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An upwards day was expected for the new trading week and price has behaved exactly as expected.

Summary: The larger trend is up. The next target is at 3,020.

The next short term target is at 2,920. This wave up may be a third wave, and it may continue to be strong. A very bullish signal today from On Balance Volume and a bullish signal from the AD line indicates another upwards day tomorrow and possibly for a few days.

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 an Elliott channel drawn using Elliott’s first technique. The channel is redrawn using Elliott’s second technique. The upper edge may provide resistance for intermediate wave (5).

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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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.

Intermediate wave (5) may only subdivide as either an impulse (more likely) or an ending diagonal. An impulse will be assumed, and a diagonal will be charted if overlapping begins to indicate it.

The downwards wave labelled intermediate wave (4) may be seen as either a three wave zigzag, as labelled on this daily chart, or it may be seen as a five wave impulse. Both possibilities must be considered. The main hourly and alternate hourly charts consider it as a zigzag. The second alternate hourly chart considers it may have been a five.


S&P 500 Hourly 2018
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A new all time high would add confidence to this wave count (even though an alternate idea published would remain valid).

Minor wave 2 was a very shallow 0.26 correction of minor wave 1. Upwards movement for today’s session has support from volume, so this should be labeled as minor wave 3 and not a continuation of minor wave 2.

Because minor wave 2 was so shallow the target for minor wave 3 is to reach equality in length with minor wave 1. But if this target is wrong, then it may not be high enough. Along the way up, within minor wave 3, corrections should be brief and shallow.

Minute wave ii may most likely be brief and shallow. It may be over within a day, but it could be longer lasting and show up on the daily chart. Minute wave ii may not move beyond the start of minute wave i below 2,697.86.



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.

Minor wave B or X may be any one of more than 23 possible corrective structures, but it would most likely be a zigzag. It looks like it may be subdividing as a zigzag at this stage.

This alternate wave count would expect a strong breach of the 200 day SMA, which would be unlikely. The first expectation should be for price to find strong support there.


S&P 500 Hourly 2018
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Upwards movement off the low may be an incomplete 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.

Minor wave B or X may be unfolding as a zigzag. So far, within minor wave B or X, minute wave a may be a complete five wave impulse. Minute wave b may now be complete as a double zigzag. Within minute wave c, no second wave correction may move beyond the start of its first wave below 2,697.86.


S&P 500 Hourly 2018
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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 continuing higher. A new target is calculated for it to end.

A new low in the short term below 2,697.86 would now invalidate the first two hourly charts and provide confidence in this second alternate.

This second alternate wave count is judged to have the lowest probability.



S&P 500 weekly 2018
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Volume last week is much lower than the prior week, which is bearish.

The longer lower wick on the last weekly candlestick and the shaven head are bullish.

The pullback has brought ADX down from very extreme. A possible trend change to down is indicated, but as yet no new trend is indicated.


S&P 500 daily 2018
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Another upwards day should be expected tomorrow. Give the new On Balance Volume high weight, which is a very bullish 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.

The last bullish signal from inverted VIX has been followed by an upwards day. It may be resolved here, or it may need another upwards day to resolve it.


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 upwards. The bounce has support from wide breadth.

Breadth should be read as a leading indicator.

The last bullish signal from the AD line has now been followed by an upwards day. It may be resolved here, or it may need another upwards day to resolve it.

The AD line today has made a new high above the prior small swing high of the 31st of January, but price has not yet made a corresponding high. This is a bullish signal.


All indices have made new all time highs as recently as five 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 @ 07:02 p.m. EST.