Category Archives: Public Analysis

Examples of past analysis from the members area

Volume and Breakouts – Is it Necessary? | 11th August, 2017

This chart was published two days ago. At that time, it was warned that the possible upwards breakout of the 8th of August lacked support from volume and may turn out to be false:

S&P500 Daily 2017
Click chart to enlarge.

That was proven correct. The strong downwards movement from the S&P comes on a day with an increase in volume. This is a classic downwards breakout.

When a downwards breakout has support from volume, that adds confidence in it. Downwards breakouts do not require support from volume; the market may fall of its own weight. Price can fall due to an absence of buyers as easily as it can from an increase in activity of sellers. But when volume supports downwards movement, it may be more sustainable, at least for the short term.

This downwards breakout was predicted by strongest volume during the consolidation being a downwards day.

This volume analysis technique looks at the presence or absence of support from volume on the breakout after a consolidation period to tells us how reliable the breakout may be.

Original post published @ 12:17 a.m. EST on 12th August, 2017, on Elliott Wave Gold.

Volume and Breakouts – Is it Necessary? | 9th August, 2017

After a consolidation price will break out. The presence or absence of support from volume on the breakout tells us how reliable the breakout may be.

Gold Daily 2017
Click chart to enlarge.

Pennant patterns are one of the most reliable continuation patterns. But in an upwards trend the breakout should have support from volume.

For price to keep rising it requires increased activity of buyers. Upwards breakouts that do not have support from volume are suspicious.

This upwards breakout comes on a day with slightly higher volume, but the balance of volume for the session is downwards. Stronger volume during the session supported downwards movement, not upwards.

The breakout is suspicious and may turn out to be false.

While volume is important for upwards breakouts, it is not so important for downwards breakouts. The market may fall of its own weight.

Original post published @ 04:47 p.m. EST on Elliott Wave Gold.

Non Farm Payroll – What Direction for the S&P500? | 3rd August, 2017

A simple classic technical analysis pattern may answer the question of what direction to expect tomorrow from the S&P500 upon release of Non Farm Payroll data. This release is expected to move markets strongly:.

Gold Daily 2017
Click chart to enlarge.

Pennants are reliable continuation patterns. The pattern is supported if volume declines as the pattern forms. Pennants normally appear about halfway within a trend.

The measured rule takes the flag pole which precedes the pattern and adds that length to the expected breakout of the pattern.

If this pattern is correct, then tomorrow may see an upwards breakout to new all time highs for the S&P500.

Original post published @ 06:28 a.m. EST on Elliott Wave Gold.

S&P 500 Elliott Wave Technical Analysis – 3rd May, 2017

The consolidation continues sideways and support is still at about 2,380.

Summary: A small flag pattern may be completing. Volume suggests the breakout is more likely to be upwards. The measured rule gives a target about 2,459. The Elliott wave analysis gives a target about 2,469. Support continues to hold about 2,380.

If the last gap is closed with a new low below 2,376, then it would be an exhaustion gap. If that happens, then expect price to move substantially lower to make at least a slight new low below 2,328.95.

Always remember my two Golden Rules for trading:

1. Always use a stop.

2. Invest only 1-5% of equity on any one trade.

New updates to this analysis are in bold.

Last monthly and weekly charts are here. Last historic analysis video is here.

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART

S&P 500 Weekly 2017
Click chart to enlarge.

This wave count sees the middle of primary wave 3 a stretched out extension, which is the most typical scenario for this market.

Primary wave 3 may be incomplete. A target is now calculated for it on the daily chart.

There is alternation within primary wave 3 impulse, between the double zigzag of intermediate wave (2) and the possible triangle or combination of intermediate wave (4).

When primary wave 3 is a complete impulse, then a large correction would be expected for primary wave 4. This may be shallow.

Thereafter, primary wave 5 may be expected to be relatively short, ending about the final target at 2,500.

