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Price remains within confidence points for the main and alternate hourly Elliott wave counts. The breakout should come soon and simple volume analysis may be used to judge which direction is most likely.

Summary: Some reasonable bullishness in classic technical analysis today indicates most likely a green candlestick tomorrow. An upwards breakout from this consolidation looks most likely.

A new high above 2,432 would see confidence in the new alternate wave count. The target would then be 2,478.

A new low now below 2,407.70 would add confidence to the main wave count. At that stage, expect the pullback has not ended. The target would be 2,390 in the first instance.

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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Primary wave 4 may now be underway.

Primary wave 2 was a regular flat correction that lasted 10 weeks. Given the guideline of alternation, primary wave 4 may most likely be a single or multiple zigzag or a triangle and may last about a Fibonacci eight or thirteen weeks, so that the wave count has good proportion and the right look. So far it has lasted only one week. This is far too brief to be considered complete or even close to complete.

Primary wave 4 may end within the price territory of the fourth wave of one lesser degree. Intermediate wave (4) has its range from 2,400.98 to 2,322.35.

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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If primary wave 4 unfolds as the more common single or multiple zigzag, then it should begin with a five down at the daily chart level. This is incomplete.

If minor wave 2 is not over, and if it continues any higher (as per the alternate hourly wave count below), then it may not move beyond the start of minor wave 1 above 2,453.82.

When intermediate wave (A) is complete, then intermediate wave (B) should unfold higher or sideways for at least two weeks.


S&P 500 hourly 2017
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Draw the acceleration channel from the end of minor wave 1 to the last low, then place a parallel copy on the end of minor wave 2. The upper edge should provide resistance along the way down. This has not worked perfectly during Monday’s or Tuesday’s sessions, but the S&P just does not always fit neatly within channels. The small breach is acceptable now that price has returned to within the channel at the end of the session.

Keep redrawing the channel as price moves lower. When minor wave 3 is complete, then it will be an Elliott channel that shows where minor wave 4 may find resistance.

There are now five first and second waves complete.

Labelling for Tuesday’s session is problematic for this main wave count. Micro wave 2 is labelled as an expanded flat correction; all subdivisions fit on the five minute chart and this labelling meets all Elliott wave rules. However, within the expanded flat, sub-micro wave (B) is 3.17 times the length of sub-micro wave (A) and this is much longer than the maximum convention of 2. So this must reduce the probability of this wave count today, or at least my labelling of this portion. I would not be prepared to label micro wave 1 over at the low for this session, because it would then be a three and it must be a five.

The short term conclusion must be that at this time the alternate now has a better fit for most recent movement in terms of Elliott wave structure at the hourly chart level.

This wave count expects now to see a strong increase in downwards momentum this week as the middle of a third wave passes. Fourth wave corrections should be shallow and must remain below their corresponding first wave’s territory.

At 2,392 minute wave iii would reach 1.618 the length of minute wave i.

A new alternate below would now be invalidated if price makes a new low below 2,407.70. At that stage, some confidence may be had in this main wave count.



S&P 500 Weekly 2017
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This wave count is identical to the main wave count up to the high labelled minor wave 3 within intermediate wave (5) within primary wave 3.

This alternate wave count sees primary wave 3 as incomplete, but close to completion.

Within primary wave 3 impulse, the final wave of intermediate wave (5) is seen as incomplete. Intermediate wave (5) is subdividing as an impulse.

When intermediate wave (5) is complete, then primary wave 3 would be complete. 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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The daily chart shows only the structure of intermediate wave (5); this structure is an impulse.

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

There is perfect alternation between the deep expanded flat of minor wave 2 and the shallow double zigzag of minor wave 4.

The end of minor wave 3 for this alternate must be on the high of the 9th of July. At that high it fits perfectly as an impulse, and within it minute wave iv has not overlapped back down into minute wave i price territory. Thus minor wave 4 begins where minor wave 3 ends, on the high of the 9th of July. This means that any analysis of minor wave 4 must take all movement from that point into account.

