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More upwards movement was expected. This is how the session began, completing a five up, which the Elliott wave count expected, but a strong pullback at the end of the session has come earlier than anticipated.

Summary: The target for upwards movement is now 2,740. A new high above 2,674.78 would add confidence in an upwards swing.

A new low below 2,585.89 would indicate downwards movement has one more low before it is done, and the target would be at 2,561.

Classic technical analysis today offers slightly more support to the view that another low may be coming in the next day or so.

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

New updates to this analysis are in bold.

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.

Intermediate wave (4) has breached an Elliott channel drawn using Elliott’s first technique. The channel is redrawn using Elliott’s second technique as if intermediate wave (4) was over at the last low. If intermediate wave (4) continues sideways, then the channel may be redrawn when it is over. 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. At this stage, it now looks like intermediate wave (4) may be continuing further sideways as a combination, triangle or flat. These three ideas are separated into separate daily charts. All three ideas would see intermediate wave (4) exhibit alternation in structure with the double zigzag of intermediate wave (2).

A double zigzag would also be possible for intermediate wave (4), but because intermediate wave (2) was a double zigzag this is the least likely structure for intermediate wave (4) to be. Alternation should be expected until price proves otherwise.


S&P 500 Daily 2018
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This first daily chart looks at a triangle structure for intermediate wave (4). The triangle may be either a regular contracting or regular barrier triangle. Within the triangle, minor waves A, B and now C may be complete.

If intermediate wave (4) is a regular contracting triangle, the most common type, then minor wave D may not move beyond the end of minor wave B above 2,801.90. Minor wave D would be very likely to end about 0.80 to 0.85 the length of minor wave C.

If intermediate wave (4) is a regular barrier triangle, then minor wave D may end about the same level as minor wave B at 2,801.90. As long as the B-D trend line remains essentially flat a triangle will remain valid. In practice, this means the minor wave D can end slightly above 2,801.90 as this rule is subjective.

When a zigzag upwards for minor wave D is complete, then this wave count would expect a final smaller zigzag downwards for minor wave E, which would most likely fall reasonably short of the A-C trend line.

If this all takes five weeks (including this week) to complete, then intermediate wave (4) may total a Fibonacci 13 weeks and would be just two weeks longer in duration than intermediate wave (2). There would be very good proportion between intermediate waves (2) and (4), which would give the wave count the right look.

At this stage, it is possible that minor wave C is over as per the labelling on this daily chart and the first hourly chart below, but it is also possible that it could continue lower tomorrow. An alternate hourly chart covers that possibility.

The best fit channel about minor wave C is redrawn to be as conservative as possible. It is copied over to the alternate hourly chart below.


S&P 500 Hourly 2018
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The zigzag downwards may be complete. A new wave up may have begun.

Minor wave D within a triangle should subdivide into a simple A-B-C corrective structure, most likely a simple zigzag.

The target range would see minor wave D reach a very common 0.80 to 0.85 length to minor wave C.

So far minute wave a looks like a five. Minute wave b will subdivide as a zigzag on the five minute chart, and it may be over at Tuesday’s low.

The target for minute wave c to end would see minor wave D shorter than the common length of 0.8 to 0.85 of minor wave C. This would be acceptable.

Some confidence in this wave count at the hourly chart level may be had if price makes a new high above 2,674.78.


S&P 500 Hourly 2018
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It is also possible that the second zigzag in the double for minor wave C is incomplete.

If the zigzag of minute wave y is continuing, then within it minuette wave (b) must be seen as an expanded flat correction (all subdivisions will fit at the five minute chart level). The problem here though is the length of subminuette wave b within the expanded flat. While there is no rule stating a limit for B waves within flats, there is a convention that states when the B wave is more than twice the length of the A wave the probability of a flat is extremely low. I have seen a few expanded flats where wave B is longer than twice the length of wave A, but they are uncommon.

The probability of this wave count would be reduced for this reason.

If price makes a new low tomorrow below 2,585.89, then the target for downwards movement to end would be at 2,561. This would expect the most common Fibonacci ratio between minuette waves (a) and (c).


