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The short term Elliott wave count is changed but the target remains the same. A new alternate Elliott wave count with a new short term target fits continuing bearishness with indicators, notably market breadth, VIX and RSI.

Summary: The structure is now incomplete and at least one more high, if not a few more days of upwards movement, should be expected now before a pullback.

The more bearish Elliott wave count has a target at 2,579; thereafter, it expects a strong pullback. The main Elliott wave count still has the same target at 2,602 to 2,614.

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 now looks like it could be complete at this time frame, but the subdivisions at the hourly time frame do not look complete. Minute wave v could be over very soon.

Upwards movement from the low labelled minuette wave (iv) has now moved further then twice the length of subminuette wave a; upwards movement should no longer be considered to be a possible continuation of minuette wave (iv) as now subminuette wave b within it would be longer than twice the length of subminuette wave a. This alternate idea, which was published as an hourly chart up to yesterday, is now discarded.

This adds confidence that minuette wave (iv) must be over, even though it was surprisingly brief.


S&P 500 Hourly 2017
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With continued bullishness in price and a correction today that does not overlap the last small swing high, it is possible that minute wave v is continuing further as an impulse and has just passed the middle of its third wave today.

Minuscule wave 4 may not move into minuscule wave 1 price territory below 2,559.47. While price remains above this point (prior to a new all time high), then assume the upwards trend remains intact.

If price makes a new high, then the invalidation point must immediately move lower to 2,557.65. A new all time high could be the end of sub-micro wave (3). The following correction for sub-micro wave (4) may not move into sub-micro wave (1) price territory below 2,557.65.


S&P 500 Hourly 2017
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It is possible that minute wave v is closer to an end than the main hourly wave count expects.

I have tried to see if the structure of minute wave v could be labelled as complete and meet all Elliott wave rules. So far I have not been able to find a solution; there is too much overlapping.

This wave count expects that subminuette wave i was a leading contracting diagonal. This structure looks typical, but the only thing that is atypical is the shallow correction of subminuette wave ii following the leading diagonal. Second wave corrections following first wave leading diagonals are more commonly very deep.

Subminuette wave iii will subdivide very neatly so far as an impulse. The final fifth wave of micro wave 5 is very slightly truncated. In this context of weakness there may now be enough of a developing pull to the downside to force a small truncation.

This wave count requires only one more high for the structure to be complete. The target assumes the most common Fibonacci ratio for minuette wave (v).

Thereafter, minor wave 4 may begin. It may last a few days and may end somewhere within the price territory of the fourth wave of one lesser degree.



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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Price continues to rise despite overbought conditions and persistent bearish divergence. Volume overall continues to decline, yet price rises.

This upwards movement is weak and a pullback or consolidation will come, but it has not arrived yet. Assume the trend remains the same until proven otherwise. Proven otherwise would be a candlestick reversal pattern on the daily chart.


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 bearish divergence. Price has made another all time high, but inverted VIX has not. Upwards movement of price is weak. But so far this divergence has failed in the last two instances to lead to any pullback.


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 last two sessions that saw price rise and breadth fall has not led to any pullback. This bearish divergence may have failed, or it may be an early warning of a sharp and deep pullback.

There is still bearish divergence between highs: price has again made a new all time high, but market breadth has not yet made a corresponding high. This indicates weakness within price, that it does not have support from breadth.

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 @ 07:53 p.m. EST.