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Upwards movement was expected to continue from last analysis, which is what has happened. The short and long term targets remain the same.

Summary: The Elliott wave target is at 2,616 and a new target from a small pennant pattern is 2,617. While On Balance Volume remains very bullish, weakness today from volume and bearish divergence with the AD line and RSI indicate weakness here. It is possible that a multi day pullback may begin here and the target may not be met.

However, assume the trend remains the same until proven otherwise. The trend is up.

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

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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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.


S&P 500 Hourly 2017
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Assume the trend remains the same until proven otherwise. Assume the trend remains up while price remains within the green channel and above 2,544.

Minuette wave (v) must subdivide as a five wave structure. It may be an impulse with subminuette wave i complete. Subminuette wave ii may continue a little lower tomorrow to end about the 0.382 or 0.618 Fibonacci ratios. Because the 0.618 Fibonacci ratio would see the green channel overshot, the 0.382 Fibonacci ratio looks more likely in this instance.

A breach of the green channel by downwards movement would be the earliest indication that this first wave count may not be correct. If that happens, then seriously consider the alternate hourly wave count below.


S&P 500 Hourly 2017
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This alternate simply moves the degree of labelling within the last five up all up one degree. It is possible again that minor wave 3 could be over.

A new correction at minor degree should begin with a five down on the hourly chart. While this is incomplete, no second wave correction may move beyond its start above 2,588.40.

Minor wave 2 was a quick shallow 0.16 zigzag lasting just three days. Minor wave 4 should also show up at the daily chart level. It may be a sideways consolidation, subdividing as a flat, combination or triangle, to exhibit alternation with the zigzag of minor wave 2. These structures are often more time consuming than zigzags, so a Fibonacci five or eight days may be likely.



S&P 500 weekly 2017
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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
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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.

There is some weakness, now becoming evident, with double divergence between price and RSI, the same with Stochastics, and weakness today from Volume and contracting Bollinger Bands.

On Balance Volume remains very bullish though.

This weakness signals risk to long positions, but on its own is not enough to signal a trend change from up to down or sideways.


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 new short term divergence today between price and inverted VIX: price has made a new high above the prior high of three days ago, but inverted VIX has not. The upwards movement in price has not come with a normal corresponding decline in market volatility. This divergence is bearish.


AD Line daily 2017
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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.

Bullish divergence noted yesterday has been followed by an upwards day to a new all time high. It may now be resolved, or it may need another upwards day to resolve it.

There is new mid term divergence now between price and the AD line: price has today made a new all time high above the high seven sessions ago, but the AD line has not made a corresponding new high. This divergence is bearish and indicates that the rise in price today does not have support from rising market breadth, so price is weak.


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 @ 07:26 p.m. EST.