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A new low below 2,462.17 in the first hour of the session added confidence to the Elliott wave count which expected a deeper pullback was in the early stages. The target for it to end and the expectation for how long it may last will remain the same for now.

Summary: A second wave bounce will come and will offer an entry opportunity to join the downwards trend, but take profits quickly when they appear and manage risk diligently.

In the short term, while price remains below 2,455.05, expect it to keep falling (the trend remains the same until proven otherwise) to a short term target at 2,426. If price bounces above 2,455.05, then look for it to end about 2,470.

Primary wave 4 may be expected to last at least 8 weeks and may end about 2,320.

Alternatively, if price makes a new high tomorrow, then the target for primary wave 3 to end would be at 2,497.

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 3 now looks complete. Further and substantial confidence may be had if price makes a new low below 2,405.70. Fibonacci ratios are calculated at primary and intermediate degree. If primary wave 3 is complete, then it still exhibits the most common Fibonacci ratio to primary wave 1.

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

Primary wave 4 should last about 8 weeks minimum for it to have reasonable proportion with primary wave 2. It is the proportion between corrective waves which give a wave count the right look. Primary wave 4 may last 13 or even 21 weeks if it is a triangle or combination.

If primary wave 4 reaches down to the lower edge of the Elliott channel, it may end about 2,320. This is very close to the lower range of intermediate wave (4); fourth waves often end within the price territory of the fourth wave of one lesser degree, or very close to it.

If price reaches the target at 2,500 and either the structure is incomplete or price keeps rising, then the next target would be the next Fibonacci ratio in the sequence between cycle waves I and V. At 2,926 cycle wave V would reach 1.618 the length of cycle wave I.

At the end of last week, Lowry’s analysis favours the idea that primary wave 4 has begun.


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.

An Elliott channel is drawn today about intermediate wave (5) in blue. Today’s session closed below this channel, so this is a further indication that intermediate wave (5) is over. If price continues lower tomorrow, then the lower edge of this channel may provide resistance for any upcoming bounce.

Primary wave 2 was a regular flat correction lasting 10 weeks. Given the guideline of alternation, primary wave 4 may most likely be a single or double zigzag. Within both of those structures, a five down at the daily chart level should unfold. At this stage, that looks incomplete.

While primary wave 4 would most likely be a single or double zigzag, it does not have to be. It may be a combination or triangle and still exhibit structural alternation with primary wave 2. There are multiple structural options available for primary wave 4, so it is impossible for me to tell you with any confidence which one it will be. It will be essential that flexibility is applied to the wave count while it unfolds. Multiple alternates will be required at times, and members must be ready to switch from bear to bull and back again for short term swings within this correction.

Members with a longer term horizon for their trading may wait for primary wave 4 to be complete to purchase stocks or enter the index long.


S&P 500 hourly 2017
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Assume the trend remains the same until proven otherwise. Assume downwards movement will continue until price tells us a bounce has arrived.

While price remains below 2,455.05, then any small bounce may be a second wave correction within minute wave v.

Minute wave iii is slightly longer than minute wave i. This means that minute wave v is not limited. The target assumes the most common Fibonacci ratio for minute wave v.

If price makes a new high short term above 2,455.05, then it cannot be a small second wave correction within minute wave v; so at that stage minute wave v would have to be over. At that stage, assume minor wave 1 is over and minor wave 2 is underway; use the alternate wave count.


S&P 500 hourly 2017
Click chart to enlarge.

If price makes a new high short term tomorrow above 2,455.05, use this alternate wave count. If price makes a new low first, then adjust the Fibonacci retracement from the start of minor wave 1 to its end.

Look for minor wave 2 to bounce up to the 0.382 or 0.618 Fibonacci ratios, favouring the 0.618 Fibonacci ratio. Expect minor wave 2 to be choppy and overlapping, and to last about two to three sessions.

Minor wave 2 may not move beyond the start of minor wave 1 above 2,490.87.

When minor wave 2 is complete, then minor wave 3 downwards should begin and should show a strong increase in momentum.



S&P 500 weekly 2017
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RSI, ADX and the two doji support the idea that primary wave 4 has begun.


S&P 500 daily 2017
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Today is a classic downwards breakout from a consolidation, with support from volume. After the breakout, expect a back test and then for price to move away from resistance. Look now for resistance about 2,460.

Bollinger Bands today widened. ATR strongly increased. ADX indicates a potential trend change to down.

There is room for price to fall further. RSI and Stochastics are not yet oversold. On Balance Volume is not yet at support.

Tomorrow may print another red daily candlestick. A bounce will come. It may end about 2,460, but it may not begin tomorrow.


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 longer term divergence between price and inverted VIX today, shown in gold lines. However, mid and long term divergence has proven to be reasonably unreliable, so it will be given no weight in this analysis today.


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.

Bullish divergence noted in last analysis has simply disappeared. It is considered to have failed. There is no new divergence between price and market breadth today. Both have fallen to make new lows below prior recent lows. The fall in price today has come with a corresponding normal decline in market breadth, so the fall looks healthy.

Lowry’s measures of internal market strength and health continue to show a healthy bull market. While the bull market overall remains healthy, there are signs at the end of this week of some short term weakness which may indicate a pullback to develop here. This supports the labelling of the Elliott wave count at the daily chart level.


The S&P500, DJIA, DJT and Nasdaq have all made new all time highs within the last month.

Modified Dow Theory (adding in technology as a barometer of our modern economy) sees all indices confirming the ongoing bull market.

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.

Published @ 11:41 p.m. EST.