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Price continues to move sideways in a very small range, which at this stage fits the alternate Elliott wave count better than the main Elliott wave count. Both wave counts remain valid.

Summary: Price may move sideways this week. Thereafter, it should break out upwards.

The first target is again at 2,614.

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, so that they show up at weekly and monthly time frames. The right proportions between second and fourth wave corrections give a wave count the right look.

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 only 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.

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.

The first target may need the degree of labelling at the hourly chart level to be moved up one degree.

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.

When fourth waves breach channels drawn using Elliott’s first technique, then the channel must be redrawn using Elliott’s second technique: draw the first trend line from the ends of minuette waves (ii) to (iv), then place a parallel copy on the end of minuette wave (iii). This channel may be used to show where minuette wave (v) may end, either mid way within the channel or at the upper edge.

At this stage, at the end of Monday’s session price is no longer contained within this channel. Unfortunately, the S&P does have a tendency to breach channels but then carry on in the prior direction. It does not always respect Elliott channels. The breach of the channel is another warning that this wave count may not be correct, but it cannot invalidate this wave count.

If price remains above 2,572.84 and makes a new high above the end of minuette wave (iii), then a five up would be complete at the hourly chart level. That would offer strong confidence to this main wave count.

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
Click chart to enlarge.

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 c should be an obvious three wave structure at the hourly chart level. Within minute wave c, minuette wave (b) fits very well as an expanded flat correction. This part of recent movement has a better fit here for the alternate than it does for the main wave count today.

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 four 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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A small range, downwards week completes as a small doji. This indicates a balance of bulls and bears and indecision. At this stage, this small week does not look like a convincing beginning of a new downwards trend, and looks much more like a small pullback within an ongoing upwards trend that should be used as another opportunity to join the trend.

There is a little distance below before On Balance Volume finds support. It is entirely possible that the pullback is not over.


S&P 500 daily 2017
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On Balance Volume may be giving a bullish signal, but so far today it is too weak for confidence. If tomorrow prints another upwards day, then the signal from On Balance Volume would be clear and would offer reasonable support to the main Elliott wave count.

If On Balance Volume moves lower tomorrow, then the resistance line would need to be redrawn.

Declining volume is a feature of Elliott wave triangles, along with flattening MACD and often also declining ATR (for the current possible triangle, this should be seen at the hourly chart level).


VIX daily 2017
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So that colour blind members are included, bearish signals will be noted with blue and bullish signals with yellow.

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.

Both price and inverted VIX today moved higher. Bullish divergence noted in last analysis has now been followed by one upwards day. It may need another upwards day to resolve it, or it may be resolved here.


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.

Mid and large caps last week moved lower, but small caps moved up to make a high above the prior week. Small caps are strongest and may be leading the market at this time.

Bullish divergence noted in last analysis has now been followed by an upwards day. It may be resolved here, or it may need another upwards day to resolve it.


Only Nasdaq has made a new all time high this week. The S&P500, DJIA and DJT have not yet made new all time highs.

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 @ 09:41 p.m. EST.