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A green daily candlestick was expected for Friday’s session. Although the candlestick printed green, the session saw a lower low that was not expected.

Overall, the Elliott wave count remains the same with price remaining well above the invalidation point. The AD line and On Balance Volume continue to support the Elliott wave analysis.

Summary: A new all time high from On Balance Volume at the weekly chart level is extremely bullish, so expect upwards movement next week. There is also bullish divergence now between price and the AD line and VIX, signalling upwards movement to start next week.

The first short term target is now at 2,814. The second short term target is at 2,915. At one of these targets a sideways consolidation to last about a week is expected.

The mid to longer term target is at 2,922 (Elliott wave) or 3,045 (classic analysis). Another multi week to multi month correction is expected at one of these targets.

The final target for this bull market to end remains at 3,616.

The Elliott wave count has good support from classic technical analysis. New all time highs this week from On Balance Volume and the AD line add strong confidence to this analysis.

Pullbacks are an opportunity to join the trend.

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.



S&P 500 Weekly 2018
Click chart to enlarge.

Cycle wave V must complete as a five structure, which should look clear at the weekly chart level and also now at the monthly 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: the first trend line from the ends of intermediate waves (2) to (4), then a parallel copy on the end of intermediate wave (3). Intermediate wave (5) may end either midway within the channel, or about the upper edge.

Intermediate wave (4) may now be a complete regular contracting triangle lasting fourteen weeks, one longer than a Fibonacci thirteen. There is perfect alternation and excellent proportion between intermediate waves (2) and (4).

Within intermediate wave (5), no second wave correction may move beyond the start of its first wave below 2,594.62.


S&P 500 Daily 2018
Click chart to enlarge.

It is possible that intermediate wave (4) is a complete regular contracting triangle, the most common type of triangle. Minor wave E may have found support just below the 200 day moving average and ending reasonably short of the A-C trend line. This is the most common look for E waves of triangles.

Intermediate wave (3) exhibits no Fibonacci ratio to intermediate wave (1). It is more likely then that intermediate wave (5) may exhibit a Fibonacci ratio to either of intermediate waves (1) or (3). The most common Fibonacci ratio would be equality in length with intermediate wave (1), but in this instance that would expect a truncation. The next common Fibonacci ratio is used to calculate a target for intermediate wave (5) to end.

Price has clearly broken out above the upper triangle B-D trend line. This indicates that it should now be over if the triangle is correctly labelled.

A trend line in lilac is added to this chart. It is the same line as the upper edge of the symmetrical triangle on the daily technical analysis chart. Price has found support about this line at the last two small swing lows. The suppport at this line has reasonable technical significance now that it has been tested twice, and this line should be assumed to continue to provide support until proven otherwise.

Sometimes the point at which the triangle trend lines cross over sees a trend change. A trend change at that point may be a minor one or a major one. That point is Friday, and it may signal the end of minute wave iv.

Minor wave 3 may only subdivide as an impulse, and within it the subdivisions of minute waves ii and iv may show up as one or more red daily candlesticks or doji.

Within minor wave 3, no second wave correction may move beyond the start of its first wave below 2,676.81. Along the way up, any deeper corrections may now find support at the lower edge of the base channel drawn about minor waves 1 and 2. Minor wave 3 may have the power to break above the upper edge of the base channel. If it does, then that upper edge may then provide support.


S&P 500 Hourly 2018
Click chart to enlarge.

Minor wave 3 may only subdivide as an impulse, and within it all third waves at all degrees may only subdivide as impulses.

At this time, this impulse still looks very good: Minute wave iii is close to 1.618 the length of minute wave i; there is perfect alternation between minute waves ii and iv; and, the whole structure fits well into an Elliott channel with a typical throw-over of the middle of the third wave for minuette wave (iii). What does not look textbook perfect now is the disproportion in duration between minute waves ii and iv. However, combinations do tend to be longer lasting structures than zigzags.

The first target expects minute wave v to exhibit the most common Fibonacci ratio to minute wave i. The second target expects minor wave 3 to exhibit the most common Fibonacci ratio to minor wave 1.

If the structure of minute wave v may be seen as complete when price approaches the first target, then it may end there. But if price keeps rising through the first target, or if it gets there and the structure is incomplete, then the second target would be used.

Until there is a strong upwards thrust out of minute wave iv, the invalidation point must remain the same. The risk here is still that minute wave iv may not be over, that it may continue lower; although that risk at the end of Friday’s session is now judged to be somewhat lower, it does still remain. Minute wave iv may not move into minute wave i price territory below 2,729.34.



S&P 500 weekly 2018
Click chart to enlarge. Chart courtesy of

The small doji candlestick on its own is not a reversal signal. A doji signals a pause, a balance between bulls and bears.

Much weight in this analysis this week will be given to the new all time high for On Balance Volume. This is extremely bullish. It is likely that price shall follow through within a few weeks to new all time highs.

This chart is very bullish.


S&P 500 daily 2018
Click chart to enlarge. Chart courtesy of

The symmetrical triangle may now be complete. The base distance is 340.18. Added to the breakout point of 2,704.54 this gives a target at 3,044.72. This is above the Elliott wave target at 2,922, so the Elliott wave target may be inadequate.

The purple support line on On Balance Volume is slightly adjusted to be as conservative as possible (there is some leeway in exactly how that line may be drawn). As it is drawn here, the support line may be offering some support.

Overall, this chart is more bullish and neutral. Only the volume spike for Friday is bearish.


VIX daily 2018
Click chart to enlarge. Chart courtesy of 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.

Inverted VIX has made a new high above the prior swing high of the 9th of March, but price has not made a corresponding new swing high about the same point yet. This divergence is bullish. Inverted VIX is still a little way off making a new all time high.

Price moved lower on Friday, but inverted VIX moved higher. This divergence is bullish and supports the Elliott wave count.


AD Line daily 2018
Click chart to enlarge. Chart courtesy of

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. New all time highs from the AD line means that any bear market may now be an absolute minimum of 4 months away. It may of course be a lot longer than that. My next expectation for the end of this bull market may now be October 2019.

Small caps and mid caps have both made new all time highs. It is large caps that usually lag in the latter stages of a bull market, so this perfectly fits the Elliott wave count. Expect large caps to follow to new all time highs.

Breadth should be read as a leading indicator.

Price and the AD line moved slightly lower. Price has made a new low below the low two sessions prior, but the AD line has not. This divergence is bullish and supports the Elliott wave count.

Overall, the AD line still remains mostly bullish as it has made more than one new all time high this week. Price may reasonably be expected to follow through in coming weeks.


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: 23,360.29.

DJT: 9,806.79.

S&P500: 2,532.69.

Nasdaq: 6,630.67.

Only Nasdaq at this stage is making new all time highs. DJIA and DJT need to make new all time highs for the ongoing bull market to be confirmed.

Charts showing each prior major swing low used for Dow Theory may be seen at the end of this analysis here.

Published @ 07:21 p.m. EST on 16th June, 2018.