Select Page

A green daily candlestick has unfolded for Wednesday’s session exactly as was expected in yesterday’s summary. With some price confidence, now the alternate and main Elliott wave counts are swapped over.

Summary: An upwards breakout is expected. The profit target is at 2,478.

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
Click chart to enlarge.

This wave count is identical to the alternate 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
Click chart to enlarge.

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.


S&P 500 hourly 2017
Click chart to enlarge.

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.

The increase in upwards momentum for Wednesday’s session perfectly fits this wave count.

Minuette wave (iv) may not move back down into minuette wave (i) price territory below 2,432.00.

When there is a new high, then minute wave iii could possibly be over. At that stage, the invalidation point should move to the end of minute wave i at 2,430.98. Minute wave iv may not move into minute wave i price territory.



S&P 500 Weekly 2017
Click chart to enlarge.

Primary wave 4 may now be underway. This is now an alternate wave count.

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 three weeks. 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
Click chart to enlarge.

Primary wave 4 may be unfolding as a double zigzag, or a double combination. A double zigzag would offer better alternation with the flat of primary wave 2, but a combination would still offer some alternation.

Labelling within primary wave 4 is today changed. The first structure in a double may be complete.


S&P 500 Hourly 2017
Click chart to enlarge.

The first structure in a possible double is labelled as a zigzag for intermediate wave (W), subdividing 5-3-5.

The double is joined by a now possibly complete three in the opposite direction, a zigzag labelled intermediate wave (X).

The second structure in the multiple may be a zigzag for a double zigzag (most likely), or a flat or triangle for a double combination (still possible, but less likely). It would be labelled intermediate wave (Y) and should last about two weeks.

Within double zigzags, their X waves are normally brief and shallow. So far intermediate wave (X) is neither, but primary wave 4 may still be a double zigzag.

Within double combinations, their X waves are normally deep as this one is. There is no rule stating the limit to X waves within double combinations, and they may make new price extremes beyond the start of wave W or Y. Here, intermediate wave (X) may make a new high above 2,453.82 and this wave count will remain valid. Unfortunately, there is no upper invalidation point that would see this wave count discarded. It will be discarded based upon structure and classic technical analysis, if that is the case.



S&P 500 weekly 2017
Click chart to enlarge. Chart courtesy of

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
Click chart to enlarge. Chart courtesy of

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 no longer contradicted by ADX. ADX now agrees that price is consolidating. Only ATR does not support this view today.

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 offers more support to the main Elliott wave count than the alternate Elliott wave count. The picture looks a little clearer today.


VIX daily 2017
Click chart to enlarge. Chart courtesy of

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.

Bullish divergence noted yesterday has been followed by upwards movement.

There is new short term bearish divergence today between price and inverted VIX: price has made a new high above the prior high of the 28th of June, but inverted VIX has not made a corresponding new high. This divergence indicates upwards movement from price today lacks a corresponding decline in volatility.


AD Line daily 2017
Click chart to enlarge. Chart courtesy of

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.

Bullish divergence noted yesterday between price and the AD line has now been followed by an upwards day. There is new mid term bearish divergence today: the AD line has made a new all time high, but price has not. This indicates weakness within upwards movement today from 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.

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 @ 09:15 p.m. EST.