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A new high above 2,539, within the second hour of trading today, indicated the alternate hourly Elliott wave count was more likely correct and price should continue overall higher, which is what happened for the rest of the session.

Summary: The first target is again at 2,614. A second target is at 2,773.

A second wave correction to come may possibly offer a good entry point to join the upwards trend, but be aware although it is likely to be deep it does not have to be.

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 may now be complete. If it continues further as per the alternate wave count below, then it 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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Minor wave 4 may now be complete. It will subdivide very well as a double zigzag. This provides a little alternation in structure with the single zigzag of minor wave 2. There is also poor alternation in depth: minor wave 2 was very shallow at only 0.16 of minor wave 1, and minor wave 4 would be only 0.12 of minor wave 3. Alternation is a guideline and not a rule; it is seen more often than not, but not always. This is one reason why this wave count had to be judged to be an alternate until price has shown today it may be more likely.

The first target at 2,614 would see a Fibonacci ratio between intermediate waves (3) and (1), but no Fibonacci ratio for minor wave 5. This would be acceptable. There is already a somewhat reasonable Fibonacci ratio between the two actionary waves of minor waves 3 and 1, so minor wave 5 may not exhibit a Fibonacci ratio to either of minor waves 3 or 1.

The second target calculated for minor wave 5 expects it to exhibit the most common Fibonacci ratio for a fifth wave. This target would not expect a Fibonacci ratio for intermediate wave (3) to intermediate wave (1).

If price gets up to the first target, and the structure may be complete and there is some divergence with price and Stochastics or RSI, then members are warned that it would be possible for a high to be in place for the mid term. But if price keeps rising through the first target, then the second target would be used.

Within minor wave 5, no second wave correction may move beyond the start of its first wave below 2,557.45.


S&P 500 Hourly 2017
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If a low is in place, then a five up on the hourly chart should develop. This is not yet complete.

Within the first five up, minuette wave (iv) may not move into minuette wave (i) price territory. When a new high is seen above today’s high, then a five up could be complete at any time.

Price should remain within the green Elliott channel while minute wave i continues higher. A breach of this channel by downwards movement would be an indication that upwards movement at this time frame should be over and a new wave down should be underway.

Minute wave ii may be relatively shallow and brief; although this is not common, members are warned that it has happened before: corrections in the beginning were brief and shallow at the start of minor wave 3.

Minute wave ii may be a more common deep second wave correction. The 0.618 Fibonacci ratio of minute wave i would be the preferred target.

Minute wave ii may not move beyond the start of minute wave i below 2,557.45.


S&P 500 Hourly 2017
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By simply moving the degree of labelling within minor wave 4 down one degree, it is possible to see that it may not be over and may continue sideways for a few days yet as a triangle or flat correction.

Here, minor wave 4 is labelled as a possible triangle. This looks at this stage to be the most likely alternate scenario.

Within a possible triangle, the first sub-wave of minute wave a fits best as a double zigzag. If this labelling is correct, then all remaining triangle sub-waves must be simple A-B-C corrections, and all but one must be single zigzags.

Minute wave b within the possible triangle would have to be complete here. It cannot move higher as a double zigzag because only one triangle sub-wave may be a more complicated multiple.

Minute wave c may not move beyond the end of minute wave a below 2,557.46.

Minute wave d to follow upwards may not move beyond the end of minute wave b above 2,590.09.

Minute wave e downwards to end the triangle may not move beyond the end of minute wave c.

The triangle may take another six days minimum to complete, if it totals a Fibonacci thirteen days.

What about a possible flat correction for minor wave 4?

This is the other possibility, but it looks less likely at this stage. Within a flat, both minute waves a and b must be three wave structures. Minute wave a can be any structure except a triangle, but A waves within flats are most commonly zigzags. The next most common structure for them would be a flat correction. They are uncommonly double zigzags.

Minute wave b within a flat correction would have to move higher as a double zigzag to reach the minimum requirement of 0.9 the length of minute wave a at 2,593.06. The most common length for minute wave b would be from 1 to 1.38 times the length of minute wave a, giving a range of 2,597.02 to 2,612.06.

While it is possible for both minute waves a and b to be double zigzags, it is not a common occurrence, and for that reason it is not charted today.

What about a possible double combination for minor wave 4?

If the downwards wave labelled here minute wave a is correctly labelled as a double zigzag, then a combination continuing sideways for minor wave 4 may be eliminated. The maximum number of corrective structures within a multiple is three: this refers to W, Y and Z. Within each of W, Y and Z, the structures may only be labelled as simple A-B-C corrections (or A-B-C-D-E in the case of triangles). To label multiples within multiples is to increase the number of corrective structures beyond three, violating the Elliott wave rule.



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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It now looks like a small flag pattern may be complete. These are reliable continuation patterns. If the beginning of the flag pole is taken as the low for the 25th of October (which looks about right), then a target using the measured rule is about 2,630, if the breakout comes about 2,577.

The upwards breakout today does not have support from volume, so it should be approached with some suspicion. However, it is noted that there are recent examples on this chart where price has risen with light and declining volume. This market appears to be able to drift slowly higher on weak volume. That may certainly happen again 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.

Mid term bullish divergence noted yesterday has now been followed by an upwards day. It may be resolved here, or it may need another upwards day to resolve it.


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.

Bearishness noted in last analysis by the AD line has not been followed by downward movement for price.

Upwards movement today has support from rising market breadth. This is bullish.


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 @ 05:55 p.m. EST.