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Price completed an outside day, mostly sideways movement to close as a small range doji. On Balance Volume gives another important signal today which may tell us what direction price may move tomorrow.

Summary: Another bearish signal as On Balance Volume moves down from resistance supports the idea that primary wave 4 is still underway. This idea now expects a downwards swing from here.

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, a single zigzag has been invalidated and a double zigzag is discarded based upon a very low probability. It looks like primary wave 4 is to be a very shallow sideways consolidation rather than a deeper pullback.

Only two daily charts are now published for primary wave 4: a triangle and a combination. It is impossible still for me to tell you with any confidence which of these two structures it may be. The labelling within each idea may still change as the structure unfolds.

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. The target at 2,500 now looks to be too low, particularly if primary wave 4 is shallow.


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. Intermediate wave (B) has made a new all time high, so it may be a running triangle.

The triangle may still last a total of at least eight weeks, but so far it is ending its fifth week and may only be completing wave B. It now looks like it will need to take 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 Hourly 2017
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A double zigzag may be complete for intermediate wave (B).

Use the black 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 again tomorrow; minute wave c may not be complete.

The low for today’s session may have been the end of a small expanded flat correction for minuette wave (iv). If this labelling is correct, then there is now perfect alternation between a quick zigzag for minuette wave (ii) and a more time consuming expanded flat correction for minuette wave (iv). The channel about minute wave c is drawn using Elliott’s second technique.

A breach of this channel by downwards movement tomorrow would be the earliest indication that intermediate wave (B) would be over. For reasonable confidence the wider black best fit channel would still need to be breached.

A new low below 2,459.99 could not be a second wave correction within minute wave c, so at that stage minute wave c would have to be over. That would provide strong price confirmation of a trend change.


S&P 500 Daily 2017
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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 now discarded). 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 1.53 length of minor wave A, slightly longer than 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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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, 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.

Despite a green candlestick, today it has closed as a doji and the balance of volume was downwards during the session. There is no strong bullish signal today from On Balance Volume to swap over the wave counts. This remains an alternate.

Low probability does not mean no probability. Low probability outcomes do occur sometimes, and when they do they are never what was expected as most likely. That is the nature of probability.



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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We have an upwards breakout to a new all time high, but it does not have support from volume. Upwards breakouts that are not supported by volume are suspicious. Be suspicious of this one.

However, it is noted that fairly recently on this chart there is evidence of a sustained upwards bull wave that began with weak and declining volume back on the 18th and 19th of May. Those two daily candlesticks also had long upper wicks suggesting bearishness, yet price continued to drift higher before finally turning into a sideways consolidation 10 sessions later. It is possible that may happen again. At this time, this market is exhibiting some highly unusual characteristics, such as the ability to drift higher on light and declining volume. This does make technical analysis and trading so much more difficult.

Today completed a green doji, which was an outside day, and importantly the balance of volume during the session was downwards. This means that On Balance Volume today gives another bearish signal. All recent signals from On Balance Volume have been bearish at both the daily and weekly chart level. This supports the main Elliott wave count.

Volume for this session is slightly higher. With the balance of it downwards, this is interpreted as support for downwards movement during the session, and it is bearish.

Only moving averages and MACD are bullish.


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.

Regular bearish divergence between price and inverted VIX noted over the last two days has not been followed by any downwards movement, so it is considered to have failed.

With the new high today from price, there is still regular bearish divergence between price and inverted VIX. The new high in price does not come with a corresponding normal decline in market volatility, so there is weakness within price.

During this session, price completed an outside day and the balance of volume was downwards. Volatility has slightly declined during the session and this may be interpreted as bullish for the very short term, but it is so weak a signal it will not be given any weight.


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 again no new divergence today between price and the AD line. The new high today for price has support from rising market breadth. This is bullish.


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 @ 08:28 p.m. EST.