DAILY CHART

S&P 500 Daily 2017
Click chart to enlarge.

Primary wave (4) may be a complete regular contracting triangle. It may have come to a surprisingly swift end with a very brief E wave.

There is already a Fibonacci ratio between intermediate waves (3) and (1). This makes it a little less likely that intermediate wave (5) will exhibit a Fibonacci ratio to either of intermediate waves (1) or (3); the S&P often exhibits a Fibonacci ratio between two of its three actionary waves but does not between all three.

Within intermediate wave (5), no second wave correction may move beyond the start of its first wave below 2,344.51.

HOURLY CHART

S&P 500 hourly 2017
Click chart to enlarge.

The triangle may have come to a surprisingly quick end. Triangles normally take their time, so this quick end does slightly reduce the probability of this first wave count. A rare running flat within minor wave D of the triangle also slightly reduces the probability. For these reasons an alternate is provided below.

If the triangle is over, then the next wave up has begun. A five up may be complete.

Minor wave 2 can be seen as a complete corrective structure, a double combination. These are very common structures. The first structure in the double labelled minute wave w is a zigzag. The second structure within the double labelled minute wave y is a regular flat correction.

If the last gap is correctly named as a measuring gap, then it may not be filled; the lower edge may provide support. If this is the case, then minor wave 2 may be a relatively shallow correction. Within a new trend for this market, the early second wave corrections are often surprisingly brief and shallow.

If price closes the gap, then use the 0.618 Fibonacci ratio as the next target for minor wave 2. However, this wave count may switch to an alternate and the alternate below may become the main wave count if the gap is closed.

Minor wave 2 may not move beyond the start of minor wave 1 below 2,344.51.

If price does make a new low below 2,344.51, then the alternate below shall be used.

ALTERNATE DAILY CHART

S&P 500 Daily 2017
Click chart to enlarge.

What if intermediate wave (4) was not a complete triangle but is still unfolding as a double combination?

Double combinations are very common structures. This would still provide perfect alternation in structure with the double zigzag of intermediate wave (2). Although double zigzags and double combinations are both labelled W-X-Y, they are very different structures and belong to different groups of corrections.

The purpose of combinations is the same as triangles, to take up time and move price sideways. Intermediate wave (2) lasted 58 days. So far intermediate wave (4) has lasted 44 days. If it continues for another two or three weeks, it would still have excellent proportion with intermediate wave (2).

Although this wave count actually has a better look than the main wave count, it does not have support from classic technical analysis. For this reason it will be published as an alternate with a lower probability.

ALTERNATE HOURLY CHART

S&P 500 Hourly 2017
Click chart to enlarge.

The problem of the running flat within the main wave count is here resolved.

The second structure of the combination for the larger correction of intermediate wave (4) may be an expanded flat labelled minor wave Y. There is no rule regarding the maximum length of B waves within flats, but there is an Elliott wave convention that states when the potential B wave reaches twice the length of the A wave the idea of a flat should be discarded based upon a very low probability. That price point would be at 2,427.77.

The zigzag for minute wave b upwards may be incomplete. Sideways movement for the last five days is seen in exactly the same way now for both wave counts, as a double combination. This may be minuette wave (b) and may now be complete.

TECHNICAL ANALYSIS

WEEKLY CHART

S&P 500 weekly 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

This chart is bullish and strongly supports the main wave count. However, it is concerning that ADX is extreme. This does not mean price must turn down here; it only puts some doubt on how much further price can go up.

DAILY CHART

S&P 500 daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

So far the last gap labelled a measuring gap is holding support. Assume this gap is a measuring gap while it remains open, until proven otherwise.

Sideways movement for the last five sessions now looks like a bull flag pattern, one of the most reliable continuation patterns. There are now at least two anchor points for the resistance and support lines, so these lines may now be drawn. The pattern has a downwards slope and that increases its effectiveness. However, volume is not declining as price moves sideways. This does not rule out a flag pattern, but it is nice to see consolidations supported by declining volume.

