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For the short term, a small pullback was expected at the hourly chart level before price turned and moved upwards again. This is exactly what has happened for Thursday’s session.

Summary: The Elliott wave target is at 2,616 and a target from a small pennant pattern is 2,617. The upwards trend has support from very bullish On Balance Volume and now today some support from volume.

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.

When minor wave 3 is complete, then minor wave 4 should find support about the lower edge of the best fit channel. Minor wave 4 may not move into minor wave 1 price territory below 2,299.55.

The next reasonable correction should be for intermediate wave (4). When it arrives, it should last over two months in duration. The correction may be relatively shallow, a choppy overlapping consolidation, at the weekly chart level.


S&P 500 Daily 2017
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Minute wave v is completing as an impulse. The final fifth wave of minuette wave (v) is underway.

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 waves i and now ii complete. Subminuette wave ii now looks like a completed three wave zigzag.

This wave count now expects to see some increase in upwards momentum over the next 24 hours as a small third wave up unfolds.

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.

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 far minor wave 4 may have lasted four days and the structure would be incomplete. It may end in a total Fibonacci eight or possibly even thirteen days.

A new correction at minor degree should begin with a five down at the hourly chart level. This has not happened, a three down only is complete. The probability of this wave count is reduced.

It is possible that minor wave 4 is beginning with a flat correction for minute wave a. Within the flat, minuette wave (b) must retrace a minimum 0.9 length of minuette wave (a). Minuette wave (b) may make a new high above the start of minuette wave (a) at 2,588.40 as in an expanded flat.

Upwards movement during today’s session has some reasonable support from volume. This reduces the probability of this alternate wave count; B waves should exhibit weakness, not strength.



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.

On Balance Volume remains very bullish, and today volume is also reasonably bullish. These two indicators will be given reasonable weight in this analysis, and they support the main hourly Elliott wave count and the target at 2,616 – 2,617.

There is still some weakness evident in divergence between price and RSI and Stochastics. This can develop further before price finds its high though. It will be taken as a warning that the trend is nearing an end, and not as a reversal signal.

A dragonfly doji is a signal in a downtrend, but not in the context of an upwards trend. It will be given no weight here.


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.

Short term bearish divergence noted in yesterday’s analysis has now been followed by a downwards day. It may now be resolved, or it may need one more downwards day to resolve it.

There is single day divergence today between inverted VIX and price: price moved lower, but inverted VIX has moved higher. Price did not come with a normal increase in volatility while price moved lower; volatility has declined. There is weakness within downwards movement today from price, and this divergence is interpreted as bullish.


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.

Bearish divergence noted in yesterday’s analysis between price and the AD line has now been followed by a downwards day. It may be resolved here or it may need one more downwards day to resolve it. There is no new divergence today between price and the AD line.


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 @ 08:47 p.m. EST.