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A breach of the small channel indicated the alternate hourly Elliott wave count should be used. Thereafter, downwards movement was expected. The candlestick has closed red today.

Summary: A pullback or consolidation has most likely begun. It may be shallow, choppy, overlapping, and last only a few days. For the very short term, a little upwards movement may unfold tomorrow before another downwards day.

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), (ii) and now (iii) are all complete.

Minuette wave (iv) may not move back down into minuette wave (i) price territory below 2,454.77.

Given the guideline of alternation, minuette wave (iv) may be expected to be a combination, flat or triangle. Within all of these options, a new all time high is possible as part of an expanded flat, running triangle or combination. There is no upper invalidation point for this reason.

Minuette wave (iv) may last about a Fibonacci five or eight days to have good proportion to minuette wave (ii), so that the wave count has the right look. Minuette wave (iv) may find support about the lower edge of the green Elliott channel if it gets down that low.


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 drawn about subminuette wave v is breached by downwards movement, 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.

There are more than 23 possible corrective structures that minuette wave (iv) may be. On the five minute chart, downwards movement from the last all time high subdivides neatly as a zigzag. This may be subminuette wave a or w of a flat, triangle or combination for minuette wave (iv).

If minuette wave (iv) unfolds as a flat correction, then within it subminuette wave b must retrace a minimum 0.9 length of subminuette wave a at 2,551.42. If minuette wave (iv) is the most common type of flat correction, an expanded flat, then subminuette wave b must be a minimum 1.05 length of subminuette wave a at 2,553.06. The most common length of subminuette wave b within a flat correction would be from 1 to 1.38 the length of subminuette wave a giving a range from 2,552.51 to 2,556.66.

If minuette wave (iv) unfolds as a combination, then the first structure in the double may be complete as a zigzag labelled subminuette wave w. Subminuette wave x should be deep and may make a new all time high. Thereafter, subminuette wave y would most likely be a flat correction.

If minuette wave (iv) unfolds as a triangle, then subminuette wave b may also make a new all time high as in a running triangle.

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. It may last a total Fibonacci three, five or eight days.



S&P 500 weekly 2017
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This chart remains very bullish, but with RSI now overbought for a little while the upwards trend may see a pullback soon to relive this overbought condition.

ADX is now again fully bullish at the weekly chart level as the black ADX line returns to below the directional lines.

The decline in volume for the last completed week is slightly bearish, but this bull run has done this before and yet price has continued higher. On its own this will not be taken as a sign that a pullback or consolidation must begin here. The bull run could continue yet for weeks.


S&P 500 daily 2017
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The short term volume profile remains bullish. The last two sessions have a balance of volume downwards and both exhibit declining volume. The market is falling of its own weight.

RSI still does not exhibit divergence with price; no weakness here is indicated. There is small weak single divergence with price and Stochastics. With a red candlestick, today it looks like a small pullback may have begun to relieve overbought conditions.

The strongest signal ADX can give is with the ADX line rising from a low level and below both directional lines. That has been the case here for ADX. With ADX at the weekly chart level no longer extreme, there is room for this bull run to continue for some time.

This chart is extremely bullish. The trend is up. While indicators are extreme and overstretched now, they can remain so for a while when this market has a strong bull move.

Always manage risk. It is the most important aspect of successful trading.


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 hidden bullish divergence today between price and inverted VIX. Downwards movement from price today did not come with a normal corresponding increase in volatility to the same point achieved several sessions ago. This indicates weakness in price. This divergence supports the short term expectation of a bounce for the hourly chart.


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 AD line has made another new low below the low of three sessions ago, but price has not. As the AD line can be a leading indicator this divergence will be interpreted as bearish. This offers some overall support to the idea of a pullback or consolidation beginning here.

Small, mid and large caps have all made new all time highs last week. The rise in price is supported in all sectors of the market.

Go with the trend. Manage risk.


All the indices are making new all time highs. The continuation of the bull market is 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 @ 09:45 p.m. EST.