During the consolidation it is upwards days which have strongest volume, suggesting an upwards breakout is more likely than downwards.

The measured rule uses the start of the flag pole on the 13th of April to its end on the 26th of April. This length is applied to an approximate breakout point about 2,390 giving a target about 2,459.

A classic breakout would be an upwards day closing above the resistance line with an increase in volume.

During a trend Stochastics may remain extreme for long periods of time. Overbought Stochastics does not signal price must move down here. Only when Stochastics has remained extreme and then exhibits divergence with price, preferably multiple divergence, is it a strong warning of an impending trend change. That is not the case yet.

This classic analysis offers more support for the main Elliott wave count than the alternate.

VOLATILITY – INVERTED VIX CHART

VIX daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

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.

It is noted that there are now six multi day instances of bullish divergence between price and inverted VIX, and all have been followed so far by at least one upwards day if not more. This signal seems to again be working more often than not. It will again be given some weight in analysis.

There is weak short term bullish divergence today between price and inverted VIX: price has made a slight new low below the low three days ago, but VIX has not made a corresponding new low. This indicates weakness in downwards movement from price today and is bullish.

BREADTH – AD LINE

AD Line daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

No new divergence is noted today between price and the AD line. There is still longer term bearish divergence, but this has not proven reliable lately, so it will not be considered.

DOW THEORY

The DJIA, DJT, S&P500 and Nasdaq continue to make new all time highs. This confirms a bull market continues.

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.

This analysis is published @ 09:17 p.m. EST.

[Note: Analysis is public today for promotional purposes. Member comments and discussion will remain private.]

Continue reading S&P 500 Elliott Wave Technical Analysis – 3rd May, 2017

FTSE Elliott Wave Technical Analysis – 24th April, 2017

FTSE is either ending a minor degree pullback or has had a major trend change. Classic analysis will be used to evaluate which scenario is more likely and at which price point one would be confirmed and the other discarded.

Summary: A pullback may be over here or very soon for FTSE. Assume the trend remains the same, up, until proven otherwise. This would be in some doubt only if price moves below 6,997.25.

Changes to prior analysis for FTSE are in bold.

MONTHLY ELLIOTT WAVE COUNT

FTSE monthly 2017
Click chart to enlarge.

For clarity only one monthly chart will be presented in this analysis. The alternate I have updated does not diverge in expected direction, so at this time it adds no depth to the analysis.

FTSE may be still within a large Super Cycle wave (II) unfolding as an expanded flat correction. These are very common structures.

Cycle wave a subdivides as a simple zigzag.

Cycle wave b may be unfolding as a double zigzag. These are also common structures for B waves.

Within the double zigzag, the second zigzag labelled primary wave Y is either complete or requires another upwards wave to complete it. These two possibilities are separated in the daily charts below.

The normal range of B waves within flats is from 1 to 1.38 the length of their respective A waves, giving a normal range for cycle wave b to end from 6,951 to 8,318. Price has reached up to within this range now.

When cycle wave b reaches 2 times the length of cycle wave a at 10,624, then the idea of an expanded flat should be discarded based upon a very low probability.

A new major swing low below 5,499.51 should be seen for Dow Theory to indicate a trend change.

WEEKLY ELLIOTT WAVE COUNT

FTSE weekly 2017
Click chart to enlarge.

This weekly chart shows the structure of intermediate waves (B) and (C) within primary wave Y.

Within minor wave 5, no second wave correction may move beyond the start of its first wave below 6,676.56. Downwards movement should now find strong support though at the lower edge of the blue Elliott channel if this wave count is correct.

DAILY ELLIOTT WAVE COUNT

FTSE daily 2017
Click chart to enlarge.

Always assume the trend remains the same until proven otherwise. Assume FTSE is still within a bull market until price proves it is not.

