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Downwards movement for Wednesday’s session has closed the last gap, which must now be considered as an exhaustion gap.

A new Elliott wave count with excellent Fibonacci ratios, and a new short term target, is presented today.

Summary: A small fourth wave correction may continue for a few more days overall, and may end within the fourth wave of one lesser degree price territory from 2,671.88 to 2,652.01. When there is more structure to analyse within this possible fourth wave, then a smaller target may be calculated.

For the very short term, look for a small bounce tomorrow that may not move above 2,694.97.

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 third waves at all degrees may only subdivide as impulses.

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.

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) has passed equality in length with intermediate wave (1). It has also now passed both 1.618 and 2.618 the length of intermediate wave (1), so it may not exhibit a Fibonacci ratio to intermediate wave (1). The target calculation for intermediate wave (3) to end may have to be done at minor degree; when minor waves 3 and 4 are complete, then a target may be calculated for intermediate wave (3) to end. That cannot be done yet.

When minor wave 3 is complete, then the following multi week correction for minor wave 4 may not move into minor wave 1 price territory below 2,400.98.


S&P 500 Daily 2017
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This wave count is new today.

This new wave count looks at the possibility that minute wave iii may have ended at the last high and minute wave iv may have just arrived.

There are even better Fibonacci ratios in this new wave count when compared to the one published yesterday, which is now an alternate.

Draw an Elliott channel about this impulse. Minute wave iv may find strong support and remain within the channel, if it gets down that low. Minute wave iv may end within the price territory of the fourth wave of one lesser degree; minuette wave (iv) has its territory from 2,671.88 to 2,652.01.

Minute wave ii lasted nine days. For the wave count to have the right look (reasonable proportion), minute wave iv may be expected to most likely last either a Fibonacci five, eight, or possibly even thirteen days.

Minute wave ii was a zigzag. To exhibit alternation minute wave iv may most likely be a flat, combination or triangle. But it may also be a zigzag though because the S&P does not always exhibit perfect alternation and a zigzags is the most common corrective structure.

Minute wave iv may not move into minute wave i price territory below 2,490.87.


S&P 500 Hourly 2017
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At this stage, I will leave the degree of labelling open to being reduced. It is possible that minuette wave (a) is complete as labelled, or this may be moved down one degree and only subminuette wave a or i may be complete.

Either way, the last wave down will subdivide as a leading expanding diagonal.

There are more than 23 possible corrective structures that minute wave iv may take. As it unfolds, the labelling within the structure will change. It is impossible at the early stages to tell which structure may unfold, so the focus should be on identifying when it may be complete and not on all the possible small movements within it.

At this stage, it looks most likely incomplete.

Confidence in this main wave count may be had if price makes a new low below 2,671.88


S&P 500 Daily 2017
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Both daily charts are identical to the high labelled minute wave i, and the low labelled minute wave ii.

This wave count was the main wave count yesterday. Today, it is an alternate.

The daily chart looks at the middle and end of minor wave 3. There are some excellent Fibonacci ratios within this wave count.

Minor wave 3 may only subdivide as an impulse. Within minor wave 3, minute waves i, ii, iii and iv may all be complete. The final fifth wave of minute wave v then looks incomplete.

Minute wave iii is longer than minute wave i, so minute wave v is not limited. Minute wave iii will meet the core Elliott wave rule stating it may not be the shortest actionary wave.

The target for minor wave 3 expects to see the most common Fibonacci ratio for a third wave.

There is good proportion here between the corrections of minute waves ii and iv: minute wave ii lasted nine days and minute wave iv lasted six days. Both show up at the weekly chart level, and the wave count has the right look.

Within minute wave v, minuette waves (i) and (ii) may be complete. Minuette wave (iii) may be incomplete.

Minuette wave (iii) may only subdivide as an impulse. Within minuette wave (iii), subminuette waves i and ii may be complete. Within subminuette wave iii, no second wave correction may move beyond the start of its first wave below 2,652.01.


S&P 500 Hourly 2017
Click chart to enlarge.

This wave count follows on from yesterday’s main wave count. If a new all time high is seen, then this would be again the only wave count.

Subminuette wave iv may not move into subminuette wave i price territory below 2,671.88.

The target for minor wave 3 may now be too high. At the limit for subminuette wave v, minuette wave (iii) would be 94.24 points in length. Minuette wave (i) was 107.74 points in length, so minuette wave (iii) would be shorter than minuette wave (i). This would limit minuette wave (v) to no longer than 94.24 points, which would probably yield a target reasonably below 2,833.

For this wave count, when minuette waves (iii) and (iv) are complete, then the target for minuette wave (v) to complete the whole of minor wave 3 may be calculated at minuette degree. At that stage, the target would change.



S&P 500 weekly 2017
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There is still no candlestick reversal signal at highs. The trend is now very extreme and overstretched, but this can continue for longer before price is ready to turn.

Overall, at this time frame, this market remains very bullish.


S&P 500 daily 2017
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The last gap is now closed. It is now indicated as an exhaustion gap and not a breakaway gap. This is a bearish signal, at least for the short term.

The last few signals from On Balance Volume were bearish. RSI and Stochastics are bearish. But ADX indicates the trend is not yet extreme at this time frame.

The trend could still continue for longer before price turns, but today there is now a little more bearish indication with the closing of the last gap.


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.

Price moved lower today, but inverted VIX moved higher. The fall in price did not come with a normal corresponding increase in volatility. This divergence is bullish and supports at least a little more upwards movement 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.

Only large caps made new all time highs last week. There is some weakness with mid and small caps unable to make new all time highs; this is bearish.

Breadth should be read as a leading indicator. The fall in price today came with the AD line remaining flat. This is not enough difference to be read as divergence, so it will be interpreted as neutral.


The S&P500, DJIA and Nasdaq last week all made new all time highs. DJT now also made a new all time high, confirming 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 @ 07:37 p.m. EST.