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Analysis since the low on the 9th of February has been bullish. Price continues to rise as expected.

Summary: The next target is at 3,020.

On Balance Volume today gives a bullish signal that offers strong support to the main bullish Elliott wave count.

Always practice good risk management. Always trade with stops and invest only 1-5% of equity on any one trade.

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

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

An alternate idea at the monthly chart level is given here at the end of this analysis.

An historic example of a cycle degree fifth wave is given at the end of the analysis 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.

Due to its size intermediate wave (4) looks proportional to intermediate wave (2), even though their durations so far are quite different.

Intermediate wave (4) has breached the Elliott channel drawn using Elliott’s first technique. The channel may be redrawn when it is confirmed as complete using Elliott’s second technique. A best fit channel is used while it may still be incomplete to show where it may find support. Price points are given for this channel, so that members may replicate it on a semi-log scale.

Intermediate wave (4) may not move into intermediate wave (1) price territory below 2,193.81.


S&P 500 Daily 2018
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The S&P has behaved like a commodity to end intermediate wave (3): a relatively strong fifth wave with a steep slope. The high looks a little like a blow off top. This is followed by a sharp decline, which is typical behaviour for a commodity and not common for the S&P.

Friday’s low is only a little above the lower edge of the best fit channel. The very long lower wick on Friday’s candlestick is bullish. It looks like intermediate wave (4) may now have found its low.

Despite the duration of intermediate wave (4) being much quicker than intermediate wave (2), the size is proportional. On weekly and monthly time frames intermediate wave (4) now has the right look.


S&P 500 Hourly 2018
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A zigzag downwards may now be complete.

A new high today above 2,727.67 adds some more confidence to this wave count. This upwards movement may not be part of minor wave C; minor wave C must be over.

A new all time high would add confidence to this wave count (even though an alternate idea published would remain valid).

An impulse upwards looks to be completing, and it is labelled minute wave iii. The target expects it to exhibit the most common Fibonacci ratio to minute wave i.

When minute wave iii is complete, then the following correction for minute wave iv may not move into minute wave i price territory below 2,672.61.

The best fit channel is slightly adjusted today so that it contains all upwards movement. If this channel is breached by downwards movement (not sideways), then it may be indicating a trend change. At that stage, either minute wave iv may be underway or possibly also minor wave 1 could be complete and minor wave 2 could be underway.


S&P 500 Daily 2018
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This wave count is identical to the main daily chart, with the exception of the degree of labelling within intermediate wave (4). If the degree is moved down one, then only minor wave A may be complete within a continuing correction for intermediate wave (4).

If it continues further, and if analysis of minor wave A as a zigzag is correct, then intermediate wave (4) may be a flat, combination, triangle or double zigzag. Of all of these possibilities a double zigzag is the least likely because that was the structure of intermediate wave (2). Intermediate wave (4) should be assumed to exhibit alternation until proven otherwise.

If upwards movement continues further, then the idea of a double zigzag may be discarded. Double zigzags normally have a strong slope against the prior trend, and to achieve a strong slope their X waves are usually shallow.

All of a flat, combination or triangle would have a very deep minor wave B. An expanded flat, running triangle or combination may have minor wave B or X make a new all time high. Unfortunately, for this reason there is no upper price point which differentiates this alternate idea from the main wave count.

Minor wave B or X should be expected to exhibit weakness. Light and declining volume and divergence with oscillators at its end are features of B waves, and also of X waves which are analogous.


S&P 500 Hourly 2018
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The labelling of subdivisions for this alternate is identical to the main wave count. The degree of labelling within the last zigzag down is moved down one degree.

Upwards movement off the low may be a zigzag for minor wave B. Zigzags subdivide 5-3-5, exactly the same as the start of an impulse.

If intermediate wave (4) is a flat correction, then within it minor wave B must retrace a minimum 0.9 length of minor wave A.

If intermediate wave (4) is a triangle, there is no minimum requirement for minor wave B. It only needs to subdivide as a three wave structure.

If intermediate wave (4) is a combination, then the first structure may be a zigzag for minor wave W. Minor wave X may be any corrective structure and it may make a new high above the start of minor wave W. There is no minimum requirement for minor wave X of a combination, but it would very likely be fairly deep.


S&P 500 Hourly 2018
Click chart to enlarge.

It is also possible to see the last downwards wave as a five wave impulse. Intermediate wave (4) may be continuing lower as a single zigzag, subdividing 5-3-5.

Within a zigzag, minor wave B may not make a new high above the start of minor wave A at 2,872.87.

Minor wave B may be now complete ending close to the 0.618 Fibonacci ratio of minor wave A. If it continues a little higher when markets open tomorrow, then look for strong resistance about 2,743.

A breach of the yellow best fit channel by downwards movement (not sideways) would be an early indication that the upwards zigzag of minor wave B may be complete.

The target for minor wave C assumes that intermediate wave (4) may end with only an overshoot of the yellow best fit channel on the weekly and daily charts. A long lower wick may overshoot the lower edge of the channel, before price quickly turns back upwards.

If minor wave B moves higher, then the target must also move correspondingly higher.



S&P 500 weekly 2018
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This pullback has now brought RSI well back down into neutral territory. ADX is declining from very extreme. A possible trend change to down is indicated, but as yet no new downwards trend at this time frame.

In the first instance, support should be expected for On Balance Volume at the yellow trend line. A breach below this line by On Balance Volume would be a very strong bearish signal. A bounce up off the line would be a strong bullish signal.


S&P 500 daily 2018
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The long lower wick today is bullish as is the shaven head.

On Balance Volume makes a new high today. This is a strong bullish signal. This strongly supports the main Elliott wave count.

There is now plenty of room for an upwards trend to develop here. Neither RSI nor Stochastics are anywhere near overbought.


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.

Both price and inverted VIX have moved higher today. The rise in price comes with a normal corresponding decline in market volatility.


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 moved lower. The decline has support from wide breadth.

Breadth should be read as a leading indicator.

Both price and the AD line moved higher today. The rise in price has support from rising market breadth. This is bullish.


All indices have made new all time highs as recently as three weeks ago, 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 @ 7:09 p.m. EST.