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A bullish signal yesterday has now been followed by another upwards day. Support from volume means a more bullish wave count is considered.

Summary: The bigger picture sees the S&P now in a primary degree pullback to last a minimum of 8 weeks and find support at the maroon channel on the weekly chart.

This consolidation may be choppy and overlapping. If it is a running triangle or combination, it may include a new all time high. A new alternate looks at these possibilities. It expects more upwards movement and has support from classic analysis.

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, which is the start of minor wave 5 within intermediate wave (5). A new low below 2,405.70 may not be a second wave correction within an extending fifth wave, so at that stage the final fifth wave must be over. 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. So far it has lasted only two weeks.

If primary wave 4 reaches down to the lower edge of the Elliott channel, it may end about 2,325. This is within the 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.

The final target for Grand Super Cycle wave I to end is at 2,500 where cycle wave V would reach equality in length with cycle wave I. 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.


S&P 500 Daily 2017
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The daily chart will now focus in on the unfolding structure of primary wave 4.

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. A new alternate is published today which perfectly illustrates the flexibility required when price is consolidating.

Intermediate wave (A) is labelled as an unfolding leading expanding diagonal today. The impulse has been invalidated by today’s upwards movement.


S&P 500 hourly 2017
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The leading diagonal is changed today to see all of minor waves 1 through to 3 complete, and possibly minor wave 4 also complete.

Minor wave 2 is 0.70 the depth of minor wave 1 and so far minor wave 4 is 0.75 the depth of minor wave 3. Both are within the common range of 0.66 to 0.81.

Within leading diagonals, the first and third and fifth waves are most commonly zigzags but may also appear to be impulses. Both minor waves 1 and 3 may be impulses.

Minor wave 2 may be a double zigzag instead of a single; doubles may take the place of singles.

This wave count meets all Elliott wave rules.

Minor wave 4 may not move beyond the end of minor wave 2 above 2,474.93. If this price point is passed, then I will again consider the diagonal as labelled up until today, in yesterday’s alternate.

Minor wave 5 must be longer than minor wave 3, which was 57.58 points.



S&P 500 daily 2017
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Primary wave 4 may be any one of more than 23 possible corrective structures. With what looks clearly like a three down complete and now a bounce unfolding, minor wave 4 may be beginning as a triangle or combination. Both those structures would still offer alternation with the flat of minor wave 2.

Intermediate wave (A) would be too brief if it was over at the low labelled minor wave A. Intermediate wave (A) may be unfolding as a three wave structure, either a combination, flat or double zigzag.

If intermediate wave (A) is to be a flat correction, then within it minor wave B must retrace a minimum 0.9 length of minor wave A at 2,483.52. The most common type of flat is an expanded flat, which would see minor wave B make a new all time high.

If intermediate wave (A) is to be a combination, then there is no minimum requirement for minor wave X, nor is there a maximum. It may make a new all time high.

If intermediate wave (A) is to be a double zigzag, then minor wave X should be relatively shallow. It may end here or very soon indeed. Minor wave Y should deepen the correction with a new low.

If intermediate wave (A) is a three, then that indicates a flat or triangle for primary wave 4.

There is no upper invalidation point for this wave count.


S&P 500 hourly 2017
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This chart tries to illustrate multiple structures for intermediate wave (A).

How high the current bounce goes may begin to tell us which structure intermediate wave (A) may be. If the minimum requirement for a flat correction is met at 2,483.52, then intermediate wave (A) may be a flat correction and a new all time high would be very likely. An expanded flat would require minor wave B to reach to 2,494.55 or above to be 1.05 the length of minor wave A.

If the minimum requirement for a flat is not met, then intermediate wave (A) may be a double combination or a double zigzag.

A combination is a sideways movement. A double zigzag should have a strong slope.



S&P 500 weekly 2017
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Last week has made a lower low and lower high, but the candlestick closed green and the balance of volume was upwards. Lighter volume does not support the rise in price during the week.

ADX had been extreme for a long time and is now declining. The black ADX line is now declining but has not yet been pulled down below both directional lines, so the consolidation or pullback may be expected to continue.


S&P 500 daily 2017
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Resistance today halted the price rise about 2,460. Look for next resistance about 2,470.

Volume and On Balance Volume support the alternate Elliott wave count. MACD is still bearish, but looks like it may be about to offer a bullish crossover. Neither RSI and Stochastics are yet extreme, so there is room for more upwards movement.

ATR and Bollinger Bands indicate the trend is weak.


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 no new divergence today. Rising price comes with a normal decline in volatility.


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 breadth and the highs in price from the 16th of August to today: the AD line has made new highs, but price has not. This indicates weakness in price. It is hidden bearish divergence.

However, mid term divergence such as this does not seem to be as reliable as shorter term, so it will be given no weight in this analysis.


The S&P500, DJIA, DJT and Nasdaq have all made new all time highs recently.

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 @ 08:31 p.m. EST.