Upwards movement was expected again. A green daily candlestick was printed, but it is technically an inside day with no new high.
Summary: Expect the trend to continue while price remains above 2,182.30. While upwards movement continues, the next target is at 2,227. A new low below 2,182.30 would indicate the expected pullback has finally arrived, and the target will be support about 2,120 and the lilac trend line.
Last monthly chart for the main wave count is here.
Last weekly chart is here.
New updates to this analysis are in bold.
MAIN WAVE COUNT
DAILY CHART
Click chart to enlarge.
Cycle wave V must subdivide as a five wave structure. At 2,500 it would reach equality in length with cycle wave I. This is the most common Fibonacci ratio for a fifth wave for this market, so this target should have a reasonable probability.
Cycle wave V within Super Cycle wave (V) should exhibit internal weakness. At its end, it should exhibit strong multiple divergence at highs.
Within cycle wave V, primary waves 1 and 2 may be complete. Primary wave 3 may have begun. Primary wave 3 may only subdivide as an impulse. So far within it intermediate wave (1) may be either complete today or very close to it.
Intermediate wave (2) may not move beyond the start of intermediate wave (1) below 2,083.79.
Intermediate wave (2) may find support close to the lilac trend line, which may also be close to the 0.618 Fibonacci ratio of intermediate wave (1).
At 2,473 primary wave 3 would reach equality in length with primary wave 1. This Fibonacci ratio is chosen for this target calculation because it fits with the higher target at 2,500.
The maroon channel is a best fit. The lower edge may provide support.
HOURLY CHART
Click chart to enlarge.
Both hourly charts are the same up to the end of minor wave 2. Thereafter, this first hourly chart sees minor waves 3 and 4 complete. There is perfect alternation between the zigzag of minor wave 2 and the triangle of minor wave 4.
Minor wave 3 is slightly shorter than minor wave 1. This limits minor wave 5 to no longer than equality in length with minor wave 3 at 2,213.03.
The final fifth wave of minute wave v may be over, or it may continue higher. There will be no indication of a trend change while price remains above the start of minute wave v at 2,194.51.
A new low below 2,182.30 would invalidate the alternate below and provide some confidence in this main wave count.
If intermediate wave (1) is over at yesterday’s high, then the 0.618 Fibonacci ratio would be at 2,130.
ALTERNATE HOURLY CHART
Click chart to enlarge.
What if minor wave 3 is not over? The area labelled as a triangle for the main hourly wave count could also be a series of overlapping first and second waves.
At 2,227 minor wave 3 would reach 1.618 the length of minor wave 1.
This wave count sees the middle of a third wave particularly weak; this is not common. The larger context of a fifth wave at cycle and Super Cycle degrees may see persistent unusual weakness though, so this wave count is possible.
ALTERNATE WAVE COUNT
DAILY CHART
Click chart to enlarge.
There is a wave count that fits for the Dow Industrials that sees an imminent trend change. It relies upon an ending diagonal, but that idea will not fit well for the S&P.
What if an impulse upwards is almost complete? The large corrections labelled primary waves 2 and 4 do look like they should be labelled at the same degree as each other, so that gives this wave count the right look.
Primary wave 4 ends within primary wave 2 price territory, but it does not overlap primary wave 1. Primary wave 1 has its high at 2,057 and primary wave 4 has its low at 2,083.79. The rule is met.
There is alternation between the double combination of primary wave 2 and the double zigzag of primary wave 4. Even though both are labelled as multiples W-X-Y, these are different structures belonging to different groups of corrective structures.
Primary wave 3 is shorter than primary wave 1. This limits primary wave 5 to no longer than equality with primary wave 3 at 2,285.53.
At 2,208 primary wave 5 would reach 0.618 the length of primary wave 3. There is no Fibonacci ratio between primary waves 1 and 3. It is likely that primary wave 5 will exhibit a Fibonacci ratio. If price continues upwards through this first target, then the next target would be at 2,084 where primary wave 5 would reach 0.618 the length of primary wave 1.
This wave count has good proportions. Primary wave 1 lasted a Fibonacci 34 days, primary wave 2 lasted 60 days, primary wave 3 lasted 40 days, and primary wave 4 lasted 52 days. Primary wave 5 may be more brief than primary wave 3. If it exhibits a Fibonacci duration, it may total a Fibonacci 34 days and that would see it end on the 22nd of December. If it is only a Fibonacci 21 days in duration, it may end more quickly on the 2nd of December.
The structure at the hourly chart level would be the same as for the main wave count. An impulse upwards would be completing, so for this wave count the degree of labelling would be one degree higher than the main wave count.
DOW JONES INDUSTRIALS
DAILY CHART
Click chart to enlarge.
An ending contracting diagonal may be completing for the DJIA. This fits into the same picture as the alternate wave count for the S&P; both see a final fifth wave coming to an end very soon.