There is a problem with this first daily wave count: the possible ending contracting diagonal of minuette wave (v) to end minute wave iii meets all Elliott wave rules regarding wave lengths, but it does not look right. First, at their end, contracting diagonals normally have a small overshoot of the (i)-(iii) trend line but there is no overshoot. Second, the trend lines should converge but these do not; they actually diverge very slightly, which is technically a violation of the Elliott wave rule.

This wave count is published with this acknowledgement. This should reduce its probability. It is published only because at this stage I have not been able to see a resolution to this bullish wave count, and the alternate is so bearish. That does not mean a resolution is not possible.

Minute wave iv may not move into minute wave i price territory below 6,997.25.

ALTERNATE DAILY ELLIOTT WAVE COUNT

FTSE daily 2017
Click chart to enlarge.

It is possible at this stage to see the entire structure of cycle wave b complete. The problem with the ending diagonal seen in the main wave count is here neatly resolved.

A new trend at cycle degree should begin with a clear five down on the daily chart. This has not completed yet. This wave count should not be given serious weight until it has proven itself.

To prove itself these conditions should be met:

– A five down on the daily chart

– A new low below 6,997.25

– A breach of the bull market support line on the monthly technical analysis chart below

– A new low below 5,499.51

Cycle wave c should last one to several years. It would be extremely likely to make a reasonable new low below 3,277.5. An initial target about 1,537 would see cycle wave c reach 1.618 the length of cycle wave a, the most common Fibonacci ratio for C waves within expanded flats.

TECHNICAL ANALYSIS

MONTHLY CHART

FTSE monthly 2016
Click chart to enlarge. Chart courtesy of StockCharts.com.

Expect the blue bull market line to offer final support while price remains above it. If this line is breached, expect a trend change from bull to bear.

Moving averages are bullish. This pullback is resolving ADX reaching extreme. There is again room for a trend to develop.

Long term RSI bearish divergence is concerning for bulls.

WEEKLY CHART

FTSE weekly 2016
Click chart to enlarge. Chart courtesy of StockCharts.com.

A mid term pullback within the larger bull market is indicated by a breach of the mid term bull trend line.

The prior upwards trend showed weakness in declining ATR, but did not reach extreme as ADX remained below 35 and below both directional lines.

DAILY CHART

FTSE daily 2016
Click chart to enlarge. Chart courtesy of StockCharts.com.

With RSI now just reaching oversold and price very close to support, it would be reasonable to expect either a bounce, at least, or fairly likely an end to this pullback here. This supports the main daily Elliott wave count.

RSI and Stochastics do not always exhibit divergence with price at lows, but they very often exhibit divergence with price at highs.

This analysis is published @ 03:26 a.m. EST.

S&P 500 Elliott Wave Technical Analysis – 27th January, 2017

Careful analysis of volume, On Balance Volume, and VIX may assist to find an entry to join the current trend.

Summary: Price has broken out upwards from a flag pattern. A target using the measured rule is 2,323 and an Elliott wave target is 2,382. Monday, and maybe Tuesday as well, may see price move a little lower; the target is at 2,284. A new low below 2,257.02 would indicate a deeper pullback to the purple trend line. If looking for a point to enter long, always use a stop and do not invest more than 1-5% of equity on any one trade.

Volume declined for Friday, On Balance Volume is very close to support, but VIX diverged from price on Friday. The last time VIX did this was during a consolidation which moved price overall lower. That is one reason why I expect some more downwards movement. But look out, the alternate is possible.

New updates to this analysis are in bold.

Last monthly and weekly charts are here. Last historic analysis video is here.

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART

S&P 500 Weekly 2017
Click chart to enlarge.

Cycle wave V is an incomplete structure. Within cycle wave V, primary wave 3 may be relatively close to completion.

When primary wave 3 is complete, then the following correction for primary wave 4 may not move into primary wave 1 price territory below 2,111.05.

