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The short term target for upwards movement was 2,540 to 2,541 on the hourly chart. Price moved up to sit right within this small one point zone, to 2,540.53.

Summary: Another day with divergence from VIX and now divergence with the AD line is bearish for the short term. Look out for a pullback here. Confidence may be had in a pullback or small consolidation underway if price makes a new low below 2,528.85.

A new high above 2,540.53 would indicate a pullback has not begun; a new short term target is at 2,548 to 2,550.

The trend remains up. Go with the trend. Corrections are an opportunity to join the trend. Only the most experienced and nimble of traders may consider trading a smaller correction short. Most traders should wait until the correction is complete before entering long.

Always trade with stops and invest only 1-5% of equity on any one trade.

Last monthly and weekly charts are here. Last historic analysis video is here.



S&P 500 Weekly 2017
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This wave count has strong support from another bullish signal from On Balance Volume at the weekly chart level. While classic analysis is still very bullish for the short term, there will be corrections along the way up. Indicators are extreme and there is considerable risk to the downside still.

As a Grand Super Cycle wave comes to an end, weakness may develop and persist for very long periods of time (up to three years is warned as possible by Lowry’s for the end of a bull market), so weakness in volume may be viewed in that larger context.

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

The next reasonable correction should be for intermediate wave (4). When it arrives, it should last over two months in duration, and it may find support about the lower edge of this best fit channel. The correction may be relatively shallow, a choppy overlapping consolidation, at the weekly chart level.


S&P 500 Daily 2017
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To see details of the whole of primary wave 3 so far see the analysis here.

Minute wave v to complete minor wave 3 must subdivide as a five wave structure. It looks like an incomplete impulse. So far it looks like minuette waves (i) and (ii) are complete with minuette wave (iii) now very close to completion.

When minuette wave (iii) is complete, then minuette wave (iv) may not move back down into minuette wave (i) price territory below 2,454.77.

A new target is calculated for minuette wave (iii) to end. The target would see no Fibonacci ratio at minuette degree, but it would see a ratio at subminuette degree within minuette wave (iii).

So far minuette wave (iii) has lasted 25 sessions. The structure may now be complete at the hourly chart level.


S&P 500 Hourly 2017
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The structure of subminuette wave v and so all of minuette wave (iii) may now be complete.

A small violet channel is drawn about subminuette wave v. When this channel is breached by downwards movement, it shall be indicating that subminuette wave v is over and the next wave should be underway.

The next wave should be a consolidation or pullback for minuette wave (iv). Minuette wave (iv) may not move into minuette wave (i) price territory below 2,454.77.

A new low below 2,528.85 would invalidate the alternate hourly wave count below and provide some confidence in this main wave count.

There are more than 23 possible corrective structures that minuette wave (iv) may be. It should begin with a small five down at the hourly chart level. While that is incomplete, the first small second wave correction within it may not move beyond the start of its first wave above 2,540.53.

Once there is some structure within minuette wave (iv) to analyse, then alternate wave counts will be used to cover the various scenarios of how it may unfold. For corrections the Elliott wave focus should be on identifying when they may be complete, not on trying to identify the small sub-waves within them because there is too much variation possible.

Minuette wave (ii) was a deep zigzag lasting five days. Expect minuette wave (iv) to exhibit alternation and to be shallow, and most likely a flat, combination or triangle.


S&P 500 Hourly 2017
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By simply moving the degree of labelling within micro wave 5 down one degree, it is possible that minuette wave (iii) is not yet over.

Sub-micro wave (2) may not move beyond the start of sub-micro wave (1) below 2,528.85.



S&P 500 weekly 2017
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The candlestick is bullish. On Balance Volume is very bullish. MACD is now bullish. ADX remains bullish.

ADX is extreme but not by much.

This analysis strongly supports the main Elliott wave count. The trend is up. Keep all trades with the trend. Always use stops as there is always risk to the downside. Invest only 1-5% of equity on any one trade to manage risk.

From the small flag pattern, using the measured rule gives a target about 2,520; this is nicely close to the Elliott wave target.


S&P 500 daily 2017
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Although RSI and Stochastics do not yet exhibit divergence today with price to indicate any weakness, there is divergence with VIX and the AD line noted below.

A decline in volume for two days supports the main hourly Elliott wave count.

While the Three White Soldiers pattern is bullish, it can make no comment on how far price may move upwards after it appears.

ADX rising from a low level and below both directional lines is the strongest signal it can give. It is giving a strong signal here that a bull trend is in the early stages. This makes no comment on when a small consolidation or pullback may appear, so it should be used as an opportunity to join an established upwards trend if that happens.

The trend is up.


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 still mid and longer term bearish divergence, but it has been noted in the past that divergence over a longer term does not seem to work as well for VIX. Short term bearish divergence has disappeared.

Price has moved higher for two days in a row now, but volatility has not shown a normal corresponding decline: inverted VIX has moved lower. This indicates weakness within price and is bearish.


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.

The rise in price today is not supported by a rise in market breadth. The AD line should be treated as a leading indicator, and today it shows weakness in price. This divergence is bearish and supports the main hourly Elliott wave count.

The mid and small caps have also made new all time highs. The rise in price is supported in all sectors of the market. Lowry’s measures of supply and demand continue to show expanding demand and contracting supply, which is more normal for an early bull market. This market shows reasonable internal health.

Go with the trend. Manage risk.


The S&P’s new all time high is confirmed by DJIA and Nasdaq also making new all time highs. DJT has also now made new all time highs, so the continuation of the bull market is now confirmed.

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 @ 12:05 a.m. EST on 5th October, 2017.