If the 1-3 trend line is overshot, then this wave count expects a reversal very quickly. These reversals are often swift and sharp.
The diagonal is contracting, so the final fifth wave is limited to no longer than equality in length with primary wave 3 at 19,488.92.
If price behaves as this wave count expects, then look out for a deep re-tracement.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
A smaller range upwards week on lighter volume looks like bulls are tiring. Some downwards or sideways movement this week is a reasonable expectation.
There is no close by resistance line on On Balance Volume to stop a rise in price. There is no divergence between OBV and price to indicate weakness here.
RSI is not extreme. There is room for price to continue to rise.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Apart from declining volume and ATR, this picture looks bullish.
There is an upwards trend in place that is supported by rising strength and widening Bollinger Bands.
Stochastics is overbought, but this oscillator may remain extreme for reasonable periods of time during a trending market. It does not exhibit any divergence at the daily chart level to show weakness. If divergence develops here, it would be a warning of a reversal but not a signal.
RSI is not yet extreme. There is room for price to move higher.
MACD is bullish.
Price is not at the extreme edge of Bollinger Bands.
If price moves strongly up and away from the round number pivot at 2,200, then momentum may see some increase. If price turns down tomorrow close by to the pivot, then resistance may have held. Today’s close at 2,204.72 above the pivot suggests resistance may be giving way.
A pullback will come, and it would still be typical behaviour of price to turn and find support at the lilac trend line.
There is strong divergence between highs for On Balance Volume and price, from today’s high to the prior all time high on the 15th of August at 2,194: price has made new highs, but OBV has not. This divergence is bearish, but it can persist for some time. It does not indicate a trend change here; it only indicates bulls are weak. This supports the bigger picture for the Elliott wave count.
VOLATILITY – INVERTED VIX CHART
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 again 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.
No new short term divergence is noted today between price and inverted VIX. The last mid term divergence has now disappeared; both price and inverted VIX have made new highs. There is longer term divergence, but this has proven more recently to be unreliable and will not be given any weight at this stage.
BREADTH – AD LINE
Click chart to enlarge. Chart courtesy of StockCharts.com.
Short term bullish and bearish divergence is again working between price and the AD line to show the direction for the following one or two days.
There is longer term divergence between price and the AD line, but like inverted VIX this has proven reasonably recently to be unreliable. It will be given no weight here.
BREADTH – MCCLELLAN OSCILLATOR
Click chart to enlarge. Chart courtesy of StockCharts.com.
On the 21st August, 2015, the McClellan Oscillator reached -71.56. Price found a low the next session, 104 points below the closing price of the 21st August. This very extreme reading for the 24th August would have been a strong indicator of a low in place.
On the 11th December, 2015, the McClellan Oscillator reached -80.82. It moved lower the next session to -92.65 and price moved 19 points lower. The extreme reading of 11th December might possibly have led to an expectation of a bigger bounce than the one that occurred, and might have misled analysis into missing the strong fall from 29th December to 20th of January.
The next most recent occasion where this oscillator was extreme was the 8th January, 2016. It reached -66.25 on that date. The low was not found for seven sessions though, on the 20th January 2016, almost 110 points below the closing price of the 8th January. At the low of the 11th February, there was strong bullish divergence with price making new lows and the oscillator making substantially higher lows. This may have been a strong warning of a major low in place.
The most recent occasion of an extreme reading was -75.05 on the 2nd of November. The last low came two days later.
As an indicator of a low this is not it. It is a warning of extreme levels. The next thing to look for would be some divergence with price and this oscillator at lows. Divergence is not always seen at lows, but when it is seen it should be taken seriously. Any reading over 100 should also be taken very seriously.
This indicator will be approached with caution. It is one more piece of evidence to take into account.
The McClellan Oscillator has just reached extreme at 60 and today turned down. This does not mean price must turn here. The last time on this chart this oscillator reached 60 was on the 12th of July and price continued higher to the 15th of August before a reasonable correction began. It looks like this does not work well to indicate or warn of highs.
DOW THEORY
Major lows within the old bull market:
DJIA: 15,855.12 (15th October, 2014) – closed below on 25th August, 2015.
DJT: 7,700.49 (12th October, 2014) – closed below on 24th August, 2015.
S&P500: 1,821.61 (15th October, 2014) – has not closed below this point yet.
Nasdaq: 4,117.84 (15th October, 2014) – has not closed below this point yet.
Major highs within the bear market from November 2014:
DJIA: 17,977.85 (4th November, 2015) – closed above on 18th April, 2016.
DJT: 8,358.20 (20th November, 2015) – closed above this point on the 9th of November, 2016.
S&P500: 2,116.48 (3rd November, 2015) – closed above this point on 8th June, 2016.
Nasdaq: 5,176.77 (2nd December, 2015) – closed above this point on 1st August, 2016.