Primary wave 2 was a flat correction lasting 47 days (not a Fibonacci number). Primary wave 4 may be expected to most likely be a zigzag, but it may also be a triangle if its structure exhibits alternation. If it is a zigzag, it may be more brief than primary wave 2, so a Fibonacci 21 sessions may be the initial expectation. If it is a triangle, then it may be a Fibonacci 34 or 55 sessions.

Primary wave 3 at this stage though is incomplete and may continue to move price higher.

DAILY CHART

S&P 500 Daily 2017
Click chart to enlarge.

It is possible that intermediate wave (4) is a complete combination: zigzag – X – flat. It would have been even in duration with intermediate wave (3), both lasting 26 days.

Intermediate wave (3) is shorter than intermediate wave (1). One of the core Elliott wave rules states a third wave may never be the shortest wave, so this limits intermediate wave (5) to no longer than equality in length with intermediate wave (3) at 2,450.76.

Within intermediate wave (5), no second wave correction may move beyond its start below 2,257.02.

Intermediate wave (5) has so far lasted just four days. It may be expected to be shorter both in length and duration compared to intermediate wave (3). At this stage, an expectation of a Fibonacci 13 days total for intermediate wave (5) looks reasonable, so it may now continue for another 9 days or sessions.

The proportion here between intermediate waves (2) and (4) is acceptable. There is alternation. Both are labelled W-X-Y, but double zigzags are quite different structures to double combinations.

HOURLY CHART

S&P 500 hourly 2017
Click chart to enlarge.

Intermediate wave (5) must subdivide as a five wave structure, either an impulse or an ending diagonal. At this stage, it is not possible to eliminate either option.

Within intermediate wave (5), minor wave 1 may be complete.

Minor wave 2 may be relatively brief and shallow. This was the pattern within the last upwards wave of intermediate wave (3) (from the 4th November, 2016, to the 13th December, 2016, seen on the daily chart). There, minor wave 2 was just 0.34 of minor wave 1 and was over within one session. Look out for this tendency again.

Within intermediate wave (3), the longest duration for a correction was four days for minor wave 4.

Within intermediate wave (1), minor wave 2 was brief lasting only two days. It was also shallow at only 0.30 of minor wave 1.

This does not mean that minor wave 2 within intermediate wave (5) must also be brief and shallow, only that the balance of probability points to this.

The preferred target for minor wave 2 will be about 2,284.

Analysis of the structure of minor wave 2 at the five minute chart level shows it is most likely incomplete. Minute wave a subdivides as a leading contracting diagonal and minute wave b subdivides as a three. Minute wave c must be a five wave structure. But as of Friday’s low that does not fit, so it looks likely to move lower.

If price moves below 2,257.02, this main wave count would be invalidated and the alternate below would be confirmed.

ALTERNATE ELLIOTT WAVE COUNT

DAILY CHART

S&P 500 Daily 2017
Click chart to enlarge.

This was the main wave count until recently. With classic analysis now very bullish, it is now an alternate as it has less support.

It remains possible that intermediate wave (4) is an incomplete expanded flat correction. With On Balance Volume breaking below support on Friday, this alternate wave count has increased in probability. It illustrates the risk to entering long positions based upon the main wave count here.

So far intermediate wave (4) may have lasted 30 sessions. It may continue for another four to total a Fibonacci 34 days or sessions.

No target is given for minor wave C downwards because a target calculated using the Fibonacci ratio of 1.618 to minor wave A results in price falling short of the purple trend line. Minor wave C may end only when price comes down to touch the trend line again.

Minor wave B is now a 1.53 length to minor wave A. This is longer than the normal length of up to 1.38 but within the allowable convention of 2. The length of minor wave B has reduced the probability of this wave count.

Intermediate wave (4) may not move into intermediate wave (1) price territory below 2,193.81. It should find very strong support at the purple trend line and stop there.

