Select Page

A small inside day, closing red, mostly fits the Elliott wave count for the short term.

Price remains above the invalidation point, which is very close by.

Summary: Upwards movement looks most likely next week. The short term target is about 2,844, where a larger pullback may develop.

Overall, an upwards trend is still expected to be developing.

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.

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 found support about this line.

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.

The preferred way now to see upwards movement from the end of intermediate wave (4) is as an incomplete five wave impulse for minor wave 1. Within the impulse, minute wave iii is shorter than minute wave i by 32.96 points, which limits minute wave v to no longer than equality in length with minute wave iii at 2,857.85, so that minute wave iii is not the shortest actionary wave within the impulse and a core Elliott wave rule is met. A target for minute wave v to complete minor wave 1 may be about 2,844.

When minor wave 1 is a complete five wave impulse, then a longer lasting pullback for minor wave 2 may be expected. A breach of the Elliott channel about minor wave 1 by a full daily candlestick below and not touching the lower trend line would provide confidence that minor wave 1 should then be over and minor wave 2 should then have begun.


S&P 500 Hourly 2018
Click chart to enlarge.

Minute wave iv may be moving sideways as a regular contracting triangle. It may have ended at the end of Friday’s session, or minuette wave (e) may move just a little lower.

If minute wave iv continues further, then it may not move into minute wave i price territory below 2,742.24.

Minute wave v may end about mid way within the Elliott channel.


S&P 500 Hourly 2018
Click chart to enlarge.

This is now the alternate hourly count. It looks at the possibility that minor wave 1 may be complete, and now minute wave i may be complete.

Minute wave ii may be an incomplete zigzag that is not remaining within the base channel drawn about minor waves 1 and 2. The base channel is drawn from the start of minor wave 1 to the end of minor wave 2, then a parallel copy is placed upon the end of minor wave 1. Lower degree second wave corrections usually find support about the lower edge of a bull market base channel. While base channels most often work in this way, they do not always work. The probability of this wave count is reduced, but it remains viable.

Minute wave ii may end closer to the 0.618 Fibonacci ratio of minute wave i about 2,721.

Minute wave ii may not move beyond the start of minute wave i below 2,676.81.

A new low below 2,742.24, by any amount at any time frame, would invalidate the main hourly wave count and provide confidence in this alternate.



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

This week’s spinning top candlestick pattern again signals a balance of bulls and bears this week. With volume not supporting downwards movement this week, it looks like bears may be tiring.

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 balance of volume for Friday was upwards and the candlestick was an inside day. Volume strongly supported upwards movement during Friday’s session.

With Stochastics now well back into neutral territory, there is again plenty of room now for price to continue higher.


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.

Bearish divergence noted in last analysis between price and inverted VIX has now been followed by one red daily candlestick. It may now be resolved, or it may need another downwards day to resolve it. There is no new divergence for Friday.


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 recently 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.

Bearish divergence noted in last analysis between price and the AD line has now been followed by a red daily candlestick. It may now be resolved, or it may need another downwards day to resolve it. There is no new divergence for Friday.

Overall, the AD line still remains mostly bullish as it has made more than one new all time high last 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 @ 10:07 p.m. EST.