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Sideways movement sees three wave counts still valid. The AD line and VIX are giving signals, and On Balance Volume may provide a signal tomorrow.

Summary: Assume the upwards trend may remain intact and the next target for an interruption is at 2,840.

Two alternates today look at a correction or pullback beginning here to last one to two weeks. Some confidence may be had in this view if price makes a new low below 2,768.64. This view has support now from bearish signals in VIX and the AD line.

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. This main wave count fits with MACD: upwards momentum is showing an increase as a third wave continues upwards.

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 last small wave count is relabelled today. Downwards movement for today’s session looks now to be too large to be a fourth wave as previously labelled, so it may be another second wave correction. Micro wave 2 may not move beyond the start of micro wave 1 below 2,768.64.

Subminuette wave iii is shorter than subminuette wave i. This limits subminuette wave v to no longer than equality in length with subminuette wave iii at 2,840.12, so that subminuette wave iii is not the shortest and the core Elliott wave rule is met.

Minuette wave (ii) was a very shallow combination lasting eight days. Minuette wave (iv) may also last about a Fibonacci eight days.

Price has again found support about the lower edge of the base channel. Assume the upwards trend remains while price remains within this channel.


S&P 500 Hourly 2018
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This hourly wave count is new today.

It is possible today that minuette wave (iii) is over with a slightly truncated fifth wave.

Minuette wave (ii) was a combination lasting a Fibonacci eight days. Given the guideline of alternation, minuette wave (iv) may most likely be a single or multiple zigzag and may last a Fibonacci five days; zigzags are often quicker than combinations.

Minuette wave (iv) may also be a flat or triangle and still exhibit some structural alternation with minuette wave (ii).


S&P 500 Daily 2018
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It is possible that minute wave iii is over. Some confidence in this wave count may be had if the main hourly wave count above is invalidated with a new low below 2,768.64. If that happens, then both this alternate daily wave count and the alternate hourly wave count would remain valid.

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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It is still a downwards day within most recent movement that has strongest volume. However, today printed a red candlestick with the balance of volume down, but downwards movement during today’s session did not have support from volume.

This chart is still very bullish. The trend can still continue while the trend is extreme and stretched.

On Balance Volume looks likely to break out of its new small range tomorrow. That would provide a signal.


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 still four bearish signals in a row from VIX. Price moved sideways today, but the balance of volume was upwards and the candlestick was green. There has not been a normal corresponding decline in market volatility despite upwards movement during the session. Volatility has shown a further increase for the fourth day in a row. This is now very bearish.

This has now been followed by an inside day which closes red. It may be followed by yet more downwards movement before it is resolved.


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.

There is short term divergence today between price and the AD line: the AD line has made a new small swing low, but price has not. This divergence is bearish, if breadth is used as a leading indicator. Price may follow more downwards movement.


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 @ 07:04 p.m. EST.