TECHNICAL ANALYSIS

WEEKLY CHART

S&P 500 weekly 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

A strong upwards week comes with an increase in volume. The rise in price is supported by volume.

On Balance Volume has found support and moved up and away from the long yellow support line. This is a bullish signal. OBV has not yet reached resistance. It may find some resistance at the purple line.

RSI is not yet overbought and exhibits no divergence with price. There is room still for price to rise further.

ADX indicates the beginning of an upwards trend. This is not extreme. There is plenty of room for the trend to continue.

DAILY CHART

S&P 500 daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

A bull flag pattern has completed and an upwards breakout closed above prior resistance. The flag pole is short, only 48.48 points, so a target using the measured rule would be about 2,323.

A downwards day for Friday comes with a decline in volume. The fall in price is not supported by volume. Volume suggests that downwards movement may end here or very soon short term.

The breakaway gap may now offer support. If any members hold long positions, this may be used to pull up stops. Or if entering a long position, the lower edge of the gap may provide a good point for a stop.

Price found resistance about the round number pivot at 2,300.

ADX today is increasing from yesterday and it is above 15. An upwards trend is indicated, which is not extreme, so there is room for this trend to continue for a reasonable distance.

ATR is now overall flat with a small range day today. ATR increased while price moved higher, so there is still some strength within this trend.

On Balance Volume gave a strong bullish signal with a break above the purple trend line. Now OBV has moved below the purple trend line, negating the strong bullish signal. The yellow line is close by and may offer some support. This may assist to halt the fall in price. If price moves lower early next week, it may not be by much.

There is still strong and long held divergence between price and RSI. This may disappear, but it does offer some support to the Elliott wave count which sees this upwards wave as a fifth wave. Fifth waves very commonly exhibit divergence as they end.

RSI is not yet overbought, so there is room still for price to rise further.

There is strong and long held divergence between price and Stochastics. This may persist for reasonable periods of time during a trending market.

MACD shows a bullish crossover.

Bollinger Bands continue to expand. Volatility may be returning to the market after the breakout. There is plenty of room for volatility to increase further.

Price closed close to the upper edge of Bollinger Bands today, but this does not necessarily mean that price must move lower tomorrow. The last upwards trend saw price close above the upper range of Bollinger Bands for three days in a row, but the end of that trend was still not seen for a following three days. Price can sit at the extreme of Bollinger Bands for several days when a trend is strong.

VOLATILITY – INVERTED VIX CHART

VIX daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

There are a few instances of multi day divergence between price and inverted VIX noted here. Bearish divergence is blue. Bullish divergence is yellow. It appears so far that divergence between inverted VIX and price is mostly working to indicate short term movements spanning one or two days. While this seems to be working more often than not, it is not always working. As with everything in technical analysis, there is nothing that is certain. This is an exercise in probability.

Price moved lower during Friday’s session and the balance of volume during the session was down. Normally, inverted VIX would also move lower indicating an increase in volatility as price declines. However, inverted VIX moved higher on Friday indicating a decline in volatility. The fall in price is not accompanied by a corresponding decline in volatility. This is abnormal.

The last two times this occurred are noted with blue arrows. It is noted that on those occasions divergence was followed overall by a further decline in price. Not immediately, but this was during a consolidation that ended lower.

That may happen again here. Normally, I would interpret this divergence as bullish, but it may actually be bearish considering recent behaviour.

BREADTH – AD LINE

AD Line daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

No new divergence at today’s new high is noted between price and the AD line.

The AD line moved lower for Friday. The fall in price was accompanied by a normal decline in market breadth.

DOW THEORY

The DJIA, DJT, S&P500 and Nasdaq have made new all time highs in December of 2016. This confirms a bull market continues.

This analysis is published @ 12:19 a.m. EST on 28th January, 2016.

[Note: Analysis is public today for promotional purposes. Member comments and discussion will remain private.]

Continue reading S&P 500 Elliott Wave Technical Analysis – 27th January, 2017