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The first target was met and passed today. Price continues higher towards the second target, which is calculated from a flag pattern using the measured rule. If price keeps rising through that target, then the next Elliott wave target would be used.

Summary: The next target using the measured rule is at 2,634, but this may not be high enough. The next Elliott wave target is 2,773. As price approaches each target, if the structure is incomplete and there is no weakness in price, then the next target will be used. But if price approaches a target and the structure is complete and there is some classic weakness, then a high may be in place.

The structure is incomplete at this stage, but some indicators are extreme and some weakness is beginning.

Always trade with stops and invest only 1-5% of equity on any one trade. All trades should stick with the trend. The trend remains up.

Last monthly and weekly charts are here. Last historic analysis video is here.

The biggest picture, Grand Super Cycle analysis, 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) may now be nearing completion. When it is complete, then intermediate wave (4) should unfold and be proportional to intermediate wave (2). Intermediate wave (4) may be very likely to break out of the yellow best fit channel that contains intermediate wave (3). Intermediate wave (4) may not move into intermediate wave (1) price territory below 2,193.81.


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 has been passed and the structure of minor wave 5 is still incomplete. The hourly chart will focus on this structure.

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).

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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This hourly chart is new today.

With strong upwards movement today showing an increase in momentum, it looks now like the middle of a third wave has passed and not a fifth wave. The S&P can behave like a commodity, but it is unusual for it to do so. What is more common for the S&P is for it to exhibit strong third waves.

Minute waves i and ii may be complete. Minute wave iii may have passed its middle today. The target for minute wave iii expects it to exhibit the most common Fibonacci ratio to minute wave i.

Minute wave iii may only subdivide as an impulse. Within minute wave iii, minuette wave (iv) may not move into minuette wave (i) price territory below 2,606.41.

When minute wave iii is complete, then the invalidation point must move down to the high labelled minute wave i at 2,601.19. Minute wave iv may not move into minute wave i price territory. However, minute wave iv looks fairly likely to remain contained within the best fit channel. This yellow channel is slightly adjusted today. It neatly contains all of minor wave 5 so far.

The target for minute wave iii fits well with the next Elliott wave target at 2,773.



S&P 500 weekly 2017
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Lighter volume for a week with a US holiday in it would be expected. On its own, this lighter volume should not be taken as a signal that a high is in place.

Some weakness and overbought indicators should be expected as intermediate wave (3) comes to an end.


S&P 500 daily 2017
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The target using the measured rule for the flag pattern is at 2,634.

There is some weakness now with divergence between price and RSI and On Balance Volume. While price is making new highs, RSI and On Balance Volume have failed to make corresponding new highs. This is regular bearish divergence. Divergence like this is not a useful timing tool in trying to pick a high, and it can only be taken as a warning that a high may be approaching. Sometimes this divergence can just disappear.

With volume and price very bullish, expect more upwards movement. I will be watching for a candlestick reversal pattern to appear because they are fairly common at highs.


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.

There is very strong bearish divergence today between inverted VIX and price: the rise in price today has not come with a normal corresponding decline in volatility; volatility as measured by VIX has increased. This is regular bearish divergence, and it indicates some weakness within price.


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.

All of large, mid and small caps last week have made new all time highs. The rise in price has support from market breadth.

Both price and the AD line today moved higher. The rise in price today had support from rising market breadth. This is bullish.


Only DJT has not made a new all time high last week. The S&P500, DJIA and Nasdaq all this week 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 @ 07:26 p.m. EST.