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The classic technical analysis target was 2,801. This was met with the gap higher today to a new all time high at 2,807.54.

Summary: The AD line and VIX today indicate a downwards day tomorrow.

A new daily alternate looks at a possible one to two week correction beginning here. This alternate may have confidence if price makes a new low below 2,759.14.

Accept there is no confidence yet in a trend change while price remains above 2,759.14 and within the base channel on the hourly chart. Assume the upwards trend may remain intact and the next target for an interruption is at 2,845.

The biggest picture, Grand Super Cycle analysis, is here.

Last historic analysis with monthly charts is here. Video is here.



S&P 500 Weekly 2018
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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. Minor wave 4 should last about four weeks to be in proportion to minor wave 2. It may last about a Fibonacci three, five or even eight weeks if it is a time consuming sideways correction like a triangle or combination. It may now find support about the mid line of the yellow best fit channel. If it does find support there, it may be very shallow. Next support would be about the lower edge of the channel.

A third wave up at four degrees may be completing. This should be expected to show some internal strength and extreme indicators, which is exactly what is happening.


S&P 500 Daily 2018
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Keep redrawing the acceleration channel as price continues higher: draw the first line from the end of minute wave i to the last high, then place a parallel copy on the end of minute wave ii. When minute wave iii is complete, this would be an Elliott channel and the lower edge may provide support for minute wave iv.

Minute wave iii has passed 1.618 the length of minute wave i. The next Fibonacci ratio in the sequence is used to calculate a target for it to end.

Minute wave iii may only subdivide as an impulse, and within it minuette wave (i) only may have recently ended as a long extension.

Within the impulse of minute wave iii, the upcoming correction for minuette wave (iv) may not move back into minuette wave (i) price territory below 2,694.97.

Because minuette wave (i) with this wave count is a long extension, it is reasonable to expect minuette wave (iii) may only reach equality in length with minuette wave (i). This target fits with the higher target for minute wave iii one degree higher.


S&P 500 Hourly 2018
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Always assume that the trend remains the same until proven otherwise. At this stage, there is no technical evidence for a trend change; we should assume the trend remains upwards.

The lower edge of the adjusted base channel has provided support today for downwards movement. Price overshot the trend line and quickly returned back above it.

Momentum for recent movement is strongest at today’s high. This may be the end of subminuette wave iii.

If subminuette wave iv began at today’s high, then it looks like it should be over at today’s low. Subminuette wave iv may not move into subminuette wave i price territory below 2,759.14.

If subminuette wave iii is over at today’s high, then it is shorter than subminuette wave i. Subminuette wave v is limited to no longer than equality in length with subminuette wave iii, so that the core rule stating a third wave may not be the shortest is met.


S&P 500 Hourly 2018
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It is possible that subminuette wave iii is not over. However, this wave count is an alternate because the proportion of micro wave 2 does not look right to subminuette wave ii. Micro wave 2 looks too big.

If price breaks below the lower edge of the base channel, then this alternate wave count should be discarded. A lower degree correction at micro degree should not breach a base channel drawn about a first and second wave one or more degrees higher.

Micro wave 2 may not move beyond the start of micro wave 1 below 2,736.06. This wave count would be discarded prior to invalidation.


S&P 500 Daily 2018
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It is possible today that minute wave iii is over. Confidence in this wave count may be had if the main hourly wave count above is invalidated with a new low below 2,759.14.

If minute wave iv is underway, then it may be expected to be reasonably in proportion to its counterpart minute wave ii correction. Minute wave ii lasted nine days, so expect minute wave iv to last a Fibonacci eight or thirteen days.

Minute wave ii was a zigzag, so minute wave iv may exhibit alternation as a flat, combination or triangle. These corrections are all sideways and usually more time consuming than zigzags.

Minute wave iv may end when it finds support about the lower edge of the pink Elliott channel. If it does not end there and if it overshoots the channel, then minute wave iv may end within the price territory of the fourth wave of one lesser degree. Minuette wave (iv) has its territory from 2,694.97 to 2,673.61.

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



S&P 500 weekly 2018
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Indicators should be expected to be extreme as a third wave at four degrees comes to an end.

When third waves are ending they fairly often will show weakness at the weekly chart level. There is still no evidence of weakness at this time. When intermediate wave (3) is close to or at its end, then we may expect to see some weakness.


S&P 500 daily 2018
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The target calculated using the last measuring gap was at 2,801, and this has now been met. Price has moved lower during the session.

RSI is very extreme but can continue for longer. It now exhibits some divergence today, but this is only single day and not enough to indicate reasonable weakness. Stochastics exhibits slight weak divergence, but not enough to indicate a correction should begin here.

This chart is still very bullish indeed.

The candlestick reversal pattern may indicate a correction to begin here. But it should be noted that there are a few reversal patterns on this chart already, none of which were followed by any sustained downwards movement: a bearish engulfing pattern on the 19th of December, a gravestone doji on the 21st of December, and a bearish engulfing pattern on the 23rd of October.


VIX daily 2018
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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 are now three days in a row of price moving higher but inverted VIX moving lower. This is now fairly bearish. The rise in price has not come with a normal corresponding decline in market volatility. Volatility has increased sharply.


AD Line daily 2018
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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 small, mid and large caps last week made new all time highs. This market has good support from rising breadth.

Breadth should be read as a leading indicator.

Price has made a new all time high today but market breadth has declined. The decline in breadth today may be a leading bearish signal.


The S&P500, DJIA, DJT and Nasdaq last week all made new all time highs. The ongoing bull market is confirmed.

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 @ 08:51 p.m. EST.