S&P 500 Daily 2018
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Double combinations are very common structures. The first structure in a possible double combination for intermediate wave (4) would be a complete zigzag labelled minor wave W. The double should be joined by a three in the opposite direction labelled minor wave X, which may be a complete zigzag. X waves within combinations are typically very deep; if minor wave X is over at the last high, then it would be a 0.79 length of minor wave W, which is fairly deep giving it a normal look. There is no minimum nor maximum requirement for X waves within combinations.

The second structure in the double would most likely be a flat correction labelled minor wave Y. It may also be a triangle, but in my experience this is very rare, so it will not be expected. The much more common flat for minor wave Y will be charted and expected.

A flat correction would subdivide 3-3-5. Minute wave a must be a three wave structure, most likely a zigzag. It may also be a double zigzag. On the hourly chart, this is now how this downwards movement fits best, and this will now be how it is labelled.

Minute wave b must now reach a minimum 0.90 length of minute wave a. Minute wave b must be a corrective structure. It may be any corrective structure.

The purpose of combinations is to take up time and move price sideways. To achieve this purpose the second structure in the double usually ends close to the same level as the first. Minor wave Y would be expected to end about the same level as minor wave W at 2,532.69. This would require a strong overshoot or breach of the 200 day moving average, which looks unlikely.


S&P 500 Hourly 2018
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The first two daily charts expect a double zigzag is over and a new corrective structure upwards has begun. The labelling is the same.

For this combination wave count, the alternate hourly chart for the triangle works in exactly the same way.


S&P 500 Daily 2018
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Flat corrections are very common. The most common type of flat is an expanded flat. This would see minor wave B move above the start of minor wave A at 2,872.87.

Within a flat correction, minor wave B must retrace a minimum 0.9 length of minor wave A at 2,838.85. The most common length for minor wave B within a flat correction would be 1 to 1.38 times the length of minor wave A at 2,872.87 to 3,002.15. An expanded flat would see minor wave B 1.05 times the length of minor wave A or longer, at 2,889.89 or above.

Minor wave B may be an incomplete zigzag, and within it minute wave c upwards must now subdivide as a five wave structure. How high minor wave B goes would indicate for this wave count what type of flat correction may be unfolding for intermediate wave (4).

It is also possible for this wave count that minute wave b may not be complete and may move lower.

When minor wave B is a complete corrective structure ending at or above the minimum requirement, then minor wave C downwards would be expected to make a new low below the end of minor wave A at 2,532.69 to avoid a truncation.

This wave count would require a very substantial breach of the 200 day moving average for the end of intermediate wave (4). This looks unlikely.


S&P 500 Daily 2018
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It is possible still that intermediate wave (4) was complete as a relatively brief and shallow single zigzag.

A new all time high with support from volume and any one of a bullish signal from On Balance Volume or the AD line would see this alternate wave count become the main wave count.

The target for minor wave 3 expects the most common Fibonacci ratio to minor wave 1.

Within minor wave 3, no second wave correction may move beyond the start of its first wave below 2,585.89.



S&P 500 weekly 2018
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Although a slight decline in volume last week and On Balance Volume nearing support indicate downwards movement may end soon, the close very near to the low and the lack of a long lower wick indicate downwards movement is probably not yet done.

However, at the daily chart level, Monday’s strong upwards session suggests a low may be in place.


S&P 500 daily 2018
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Assume until proven otherwise that the last noted gap is a breakaway gap from a small consolidation, which may provide resistance while it remains open.

Overall, this chart is fairly bearish. It offers a little more support to the alternate hourly chart, which expects new lows tomorrow.

There is still strong support at the 200 day moving average. This may be overshot, but in the first instance expect price to bounce up reasonably close to it.


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.

Downwards movement for Tuesday has a normal corresponding increase in market volatility to support it. This is bearish. There is no divergence.


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 fell strongly. The fall in price has broad support from market breadth. It was small caps though that had the least decline. This slight divergence indicates some weakness and may be interpreted as slightly bullish.

Breadth should be read as a leading indicator.

Downwards movement for Tuesday has support from declining market breadth. This is bearish. There is no divergence.


All indices have made new all time highs as recently as nine 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: 7,039.41.

S&P500: 2,083.79.

Nasdaq: 5,034.41.

Charts showing each prior major swing low used for Dow Theory are here.

Published @ 09:24 p.m. EST.