Yesterday’s summary stated: “Expect a green daily candlestick and upwards movement to a short term target at 2,474 – 2,475 tomorrow.”
The high today is 2,473.83, just 0.17 short of the 1 point target zone.
Summary: The profit target is at 2,478. The upwards trend has internal strength and health. Use corrections as an opportunity to join the trend.
Another short term pullback to last about two to five days may begin either tomorrow or the day after. It may pull price down to about 2,464 to 2,450.
Always use stops. They should be set at this time just below 2,430.98, or for profitable positions use a trailing stop. 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
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This wave count is identical to the alternate wave count up to the high labelled minor wave 3 within intermediate wave (5) within primary wave 3.
This wave count sees primary wave 3 as incomplete, but close to completion.
Within primary wave 3 impulse, the final wave of intermediate wave (5) is seen as incomplete. Intermediate wave (5) is subdividing as an impulse.
When intermediate wave (5) is complete, then primary wave 3 would be complete. Primary wave 4 may not move into primary wave 1 price territory below 2,111.05.
If price reaches the target at 2,500 and either the structure is incomplete or price keeps rising, then the next target would be the next Fibonacci ratio in the sequence between cycle waves I and V. At 2,926 cycle wave V would reach 1.618 the length of cycle wave I.
DAILY CHART
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The daily chart shows only the structure of intermediate wave (5); this structure is an impulse.
Within intermediate wave (5), minor waves 1 through to 4 are now complete. The final fifth wave of minor wave 5 should now be underway. Within minor wave 5, the upcoming correction for minute wave iv may not move into minute wave i price territory below 2,430.98.
Minor wave 5 looks like it is extending. When waves extend, they show their lower degree subdivisions at higher time frames and here, within minor wave 5, minute wave ii is clear and minute wave iv should be also. That means that when it arrives minute wave iv may last two or so days.
Within minute wave iii, the subdivisions of minuette waves (ii) and (iv) now look clear on the daily chart.
There is perfect alternation between the deep expanded flat of minor wave 2 and the shallow double zigzag of minor wave 4.
HOURLY CHART
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Minor wave 5 may be subdividing as an impulse so far. The middle of the third wave has the strongest upwards momentum. This wave count fits so far with MACD.
There is no Fibonacci ratio between minuette waves (i) and (iii). This means it is more likely that minuette wave (v) will exhibit a Fibonacci ratio to minuette waves (i) or (iii), and the most common Fibonacci ratio for a fifth wave is equality in length with the first wave. The target is widened to a small 1 point zone calculated now a two degrees, and it has a reasonable probability.
Minuette wave (iv) has found support perfectly at the lower edge of the green Elliott channel. Now that this channel shows where price is finding support and resistance, the fifth wave of minuette wave (v) may be ending mid way within it. When the channel is breached by subsequent downwards movement, that shall be now taken as an indication that minute wave iii is over and minute wave iv is underway.
When minute wave iii is complete, then minute wave iv may not move into minute wave i price territory below 2,430.98.
ALTERNATE ELLIOTT WAVE COUNT
WEEKLY CHART
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Primary wave 4 may now be underway.
Primary wave 2 was a regular flat correction that lasted 10 weeks. Given the guideline of alternation, primary wave 4 may most likely be a single or multiple zigzag or a triangle and may last about a Fibonacci eight or thirteen weeks, so that the wave count has good proportion and the right look. So far it has lasted three weeks. This is far too brief to be considered complete or even close to complete.
Primary wave 4 may end within the price territory of the fourth wave of one lesser degree. Intermediate wave (4) has its range from 2,400.98 to 2,322.35.
Primary wave 4 may not move into primary wave 1 price territory below 2,111.05.
DAILY CHART
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A new all time high means a double zigzag for primary wave 4 is still possible but much less likely. A double combination would be more likely but would not offer very good alternation with the flat correction of primary wave 2.
What would still offer good alternation would be a running contracting triangle.
Within the triangle, intermediate wave (A) can be easily seen as a double zigzag. All remaining sub-waves of the triangle should then be simple A-B-C corrections.
There is a rule for expanding triangles stating that no sub-wave may be longer than 1.5 times the length of the prior wave. This rule will be applied here to intermediate wave (B) of this triangle, which may be any of the three types (contracting, barrier or expanding). That price point is at 2,477.88.
At this stage, intermediate wave (B) is now reasonably longer than intermediate wave (A). As price moves higher, the probability of this wave count reduces. The probability today is now fairly low.
HOURLY CHART
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Intermediate wave (C) of a contracting triangle may not move beyond the end of intermediate wave (A) below 2,407.70. Although an expanding triangle would be valid, they are the rarest of Elliott wave structures. In my nine years of daily Elliott wave analysis I have only ever seen one structure which in hindsight was an expanding triangle. If price makes a new low here below 2,407.70, then another scenario would be considered.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Candlesticks, volume, and On Balance Volume are bullish.
ADX, RSI and MACD are bearish.
Overall, give more weight to volume and On Balance Volume.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Look now for support about 2,450 for any pullbacks within this upwards trend.
Volume today indicates another upwards day tomorrow.
Volume, On Balance Volume, MACD and Bollinger Bands are all bullish.
