be beginning slowly with overlapping first and second waves.

If minor wave 2 continues further, it may not move beyond the start of minor wave 1 below 2,422.88.

At the hourly chart level, this wave count has a better fit for recent movement.

It is not possible to label today’s high as wave B of a continuing expanded flat for minor wave 2 because it has not retraced the minimum 0.9 required length of the prior downwards wave, which would be wave A of the flat. If minor wave 2 is continuing sideways as a flat correction, then a little more upwards movement is needed first to a minimum at 2,451.51. This is not very far away at all from today’s high.



S&P 500 Weekly 2017
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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.

A cluster of Hindenburg Omens have been noticed at this time, on the 4th and 31st of May. This does not mean the market must crash now, it is only a warning that the market conditions are conducive to a crash. The probability of a crash based upon the Hindenburg Omen is about 20%, which means the probability that a crash will not occur is about 80%.


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 Hourly 2017
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A correction at primary degree must begin with a five down at least at the hourly chart level.

I have spent some time looking at the downwards wave labelled minor wave 1 on the five minute chart. A wave that moves in a straight line is only either an impulse, zigzag or zigzag multiple. This downwards wave will fit very neatly as a double zigzag, but I cannot see a solution for it as any other structure. I cannot see a solution for it as a five wave motive structure, which minor wave 1 must be.

Minor wave 2 may not move beyond the start of minor wave 1 above 2,453.82. Minor wave 2 may have continued a little higher as a double zigzag.



S&P 500 weekly 2017
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Price is moving higher with a higher high and a higher low, but upwards movement is weak. Volume is light and the candlestick is a small spinning top pattern.

Give weight to On Balance Volume though. This strongly supports the main Elliott wave count.


S&P 500 daily 2017
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Light volume and a long upper wick on today’s candlestick is bearish for the short term.

The yellow support line for On Balance Volume is redrawn today. I have more confidence that this line is now drawn correctly.

Bollinger Bands, ADX and ATR all agree that the market is consolidating. Price is moving sideways and is range bound with resistance about 2,450 and support about 2,420. Expect an upwards breakout as more likely than downwards based upon volume for the 16th of June being strongest during this consolidation.


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 still bearish divergence between price and inverted VIX: from the last all time high of the 19th of June price made a lower high, but inverted VIX made a higher high. This indicates weakness within upwards movement during the last two sessions.


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.

There is new divergence today between price and the AD line: the AD line has made a new all time high, but this has not been matched by price. This divergence is bearish and indicates weakness within price.

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.

However, there is now some weakness becoming evident within small and mid caps. The number of equities down 20% or more from their all time highs is greatest in small caps, next in mid caps, and least in large caps. This is only an early sign of weakness developing.


At the end of last week, DJIA and the S&P500 have all made new all time highs. DJT and Nasdaq last week did not make new all time highs. However, at this stage, that only indicates some potential weakness within the ongoing bull market and absolutely does not mean that DJT and Nasdaq 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 @ 10:23 p.m. EST.