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For the very short term, the hourly Elliott wave analysis expected a pullback for a small fourth wave. With price remaining above first wave price territory, all Elliott wave rules are met and the wave count has the right look. The pullback for Friday was almost exactly what the last analysis expected to see.

Summary: The new next Elliott wave target is now at 2,676. If price keeps rising through this target, or if it gets there and the structure is incomplete, then the next target is at 2,773.

These targets are for a mid term end to the upwards wave. When this structure is complete, then the analysis expects a pullback / consolidation to last about 10 weeks.

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. This wave count expects to see two large multi week corrections coming up, and the first for intermediate wave (4) may now be quite close by.

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.

The yellow best fit channel is redrawn. Price points are given so that members may replicate this channel.


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 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). A new lower target is calculated at the hourly chart at minute degree, one degree lower.

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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The new target is reasonably lower than 2,773, which was expected. The new target may see intermediate wave (3) end at all degrees fairly quickly next week. This is possible.

The channel about minor wave 5 is now redrawn using Elliott’s second technique. Minute wave iv has remained above minute wave i price territory.

The hourly candlestick to end minute wave iv has a very bullish long lower wick. There is perfect alternation and excellent proportion between minute waves ii and iv.

If minute wave v were to only reach equality in length with minute wave i, it would be truncated, so the next Fibonacci ratio in the sequence is used to calculate the new target.

If it continues further, then minute wave iv may not move into minute wave i price territory below 2,601.19. If this invalidation point is breached before a new all time high is seen, then my analysis of minute waves i through to iii is wrong. It may then be possible that intermediate wave (3) could be over.


S&P 500 Hourly 2017
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This alternate hourly chart simply moves the degree of labelling within minor wave 5 all down one degree. It is possible that only minute wave i within minor wave 5 is coming to completion.

For the short term, the invalidation point remains the same for both hourly wave counts. As soon as a new all time high is seen, then this wave count moves the invalidation point down to the start of minor wave 5 at 2,557.45.

This price point then becomes the differentiator between the idea that intermediate wave (3) is over and the idea that it continues higher. A new low below 2,557.45 at that stage would be required to provide price confirmation that intermediate wave (3) could be over and intermediate wave (4) may then be expected to have just begun.



S&P 500 weekly 2017
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This last week completed the strongest volume for a year, which for an upwards week is very bullish.

The problem with divergence, and one reason why it is hopeless as a timing tool, is that sometimes it just disappears. That is what has happened between divergence with price and RSI. Still, the failure of On Balance Volume to make new all time highs with price is bearish especially if On Balance Volume is a leading indicator.

This trend is extreme, but it could still continue for a while longer. Look for a candlestick reversal pattern or a bearish signal from On Balance Volume.


S&P 500 daily 2017
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Friday’s candlestick has a very bullish long lower wick. For this to be read as a Hanging Man reversal pattern it needs bearish confirmation. The Hanging Man pattern is in practice a two candlestick pattern. While that bearish confirmation is not present, it will be read as bullish.

Overall, this chart remains very bullish. But with RSI and Stochastics extreme overbought, this warns that an end to the current trend may be approaching. Some consolidation may be required to relieve these overbought conditions.

Look for a bearish candlestick reversal pattern or a bearish signal from On Balance Volume before considering a high in place.


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.

The two bearish signals given recently from VIX have now been followed by a strong downwards day. This bearishness may be resolved here, or it may need another downwards day to resolve it. There is no new divergence between price and inverted VIX for Friday; both moved lower.


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 this week have made new all time highs. The rise in price has support from market breadth. They all also have very long lower wicks for Friday; this looks bullish.

For Friday price moved lower, but the AD line moved higher. As breadth should be read as a leading indicator, this is read as bullish. This offers reasonable support to the Elliott wave count.


The DJIA, DJT, S&P500 and Nasdaq have this week made new all time highs. This provides confirmation of the ongoing bull market.

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 @ 09:45 p.m. EST on 2nd December, 2017.