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A new all time high to begin the new trading week continues the upwards trend, which is what the last Elliott wave and volume analysis expected.

Summary: There is bearish divergence today with price and the AD line, RSI, Stochastics and volatility.

While the trend remains up, look out for at least a short term pullback to begin tomorrow. Look for one to a few red daily candlesticks here. The first target is about 2,548 minimum. If price makes a new swing low below 2,541.60, then the target is at 2,531.

This pullback may be used as an opportunity to enter the upwards trend. Only the most experienced of traders should consider trading it short.

Always trade with stops and invest only 1-5% of equity on any one trade. If trading a correction against the larger trend, then reduce risk to 1-3% of equity.

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. 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
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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.

Upwards movement from the end of minuette wave (iv) is today relabelled. A leading contracting diagonal may have just ended at Monday’s high, and this may be subminuette wave i within minuette wave (v). The only problem with this leading diagonal is the overshoot of the lower 2-4 trend line; this does not look typical. The structure does meet all Elliott wave rules.

Second wave corrections following first wave leading diagonals are most commonly very deep. If the 0.618 Fibonacci ratio as a target is wrong, it may not be low enough for subminuette wave ii.

Subminuette wave ii may not move beyond the start of subminuette wave i below 2,541.60.


S&P 500 Hourly 2017
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If minuette wave (iv) is not over, then it may continue for another one day to total a Fibonacci eight. However, this now looks to be too quick an expectation. The next Fibonacci number in the sequence is 13, which would see minuette wave (iv) continue now for six more days.

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 still be a little too low if this channel offers strong support.

The structure within subminuette wave b upwards is relabelled today. Seeing this upwards wave as a zigzag has a better fit than trying to see it as a five for the main hourly wave count.

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
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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
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Volume declining for two days in a row as price moves higher, double divergence with RSI, and now triple divergence with Stochastics, all indicate an extreme upwards movement which is highly susceptible to a pullback or consolidation about here.

Only On Balance Volume remains very 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.

Price moved higher today with a higher high and a higher low and a green daily candlestick. However, volatility did not show a normal decline and increased as inverted VIX moved lower. This single day divergence indicates weakness today 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.

While price has made a new all time high for Monday, it does not have support from market breadth. The AD line can be a leading indicator. The decline today in market breadth is bearish and supports the hourly Elliott wave counts which expect a pullback or consolidation to begin here.

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 @ 08:48 p.m. EST.