I have gone through a process of looking at all the alternate scenarios I can see for the structure of minor wave 4. Members are most welcome to have a go as well and share your efforts in comments with a chart as Kkuykendoll has kindly done in last analysis; it is entirely possible someone will see something that I have missed and that we may all benefit from. If doing so, be careful to begin the analysis of minor wave 4 at the appropriate point, otherwise the structure of minor wave 3 will no longer work as an impulse.


S&P 500 Hourly 2017
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Within the double zigzag of minor wave 4, the second zigzag labelled minute wave y has deepened the correction by 10 points; so it has achieved its purpose. Minor wave 4 does have a slight downwards slope even with the middle of it being mostly sideways movement. This is acceptable.

Some confidence may be had in this wave count if price makes a new high above 2,432. At that stage, expect it is more likely that price shall make new all time highs by the end of this week or next week.

This wave count expects to see an increase in upwards momentum.

At this stage, the most recent movement on the hourly chart looks like a five up from the low of the 6th of July, and this is labelled as an impulse for minuette wave (i). Downwards movement to the low for today’s session fits very well as a three, and this is labelled as minuette wave (ii). This has a better fit, so it has a higher probability than the labelling of this movement on the main hourly wave count.

Minuette wave (ii) may not move beyond the start of minuette wave (i) below 2,407.70.



S&P 500 weekly 2017
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Volume, candlesticks and On Balance Volume are bullish. This does not support the main Elliott wave count.

ADX, RSI and MACD still are bearish, and point to lower prices in the next few weeks.


S&P 500 daily 2017
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Stepping back and taking a very simple approach to current market conditions sees a very obvious consolidation continuing. This view is supported by now clearly declining volume as price moves sideways.

During the consolidation, it is upwards days that have strongest volume, suggesting again another upwards breakout when the consolidation is complete. More long lower wicks than long upper wicks also looks like this view is more likely correct.

This is contradicted though by ADX indicating a downwards trend in place and ATR increasing, suggesting the market is trending.

Support is about just above 2,400 and resistance about 2,450. The safest approach to a consolidating market is to wait patiently for a breakout and then join the trend afterwards. Often after a breakout price curves back to re-test prior support or resistance, the final “kiss goodbye”. When price behaves like that, it offers a good entry opportunity to join a trend with some confidence.

This chart now offers more support to the alternate Elliott wave count than the main Elliott wave count, although the picture is still somewhat unclear.


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 single day divergence today between price and Inverted VIX. Price moved lower today, with a lower low and a lower high, but volatility declined (normally, volatility should increase; inverted VIX should move lower because it’s inverted). This indicates weakness today within downwards movement from price, and it is interpreted as bullish.


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.

Hidden bullish divergence noted after Thursday’s session has now been followed by two upwards days. It may now be resolved here.

There is the same single day divergence today between price and the AD line as is noted between price and Inverted VIX. Price has moved lower but the AD line increased. This session saw an increase in market breadth, which was not translated into an increase in price. This is interpreted as downwards movement for price during this session being weak, so the divergence is interpreted as bullish.

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.

While the market has moved sideways for about a month now, it has been accompanied by new highs in market breadth and improving underlying health as measured by Lowry’s buying power and selling pressure. This sideways correction should be expected to be a normal consolidation within an ongoing healthy bull market.

Historically, almost every bear market is preceded by at least 4-6 months of divergence with price and market breadth. There is no divergence at all at this time. This strongly suggests this old bull market has at least 4-6 months to continue, and very possibly longer.


The DJT today has finally made a new all time high. This confirms a continuation of the bull market.

Nasdaq still has not made a new all time high. Modified Dow Theory (adding in technology as a barometer of our modern economy) indicates some weakness at this time within the bull market, but there is zero indication that it is over.

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 @ 12:18 a.m. EST on 12th July, 2017.