Dow Theory Conclusion: The transportations indicate an end to the prior bear market. The transportation index confirms a bull market.
This analysis is published @ 10:33 p.m. EST.
Price has passed the maximum for the main wave count. There was no fourth wave triangle in there.
This wave count has a fair amount more upwards movement expected now. Two small fourth wave corrections need to unfold along the way up.
DJIA is today overshooting the 1-3 trend line of that diagonal. It is now looking for an imminent turn, it should be today or tomorrow. Ending contracting diagonals overshoot the 1-3 trend line often by only a very small amount. I’ve been surprised before at how small the overshoot can be, so I’ve come to expect a turn almost immediately after the overshoot.
Look out below folks. It’s a possibility today.
If members are long here please manage risk carefully. By all means do go long if you have the nerve, just be aware of the risk of the alternate here. Use stops for sure. Invest only 3-5% of equity, or less, on any one trade.
If my new alternate which expects a massive multi generational trend change here is right, then my analysis of this last impulse up on the hourly chart level may be wrong. It could be over today or tomorrow if the diagonal for DJIA is correct.
Looks like NZ is gonna enjoy a pretty large off season south swell in the next few days. Enjoy!
I know your talking about the Downtown, but do you think the S&P could be done as well? Bear markets from here?
Closed out the rest of my SPXL longs at the end of day, SPX reached my 2213 target. Still holding GS shorts from 212.70.
1-3 trend-line of possible DJI ED exceeded today in classic “throw-over”. A close back below should take place next if the ED is in play…
I took a look at DJT and thought for a second it had made a new ATH but was reading 9400 instead of 9040…
Hi Folks,
Reading through the analysis as my subscription comes to an end. The reason for my stepping away is the fact that markets are heavily manipulated. We are seeing a significant effort and resources being deployed to keep the markets running higher. I have had my share of wins and loses. A recent example, I had bought some DOW, S&P and NASDAQ puts the day US election (Nov. 08, 2016). I was up into the wee hours and saw futures dive deep as the outcome was becoming clear (my positions were in the money by a very significant amount). I thought finally the fundamentals will do a reset and bring the valuation and markets to a reasonable level. But when I woke up, the market was only fractionally down and since then it has been steadily trending higher. I am all for the technical analysis but stepping away to figure out how best to make the manipulation work in my favor is what I hope to sort out for majority of my trades.
It will mean a lot of reading and research as I want to use my resources more efficiently and effectively going forward.
Happy Thanksgiving to folks in US!
ciao,
Ciao Ris. May you have health and happiness with your family and loved ones.
I agree, it does look like the markets are heavily manipulated. Maybe this is because there are fewer players at this high? So it may be easier for larger players to manipulate price?
I leave you with this. This is where I live and surf. Not my friends in this vid, but this is my home. If any members ever wish to visit New Zealand please contact me, I’ll put you in touch with all the local knowledge I have 🙂
I know a trader who saw a 100K profit in his trading account evaporate by the open election night. It was one of the most spectacular illustrations of how central banksters can manipulate short term market price. It has to be clear to any rational person that this is not normal market behaviour. As a result of this kind of market dysfunction, I am reluctant to leave positions in the market overnight. This kind of whipsaw has done a stellar job of intimidating market short sellers. I cannot remember the last time I have seen the kind of persistent selling pressure one would expect with third wave declines of minor degree or higher- the declines are all tentative and hesitant, no doubt because of the fear bearish traders have of being whipsawed by central bank intervention. I think what this means is that the market will reach an inflection point at which it will begin to descend under its own weight. Another very interesting question is how much leverage central banks have employed to keep the markets aloft. While some folk think they can print in perpetuity, and are reckless enough to attempt to do so, I think the bond market will eventually call their bluff. I expect the initial move down to start slowly for all the above cited reasons, but once it gets going, it will be historic in its intensity and duration. Banksters, whatever delusions they habor about their own prowess, are powerless to contain the human emotion of fear.
Vern,
My profits on paper at the peak of futures dive were in 7 figures. Now it seems like a paper trade but lesson learned and moving on. I am not out of the markets but just taking a pause and agree when that correction comes it will blow all support levels.
GOLD about to get whacked big way as Indian Government likely to put ban on GOLD import in effort to support demonetization efforts to kill tax evasion and counterfeit currency…
I wish there was a way to put my subscription on HOLD without cancelling.
Wow! I understand your frustration. Let’s face it, you were robbed. I have eaten some big losses in my time in the markets but none that huge. These so-called “flash crashes” I believe are giving us a peek into what is really going on with market internals, a peek behind the curtain as it were. It is truly remarkable that the markets continue to levitate against all rational expectation but here we are at new all time highs. I am watching transports very carefully and would probably join you in walking away for a break if we also see a new ATH there. The question of the market remaining irrational does not change economic reality. The key is to be in a position to act when the insanity finally ends….and end it will!
ps. FWIW, maintaining a subscription does not necessarily mean one has to be actively trading. There are times when I will go several weeks without making a trade but continue to read widely and observe market action and see what I can learn…
You can suspend your subscription. If you’ve paid via paypal go to your paypal account and find the first transaction. There will be a recurring payment profile.
