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A quick spike up was expected to begin the week, but it was expected to move just above 2,469.64 before turning. Price has moved comfortably higher, reaching so far to 2,488.95.

Summary: In the short term, it is entirely possible that price may move higher tomorrow. There is weakness, but as yet no evidence that upwards movement is over. The lack of a candlestick reversal pattern or a long upper wick, along with only slightly lighter volume and support today from rising market breadth, indicates price may yet move a little higher.

This upwards swing is still expected to end here or very soon; strong resistance about 2,485 and 2,490 may force a turn. The next swing downwards may find support about 2,420.

In the short term, a new low below 2,459.99 would add confidence to the view that the upwards swing is indeed over and the next swing downwards has begun.

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 2,417.35 now. That would invalidate a new alternate published below.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 may have completed its fourth week.

If primary wave 4 unfolds as a single or double zigzag, then it may find support about the lower edge of the maroon Elliott channel. If it is a triangle or combination, it may be more shallow, ending about mid way within the channel.

At this stage, the analysis gets complicated because there are several possible structures that primary wave 4 may be. The ideas for a triangle, combination, double zigzag, and single zigzag will be separated out into different daily charts in order for members to have a clearer picture of how price may behave for each. It is still impossible for me to tell you with any level of confidence which structure primary wave 4 may take, so all possibilities must be considered. I can only say that a single or double zigzag, or a triangle, would be most likely to exhibit good alternation with the flat correction of primary wave 2.

The daily charts are presented below in order of probability based upon my judgement.

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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In order for members to compare and contrast this main wave count with the new alternate published below, it is necessary to publish a chart showing all movement from the low labelled intermediate wave (2), which is shown on the weekly chart. I would not want to try and see any alternate which does not have primary waves 1 and 2, and intermediate waves (1) and (2), in any other position than that labelled on the weekly chart. Any variation should be taken from that point.

This wave count fits with MACD. The end of a third wave is very often the strongest portion of MACD, and the middle of the third wave is very often the strongest portion of the histogram on MACD. In this way MACD can be used to assist in labelling an impulse.

It is very common for the S&P to exhibit Fibonacci ratios between only two of its three actionary waves within an impulse . Rarely will it exhibit Fibonacci ratios between all three actionary waves. The lack of a Fibonacci ratio for intermediate wave (5) and for minor wave 3 within it is entirely acceptable.

This wave count also fits neatly with the Elliott channel. It is extremely common for the end of a third wave within an impulse to overshoot the Elliott channel, because it is usually the strongest portion of movement.

This wave count has a neat fit in terms of subdivisions and fits with most common behaviour for this market. For this reason I have confidence in it.

The only problem here is one of proportion for minor wave 2 within intermediate wave (3). But then the S&P does not always exhibit nice proportion between its corrective waves.


S&P 500 Daily 2017
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This first daily chart will illustrate how price might move if primary wave 4 unfolds as a triangle.

Intermediate wave (B) may be continuing higher as a double zigzag. One of the five sub-waves of a triangle should be a more complicated multiple; most commonly that is wave C, but it may be any sub-wave. If intermediate wave (B) continues higher, it may make a new all time high as in a running triangle.

The triangle may still last a total of at least eight weeks, and possibly longer. If longer, then a Fibonacci 13 or 21 weeks may be expected.

Both intermediate waves (A) and (B) look like three wave structures.

Intermediate wave (C) may not move beyond the end of intermediate wave (A).


S&P 500 Daily 2017
Click chart to enlarge.

A combination for primary wave 4 would still offer some alternation with the regular flat of primary wave 2. Whenever a triangle is considered, always consider a combination alongside it. Very often what looks like a triangle may be unfolding or may even look complete, only for the correction to morph into a combination.

There may only be one zigzag within W, Y and Z of a combination (otherwise the structure is a double or triple zigzag, which is very different and is considered below). At this stage, that would be intermediate wave (W), which is complete.

Combinations are big sideways movements. To achieve a sideways look their X waves are usually deep (and often also time consuming) and the Y wave ends close to the same level as wave W.

Here, intermediate wave (X) is very deep.

Intermediate wave (Y) may be a flat correction or a triangle. A flat correction should be expected for intermediate wave (Y).

Intermediate wave (Y) may be unfolding as an expanded flat, the most common variety. So far minor wave B may be a 1.25 length of minor wave A, within the most common range of up to 1.38. If minor wave B reaches twice the length of minor wave A at 2,514.21, then the idea of an expanded flat should be discarded based upon a very low probability.

It is also possible that intermediate wave (X) is continuing higher as a double zigzag, as labelled on the triangle daily chart. While waves W, Y and Z within combinations may only be simple corrections labelled A-B-C (or A-B-C-D-E as in the case of triangles within combinations), the X waves within combinations may be any corrective structure including multiples. However, while this is valid, it is fairly unusual. I am always uncomfortable with labelling X waves as multiples until price proves in hindsight that they were, because of the low probability.

