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A consolidation or pullback was expected to continue. Price has moved lower today and remains within the consolidation zone.

Summary: The target for a multi day pullback is now about 2,539. Today, this is supported by bearish divergence with price and the AD line, price and inverted VIX, and On Balance Volume at resistance.

Pullbacks and consolidations at their conclusions offer 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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Cycle wave V must complete as a five structure, which should look clear at the weekly chart level. It may only be an impulse or ending diagonal. At this stage, it is clear it is an impulse.

Within cycle wave V, the corrections for primary wave 2 and intermediate wave (2) both show up clearly, both lasting several weeks. The respective corrections for intermediate wave (4) and primary wave 4 should also last several weeks for the wave count to have the right look at the weekly and monthly time frames, so that they show up at weekly and monthly time frames.

Cycle wave V has passed equality in length with cycle wave I, which would be the most common Fibonacci ratio for it to have exhibited. The next most common Fibonacci ratio would be 1.618 the length of cycle wave I.

Intermediate wave (3) looks incomplete. It may only subdivide as an impulse. Within intermediate wave (3), minor wave 4 is currently unfolding and may not move into minor wave 1 price territory below 2,299.55. However, minor wave 4 should remain contained within the yellow best fit channel if this wave count is correct.


S&P 500 Daily 2017
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Price has today properly broken out of a channel which contains minute wave v (green channel). A full daily candlestick is now outside and not touching the channel; this constitutes a breach, and is an indication that minute wave v should be over. If the wave count is right at higher degrees, then that means that minor wave 3 should be over.

Minor wave 4 is so far a very shallow and overlapping sideways movement. When it is complete, the breakout is expected to be upwards. Minor wave 4 may end when price finds support about the mid line of the yellow best fit channel.

Minor wave 4 may be any one of multiple corrective structures. The only structures which may be reasonably eliminated today are those in the zigzag family (single and multiple zigzags) if the start of minor wave 4 is correctly labelled.

Minor wave 4 may still be any one of a different type of flat, triangle or combination. At this stage, a triangle does not have a good fit, so a flat and combination are considered in two hourly wave counts below.

At its end, minor wave 4 should offer a good entry point to join the upwards trend.

To label minor wave 4 as complete at the last low would be to see it as a rare running flat. The rarity of this structure means it is highly unlikely.


S&P 500 Hourly 2017
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Minor wave 4 may be a combination. The first structure in the double combination may be a completed zigzag labelled minute wave w. The double may be joined by a complete three in the opposite direction labelled minute wave x.

Minute wave y may be a flat or triangle. It may not be a zigzag, because then minor wave 4 would not be a double combination but a double zigzag. Double zigzags are very different structures to combinations; they should have a strong slope against the prior trend and their X waves should not make new price extremes.

Within minute wave y, if it is a flat correction, minuette waves (a) and (b) should both be three wave structures. Minuette wave (b) must retrace a minimum 0.9 length of minuette wave (a).

When the length of minuette wave (b) is known, then a target may be calculated for minuette wave (c). It would be expected to be reasonably close to the end of minute wave w at 2,566.17, so that minute wave y ends about the same point. Double combinations are sideways movements and to achieve a sideways look the second structure in the double normally ends close to the same level as the first.


S&P 500 Hourly 2017
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This wave count does not have such a good look as the first, but all possibilities that I can see are considered today.

Minor wave 4 may be a flat correction and minute wave b within it may be a triangle. Minute wave b at its end must effect a 0.9 retracement of minute wave a, so it needs to end at the minimum requirement or above.

If the triangle is correctly labelled, then only minuette wave (e) may be required to complete it. It may overshoot the (a)-(c) trend line. Minuette wave (e) may not move beyond the end of minuette wave (c) above 2,587.66.



S&P 500 weekly 2017
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Last week moves price higher with a higher high and a higher low, but the candlestick closed red and the balance of volume was down. Volume did not support downwards movement during the week; this is slightly bullish, but it would be better to look inside the week at daily volume to make a clearer judgement.

With ADX now extreme and RSI exhibiting divergence while overbought, some pullback to resolve this seems a reasonable expectation.

The overall trend does remain up though, so pullbacks are still an opportunity to join the trend.


S&P 500 daily 2017
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A triple bottom is a rare pattern and failure rates are very low. The breakout should be upwards. The second peak here is slightly higher than the first; this is favourable.

The current consolidation has been sufficient to bring ADX well down from extreme. There is now again room for a more sustained trend to develop.

An upwards breakout would be the classic bullish signal. It should have support from volume for confidence.


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.

Bearish divergence noted in last analysis has now been followed by a downwards day. This divergence may now be resolved, or it may need another downwards day to resolve it.

There is no new divergence today between price and inverted VIX.


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.

Small caps have moved strongly lower last week and mid caps have moved somewhat lower. This market continues to show some short term weakness in support of the new main hourly Elliott wave count.

Bearish divergence noted in last analysis has now been followed by a downwards day. This divergence may now be resolved, or it may need another downwards day to resolve it.

The AD line is bearish. It is making new lows while price is not. As the AD line may be a leading indicator, this divergence is interpreted as bearish.


At the end of last week, DJT has still failed to make a new all time high. The S&P500, DJIA and Nasdaq have made new all time highs. DJT has 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 @ 08:55 p.m. EST.