Select Page

The second target at 2,634, calculated using the measured rule, has been met today.

The Elliott wave structure is analysed to see if it may be complete. If it is, then price may turn here. If it is not, then the next target will be used.

Summary: The next Elliott wave target is 2,773. While price remains above 2,606.41 and within the yellow best fit channel on the hourly chart, then assume the upwards trend remains intact.

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
Click chart to enlarge.

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
Click chart to enlarge.

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 target at 2,634, calculated using the measured rule, has now been reached. The structure of minor wave 5 on the hourly chart looks incomplete. The second Elliott wave target should now be used.

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
Click chart to enlarge.

This chart uses BarChart data (only the last one or two hourly bars are missing). The low for the session is accurate.

If minute wave iii is over at the high for today, then it would be shorter than minute wave i. The target at 2,773 would be too high. When minute wave iv may be complete, then a target may be calculated at minute degree for minute wave v, which would be lower than 2,773.

Minute wave iii so far shows strongest momentum. Minute wave iv may not move into minute wave i price territory below 2,601.19.

Minute wave iv may find support about the lower edge of the yellow best fit channel.


S&P 500 Hourly 2017
Click chart to enlarge.

It is also possible that minute wave iii may not be over and that upwards movement will continue to be strong for another day or so towards the target at 2,666.

Minuette wave (iv) may have been over at today’s low. If it continues any further, then it may not move into minuette wave (i) price territory below 2,606.41.

It would be my judgement that this alternate hourly chart is about even in probability with the first hourly chart.



S&P 500 weekly 2017
Click chart to enlarge. Chart courtesy of

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
Click chart to enlarge. Chart courtesy of

The target using the measured rule for the flag pattern is at 2,634. This is now met. If tomorrow completes a downwards day, then it may complete an Evening Doji Star reversal pattern. That would be a strong indication of a high in place, but this pattern is not yet present and no reversal signal is yet shown.

RSI and Stochastics are extreme and exhibit divergence, which indicates weakness in price now. Volume today is bearish.

It is possible that a high is in place here, but that is not yet confirmed.


VIX daily 2017
Click chart to enlarge. Chart courtesy of

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.

Regular bearish divergence noted yesterday between price and VIX has not been followed by downwards movement yet, although the balance of volume today was down. It may yet be followed by some downwards movement tomorrow.


AD Line daily 2017
Click chart to enlarge. Chart courtesy of

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.

Price moved higher today, but the balance of volume was down and the candlestick closed red. Downwards movement during the session has come with a normal corresponding decline in market breadth. This is slightly bearish.


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 @ 10:10 p.m. EST.