Select Page

More upwards movement was expected from the main hourly Elliott wave count and from the summary in last analysis.

Summary: The correction may be over; while price remains above 2,548.31 now, this should be the expectation. The next target is at 2,602 to 2,614. However, there is less bullishness and more weakness today, so a little less support for this view.

While the trend is clearly up, overbought conditions illustrate risk here to long positions.

A new low below 2,548.31 would indicate the pullback is not over and a target for it to end would now be at 2,527 to 2,523. If this happens, then use it as an opportunity to add to long positions. The trend remains up.

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
Click chart to enlarge.

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
Click chart to enlarge.

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. It looks like minuette waves (i) through to (iv) may now be complete despite minuette wave (iv) lasting only two sessions. The problem of proportion may be accepted if bullishness in classic analysis correctly predicts more upwards movement.

If it continues any further then minuette wave (iv) may not move back down into minuette wave (i) price territory below 2,454.77. If it continues further, then minuette wave (iv) may end to total a Fibonacci eight sessions and have good proportion with minuette wave (ii).


S&P 500 Hourly 2017
Click chart to enlarge.

It is possible that minuette wave (iv) may have been a flat correction. The downwards wave labelled subminuette wave a will subdivide as either a three or a five on the five minute chart. This wave count looks at it as a three which would give alternation for minuette wave (iv) as a flat correction to the zigzag of minuette wave (ii).

The target may now be calculated at two wave degrees, so it is widened to a rather large zone. When subminuette waves i through to iv are complete, then it can be calculated at a third degree. At that stage the zone may be narrowed.

Minuette wave (v) may have begun with a leading contracting diagonal for subminuette wave i and a relatively deep 0.51 zigzag for subminuette wave ii, which is finding support about the mid line of the green Elliott channel.

If subminuette wave iii is underway, then micro wave 1 may be complete and micro wave 2 may have either completed or continue lower on Monday. It may not move beyond the start of micro wave 1 below 2,548.31.

Prior to any invalidation, it is safest to assume the trend remains the same, upwards.


S&P 500 Hourly 2017
Click chart to enlarge.

If minuette wave (iv) is not over, then it may continue for another two days to total a Fibonacci eight.

There are still multiple structural options for minuette wave (iv). Today, it is labelled as the most common option, an expanded flat. But it may still morph into a combination or complete as a running triangle.

An expanded flat may see minuette wave (iv) come lower to test support at the lower edge of the green Elliott channel. The target calculated may be a little too low if this channel offers strong support.

This alternate wave count would see minuette wave (iv) still exhibit good proportion with minuette wave (ii), and they would have perfect alternation. At the daily chart level, this wave count would give the structure of minute wave v a better look.



S&P 500 weekly 2017
Click chart to enlarge. Chart courtesy of

Again, this week this chart remains very bullish. A doji on its own is not a reversal signal, and doji may appear as small pauses within upwards trends.

RSI is overbought and exhibits longer term divergence with price, but not short term. If short term divergence develops, then a pullback would be more likely. RSI may move higher to further overbought and may remain there for a reasonable period of time during a strong bull trend in the S&P500. On its own, it does not mean a pullback must happen here and now; it is just a warning at this stage for traders to be cautious and manage risk. Overbought conditions mean the risk of a pullback is increasing.


S&P 500 daily 2017
Click chart to enlarge. Chart courtesy of

Thursday’s session moved price higher, but the balance of volume was downwards. Higher volume supported that downwards movement during Thursday’s session.

Now Friday’s session has also moved price higher with a balance of volume upwards. Lighter volume did not support upwards movement during Friday’s session.

The short term volume profile is thus bearish. This offers a little support to the alternate Elliott wave count.

ATR, RSI and Stochastics also offer support to the alternate Elliott wave count.

On Balance Volume, ADX, MACD and Bollinger Bands offer support to the main Elliott wave count.


VIX daily 2017
Click chart to enlarge. Chart courtesy of

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 bearish divergence for Friday between price and inverted VIX. The new all time high for price does not come with a normal corresponding decline in market volatility; the rise in price is weak.


AD Line daily 2017
Click chart to enlarge. Chart courtesy of

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 again made a new all time high for Friday. As this should be read as a leading indicator, it supports the main hourly Elliott wave count. This is bullish.

Small, mid and large caps have all made new all time highs. 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 @ 07:35 p.m. EST on 14th October, 2017.