Go into that and you should see a “suspend” option.
When you want to come back you can go back to paypal and unsuspend.
If you can’t find how to do this give paypal a call. They should be able to help you easily.
Lara,
I will certainly look into that later tonight. I certainly want to be touch with the nice group we have here and over at Gold site.
Wow! I just am blown away every time I have an idea that I cannot formulate with respect to the actual wave count and VIOLA! Lara charts it. I came ever so close to asking whether there was a viable wave count that saw a terminal wave up at high degree and there it is. Amazing. The maid is a maven!
Thanks Lara. The thing I have always so deeply appreciated about your analysis is its thoroughness and objectivity and tonight’s charts provide great examples of both. Happy Thanksgiving Everyone!
Another very kind gentleman. Thank you Verne.
That ending diagonal fits so well for the Dow, so I wanted to see if a similar idea could fit for S&P.
Gotta consider all possibilities….
Hey, thanks for the charts and analysis Lara. They look good. We still have to wait though for the market to reveal itself fully. Below is a comment from yesterday’s blog that I want to make sure you get to see. So I am copying it here.
“Dear Lara,
Anyone who expects any TA analyst to be right all the time is a fool. Analysis and trading are both art and science. We are searching for patterns and tendencies etc. In addition, as has been said many times in the past, trading is hard work. Your work is absolutely essential to me and I appreciate it greatly.
I never understand why so many people become disinterested with bull markets. I can understand trendless market disinterest because it is much more difficult to be profitable. But great profits can come from trending markets no matter what the direction. Example in point, last week I wrote that I closed out a trade at +20% profit. In my case, this was also a large trade so it made a significant impact on my account balance(s). I don’t know why so many don’t find this acceptable or exciting. If they are out to get rich quick in a bear market, they will probably not make it as a trader.
Again, I rely upon your work and greatly appreciate it along with all the member commentary. Have a great day.
In my world the snow is falling in the mountains. A favorite time of year for me.”
Beautiful. Thank you Rodney 🙂 You are a Gentleman.
Enjoy your snow, and your Thanks Giving.
I surfed with dolphins last week, and surfed my old skool 1960’s longboard (9’9″) this morning so I’m super stoked.
I don’t think it’s so much people becoming disinterested in bull markets, I think it may be more of a disinclination to put confidence in any form of technical analysis.
I think this tendency is stronger for equities, as they are a mirror of social mood. It doesn’t seem to work the same way for Elliot Wave Gold.
I also don’t think it is anything to do with being interested in a bull or a bear – you can of course make money with both. It is more to do with extremes getting even more extreme. The difficulty for me (and many others) is reconciling a tireless bull market with the reality we see everyday around us. In actual fact this is thinking outside the box – the natural thing to do is just go blindly with the herd. There are always alternate counts that can jump out and wipe your account, so for me it is prudent not to get too deeply invested in the last gasps of a very tired bull (albeit a bull that *could* stay alive for quite alot longer).
On the contrary, I think the same kind of situation when near the end of a brutal bear market will create more interest in the bull for those that think outside the box whilst the majority are proven right (initially) by staying on the sidelines. I can see a situation where we can clearly see things are getting better around us but the bear persists all the same and to our similar frustration, as one possible bull alternate after another gets invalidated.
Most people on this site I would imagine are here because they don’t go along with the herd and have the rare ability of individual thinking despite the huge amount of noise going on around them. Unfortunately at times that can be a curse as much as a blessing.
Olga has voiced my sentiments precisely. Here is the thing I have learned about the crowd – you cannot overestimate their gullibility! If you get my drift. I too have taken advantage of some of the manic moves higher for some profitable quick strikes. Nonetheless, I have been quite loathe to buy into the notion of “long and strong” based I what I know about the macro economic situation. The P.E ratios at these market evaluations is absolutely insane and in no way justified by the kinds of numbers companies have been posting for the last several years. As long as we understand we are trading markets subjected to extreme distortions by central bank intervention, to that degree we can trade with the caution and flexibility demanded of an unprecedented situation in global markets. I must admit I never thought, based on my understanding of econmic reality that we would be seeing these levels in the markets. Let’s see how long the equity markets can (pretend to) ignore what I have always thought would be the ultimate canary in the coal mine- the implosion of the bond market!
Olga, that is a great way of putting into words what I have been feeling for a long time now.
Vern, I share much of what your saying here.
Happy Thanks Giving to everyone who celebrates it!
May you all have a wonderful holiday with your families.