Minor wave C should move below the end of minor wave A. This structure may take another few weeks to complete.


S&P 500 Daily 2017
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While combinations and double zigzags are both labelled W-X-Y, they are very different structures.

Double zigzags (and very rare triples) belong to the zigzag family of corrections. Combinations are more closely related to flats (these are sideways movements). Double zigzags have a strong slope, as do single zigzags. The second zigzag exists when the first zigzag does not move price deep enough; its purpose is to deepen the correction.

To achieve a strong slope the X waves of double zigzags (and the very rare triple zigzags) are almost always brief and shallow. Here, intermediate wave (X) is neither brief nor shallow reducing the probability of this wave count.

With intermediate wave (X) today moving much higher and now subdividing as a multiple, the probability of this wave count is now extremely low. It is my judgement that today will probably be the last day this should be published.

Within the second zigzag, minor wave B may not move beyond the start of minor wave A.

It would still be possible for this wave count for primary wave 4 to end about the lower edge of the maroon channel on the weekly chart.

A channel is added about intermediate waves (W) and (X). For all three ideas at the daily chart level, if my labelling is correct, then any upwards movement at this stage should find very strong resistance at the upper edge of this channel. This channel is copied over to the hourly chart below.

The alternate that was published up until yesterday, which looked at a leading diagonal unfolding, will no longer be published today based upon a very low probability. While it remains technically valid, the second wave correction would now be much deeper than normal and would now subdivide as a double and not a single zigzag. Second and fourth waves within diagonals are almost always single zigzags; although double zigzags may take the place of single zigzags and the rules still be met, it is highly unusual.


S&P 500 Hourly 2017
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A double zigzag may be complete for intermediate wave (B) or intermediate wave (X).

Use the best fit channel. If price breaks below the lower edge, then expect the upwards swing is over and the next swing down has begun. While price remains within this channel, then it is entirely possible price may continue higher tomorrow; minute wave c may not be complete.


S&P 500 Daily 2017
Click chart to enlarge.

This alternate is new in response to concerns from members that primary wave 3 may not be over.

If primary wave 3 isn’t over, then how would the subdivisions fit? Would it fit with MACD? What would be the invalidation point and would the Fibonacci ratios be adequate?

Of several ideas I have tried today, this one has the best fit in terms of subdivisions and meets all Elliott wave rules.

However, this wave count is manufactured and forced. It does not fit with MACD. Because this possible third wave, if it is not over, exhibits long term and persistent weakness this wave count must be judged to have a very low probability. It is published primarily to illustrate why confidence is had in the main wave count. This wave count is not supported by the classic technical analysis given below, both at the weekly and daily chart levels, particularly the bearish signals recently given by On Balance Volume.

A target is provided for members who find that this wave count may fit with their own technical analysis, should they wish to attempt to trade an expected upwards movement.

Within minute wave v, no second wave correction may move beyond the start of its first wave below 2,417.35.



S&P 500 weekly 2017
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An inside week closes red and the balance of volume was down. Volume shows a slight decline; during the week, the market fell very slightly of its own weight. This will be read as neutral; the slight decline in volume is very small.

Overall, this chart is bearish. Give reasonable weight this week to the bearish signal from On Balance Volume because it supports the Elliott wave counts.


S&P 500 daily 2017
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Only if an upwards breakout to a new all time high is seen, which very importantly should have support from volume, would the view that price is consolidating have to change.

Price is still within a consolidation zone. Expect swings from resistance to support and back again. Stochastics is now again overbought and now exhibits clear short term divergence with price at the new high today. This is a very typical look and very often is followed by a downwards swing.

ADX, Bollinger Bands, and now maybe also ATR, all agree that price is consolidating. This is what should be expected for a larger correction such as primary wave 4, and this supports the main Elliott wave count.

For the very short term, there is weakness today from volume but the candlestick is strong. It is entirely possible that price may yet move higher tomorrow and then exhibit multiple divergence with Stochastics. For confidence in the end to this upwards swing and the next swing down beginning, I would prefer to see a candlestick reversal pattern or a candlestick with a long upper wick. There is neither today.

Price does not move in straight lines within consolidations. It may also overshoot resistance or support before turning. Stochastics may remain overbought or oversold for a while; it is not an exact timing tool for price turns. This makes trading consolidations very risky. Typically, swing trading systems will have a series of small profits and a few large losses. Please manage risk carefully using my two Golden Rules:

1. Always use a stop.

2. Invest only 1-5% of equity on any one trade. Less experienced members should reduce that to 1-3%.


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 regular bearish divergence today between price and inverted VIX: price has made a higher high beyond the prior short term high five sessions ago, but inverted VIX has failed to make a corresponding high. This indicates that upwards movement for price does not have a normal corresponding decline in market volatility, that there is weakness here within price.


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 no new divergence today between price and the AD line. The new short term swing high today for price comes with normal increase in market breadth above the same point five days ago. The rise in price today is supported by a corresponding rise in market breadth.


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 @ 10:50 p.m. EST.