Select Page

A very small range inside day changes the very short term picture only slightly. The Elliott wave targets remain the same and can today be supplemented by a classic analysis target using a reliable short term pattern.

Summary: The Elliott wave target is at 2,616 and a new target from a small pennant pattern is 2,617. Volume and On Balance Volume support this view, and the AD line today also supports this view.

Pullbacks should be used as opportunities to join the upwards trend.

If price makes a new low below 2,544, then a pullback should be expected to be underway. The target is at 2,533 to 2,527. This view has very little support today.

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.

Friday looks like a classic upwards breakout from a small consolidation. A breakout is a bullish signal.

The target for minor wave 3 expects to see the most common Fibonacci ratio to minor wave 1.

Within minuette wave (v), no second wave correction may move beyond the start of the first wave below 2,544.00.

Fibonacci ratios for this main wave count are better than for the alternate. This increases the probability of this main wave count slightly.


S&P 500 Hourly 2017
Click chart to enlarge.

The short term analysis is again changed today after more sideways movement. It looks like a small five up may be completing.

Because micro wave 3 is very slightly shorter than micro wave 1, micro wave 5 is limited to no longer than equality in length with micro wave 3, so that micro wave 3 is not the shortest actionary wave within the impulse of subminuette wave i and the core Elliott wave rule is met.

The small violet channel is drawn about subminuette wave i using Elliott’s second technique.

When subminuette wave i is complete, then subminuette wave ii may find support about the lower edge of the green Elliott channel if it gets that low.

If this short term analysis is correct, then subminuette wave ii may present another opportunity to join the upwards trend.



S&P 500 Daily 2017
Click chart to enlarge.

This alternate wave count will consider the possibility that minor wave 3 is complete and minor wave 4 is continuing as an expanded flat correction. The degree of labelling within minor wave 4 has been moved up one degree. If minute wave c continues over a few days, then minor wave 4 would have lasted about the right duration for a correction at minor degree, and would not be too disproportionate to minor wave 2 which lasted only three days.

A breach of the lower edge of the green Elliott channel about minute wave v would be expected when minute wave v is complete. If this happens, it would add substantial confidence that minute wave v is over and so minor wave 3 should be over.

Minor wave 4 may not move into minor wave 1 price territory below 2,299.55.


S&P 500 Hourly 2017
Click chart to enlarge.

Minute wave b is still within the most common range for a B wave within a flat correction. Because minute wave b is longer than 1.05 times the length of minute wave a, this may be an expanded flat correction, which is the most common type.

The appropriate Fibonacci ratio to apply to the target for minute wave c is 1.618. This gives a target close to the 0.146 Fibonacci ratio of minor wave 3.

So far minor wave 4 has lasted six days. If it continues for another two, it may end in a total Fibonacci eight sessions.

This wave count now requires a new low below 2,544.00 for reasonable confidence. The fact that upwards movement labelled minute wave b has good support from volume does not support this wave count; B waves should exhibit weakness, not strength.

For the very short term, the subdivisions at the five minute chart level do not support this wave count very well. The wave down here labelled minuette wave (i) looks like a double zigzag and not a five wave structure.



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

The Hanging Man candlestick requires bearish confirmation because the long lower wick has a strong bullish implication. Without that bearish confirmation, it should not yet be read as a reversal signal and only as a possibly developing reversal signal.

Overall, this chart is fairly bullish. Only extreme ADX sounds a warning, but most recently this has reached extreme at the weekly chart level and remained so for several weeks while price continued to rise. It may do so again.


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

The Harami may be indicating only a small consolidation, which now looks like a pennant pattern.

Pennants are one of the most reliable continuation patterns. The measured rule calculates a target about 2,617. Because this is only one point off the Elliott wave target, this area may offer strong resistance.

Volume and On Balance Volume still today strongly support 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 no short term divergence between price and inverted VIX. Mid term divergence is more often unreliable and will not be noted here nor given any weight.


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

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 longer term 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.

Short term bearish divergence noted on Friday between price and breadth has now been followed by two red daily candlesticks. This divergence may now be resolved.

There is new short term bullish divergence today. The AD line has made a new high above the high of the 27th of October, but price has not. With the AD line a leading indicator, this divergence is interpreted as bullish.


At the end of last week, DJIA and DJT have failed to make new all time highs. The S&P500 and Nasdaq have made new all time highs. DJIA and DJT have failed so far to confirm an ongoing bull market.

Failure to confirm an ongoing bull market should absolutely not be read as the end of a bull market. For that, Dow Theory would have to confirm new lows.

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 @ 06:53 p.m. EST.