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All three hourly Elliott wave counts remain valid today. Members are given some trading advice on how to handle this uncertainty.

If a new all time high is seen tomorrow, then members will have an Elliott wave target to work with.

Summary: The main wave count expects downwards movement to begin next week to a target at either 2,599 or 2,586.

If price makes a new low below 2,557.45, that would indicate a multi week (about 10) correction may have arrived.

If price makes a new all time high tomorrow, then the next target would be at 2,732 for a small consolidation, and then 2,773 for the upwards trend to end for the mid term.

One approach to the uncertainty for the short term may be to open a hedge. The short side should be closed if price makes a new all time high. The long side should be closed if price breaks well below the small channel on the hourly chart with clearly downwards movement (not sideways).

Targets for the long side may be either 2,732 or 2,773. A target for the short side may be 2,599 – 2,595.

Always trade with stops and invest only 1-5% of equity on any one trade (or in total for a hedge). 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. 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 (the alternate hourly wave count looks at the possibility it could be complete at the last high). 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. This channel is copied over to the daily chart.


S&P 500 Daily 2017
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We should always assume the trend remains the same until proven otherwise. Assume that minor wave 5 is incomplete while price remains above 2,557.45.

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).

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 first hourly chart follows on from labelling on the daily chart.

Minute wave ii may take another three days to complete if it totals a Fibonacci eight days. The target for it to end is now widened to a small zone.

There is a five down complete at the hourly chart level. It looks like this is now being followed by a deep bounce for minuette wave (b). Minuette wave (b) still fits as a single zigzag.

Minuette wave (b) may not move beyond the start of minuette wave (a) above 2,665.19. When minuette wave (b) is complete, then another five down should unfold for minuette wave (c).

A narrow best fit channel is drawn about minuette wave (b). While price remains within this channel, there is no evidence that minuette wave (b) is complete. However, it has almost no room left to move in now and should be over either here or early tomorrow if this wave count is correct.

If this wave count (or the first alternate below) is correct, then the small channel should be breached quickly tomorrow by clear downwards movement.


S&P 500 Hourly 2017
Click chart to enlarge.

Because we should always assume the trend remains the same until proven otherwise, this wave count should be considered an alternate while price has not confirmed it.

By simply moving the degree of labelling within the five up from the end of minor wave 4 all up one degree, it is possible to see that intermediate wave (3) could be over.

If this wave count is confirmed with a new low below 2,557.45, then it would expect a multi week pullback or consolidation for intermediate wave (4) to last about ten weeks or so. If it is a complicated combination or a triangle, then it may be longer lasting, possibly a Fibonacci thirteen or even twenty-one weeks.

At this early stage, the 0.382 Fibonacci ratio of intermediate wave (3) would be a reasonable target.

For the short term (the next week or so), a trend change at intermediate degree should see a larger five down develop at the hourly chart level. So far only a first wave within that five down may be complete.

Minute wave ii may not move beyond the start of minute wave i above 2,665.19. It should be noted that for this alternate wave count the depth of minute wave ii fits with reasonably common behaviour. The very first second wave correction within a new trend can be very deep. The purpose of deep second wave corrections is to convince us there has been no trend change and the old trend remains, and they do this job very well indeed. They are fakes, and should exhibit weakness. This one does exhibit weakness, particularly in volume, and this is discussed below in more detail today.

Both wave counts expect overall the same direction next.


S&P 500 Hourly 2017
Click chart to enlarge.

A more bullish wave count should be considered because the AD line is giving bullish signals now two days in a row.

If price follows the AD line and makes a new all time high this week, then the last wave down cannot be seen as a five. It will fit as a double zigzag, although this does not have as good a fit. The S&P does not always have waves that have the right look though, so all possibilities should be considered.

If price makes a new high, then a low degree third wave should be underway. The target is for equality in length with minute wave i, because minute wave ii was shallow, and because it fits with the higher target for minor wave 5 to end.

Within minute wave iii, no second wave correction may make a new low beyond the start of its first wave below 2,624.85.



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

There is no candlestick reversal pattern yet at highs.

Price and On Balance Volume continue to make new highs. This is bullish.

The trend is extreme, but as yet there is no reversal signal at this time frame.


S&P 500 daily 2017
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Looking back at volume for the start of a bull run, at the end of May this year, six days straight of upwards movement came on relatively light and declining volume until the last day. On the sixth day some increase in volume occurred.

Rising price on declining volume has been a feature of this market for many months now, at all time frames. It is very clear at the monthly time frame, in particular since the low of March 2009.

And so although volume for the short term here is bearish, it will not be given weight in this analysis due to current market conditions. We must be flexible and change with a changing market.

The last bearish signals at the daily chart level from On Balance Volume were given on the 15th of June and the 22nd of June this year. That was during a short lived pullback of only 2%, which ended on the 29th of June. But at that time RSI was not overbought.

It may be that On Balance Volume here is indicating only another small short lived pullback and not a reasonable sized correction.

If On Balance Volume turns down here from resistance, then it would give another bearish signal and that should be given some weight.

This chart still looks reasonably bearish. This market is overbought and exhibits weakness; it looks susceptible to a reasonable sized correction.


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 rise in price today came with a normal corresponding decline in market volatility.


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.

Breadth should be read as a leading indicator. The AD line has made new all time highs for the last two sessions now. This may be followed by price shortly to make new all time highs. This bullish signal supports the second alternate Elliott wave count.


The DJIA, DJT, and S&P500 have last week made new all time highs. Only Nasdaq was unable to make a new all time high.

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 @ 09:46 p.m. EST.