Only ATR at this stage hints as to some weakness within upwards movement. It cannot tell us when and where upwards movement may temporarily end though.
VOLATILITY – INVERTED VIX CHART
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.
There are five instances of hidden bearish divergence on this chart; instances where inverted VIX made a new high but price did not make a corresponding new high. This divergence is bearish and indicates weakness within price. Three of those prior four instances were followed by some downwards movement.
Today is the fifth instance on this chart, so it may be followed by some downwards movement tomorrow.
BREADTH – AD LINE
Click chart to enlarge. Chart courtesy of StockCharts.com.
With the last all time high for price, the AD line also made a new all time high. Up to the last high for price there was support from rising market breadth.
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 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.
There is no divergence today between price and the AD line. Both have now made new all time highs. Upwards movement from price today has support from rising market breadth
Lowry’s measures of internal market strength and health continue to show a healthy bull market. The rise in price comes with expanding buying power and contracting selling pressure, normal and healthy for a bull market, even an old one.
Historically, almost every bear market is preceded by at least 4-6 months of divergence with price and market breadth. There is no divergence at all at this time. This strongly suggests this old bull market has at least 4-6 months to continue, and very possibly longer.
DOW THEORY
The S&P500, DJIA and DJT have all made new all time highs.
Nasdaq has yesterday made a new all time high. Modified Dow Theory (adding in technology as a barometer of our modern economy) sees all indices 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: 7,029.41.
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 @ 07:17 p.m. EST.
Without a channel breach I’m rather hesitant to post this chart. For now, this is what I’ve got.
But we really need the channel to be breached before having confidence in this idea.
What we should be doing if we’re going by the book for trading is using the touch of the lower edge of the channel to enter long. Only exit longs if the channel is breached.
That way they’ll all be profitable, except possibly the last one. But if you move stops up to breakeven fairly soon then it may be possible to have no losses on such an approach.
Anyway, this upwards wave looks to be a bit overbought today. Minute iv will turn up, the question is when? A long red doji today looks very slightly bearish and offers just a very little support for this labelling.
Very plausible scenario. This is a perfect set-up for a sharp C down tomorrow to complete minute four. This has been the pattern of late – sharp C waves down that complete during the session. I suspect quite a few bears are going to be trading this as a larger trend change and get trapped in minute five up but we will be ready won’t we? I am expecting price to bounce at the 21 day EMA 🙂
I already know a few who expect this to be a very large trend change… I keep trying to warn that it may not be so.
yeah, i just don’t see it coming yet
and Lowry’s are pretty bullish
so far putting weight on their data has worked well, i’m expecting that when we see 4-6 months divergence with breadth, and at least 4 months of divergence with buying power, then we can be ready for a massive trend change
so not yet
it’s all making me think that now the target at 2,500 may be too close by
Even those expecting a final wave up may fall for the minute four bear trap and think it is the larger fourth wave correction. I know the triangle is not yet out of the picture but I think the pattern of sharp C waves down to complete minor corrections will continue. I am sure other traders are starting to notice the pattern which is why the moves down are so sharp on high volume.
I will hopefully be closing out the long side of former bullish put spreads on the move down in the a.m. and closing the short side of a few bearish call spreads.
If we do get an intra-day reversal with minute four completing during tomorrow’s session it will be an incredibly good set-up for trading minute five up. I would expect exploding futures on Sunday as we finally put in a top to this extended third wave…boy it sure has taken its time getting to a top! We may as well enjoy the ride!
By any chance anyone notice the instant SPX/SPY sell twice today at exactly R1 (2477 / 247.32)
Algo’s dont want it higher.
Not quite sure what to make of price action today. As someone noted we did not have a breach of trend channel but VIX heading South so it looks as if this dip over for now with more upside ahead. I will wait for analysis insights! Later….
Euro at new 52 week high today. Looks like some currencies at major inflection points as the Australian dollar also putting in a new 52 week high. UUP missed it (a new low) by 0.003 points!
Here we go! It is not often that you get clearly defined trends in these markets. Not much one can do with sideways action. Thanks to Lara’s sharp analysis we have a pretty good road map for the immediate term…looking for a move down to around 2443…
2443 much lower than her target but still don’t have a breach of that channel.
True. It sure is taking its sweet time for that channel breach. I think Lara has marked it around 2463.85. Looks like Mr Market wants to keep bullish sentiment alive into the close… 🙂
The upcoming small trend change feels like the titanic trying to turn and one would expect a more nimble affair for a minute degree correction. It may last more than a day or two at this rate….
Flat correction for a second wave? If so we should now see a third down for SPX to align with Nasdaq Comp….
The upper price target was nearly hit this morning with SPX opening at 2477.62. What are the implications for the primary wave if we surpass it?
It’s slightly surpassed. When minute iv is complete then I can add to the target calculation for minute v to end minor 5 to end intermediate (5) to end primary 3.
So at that stage the target for primary 3 which is now 2,478 may change or widen to a zone.
Very deep Nasdaq retrace- almost 100 %. If minute four is here we should now get a very sharp third wave down….
Nasdaq Comp has the clearest wave structure so far. Showing an exhaustion gap immediately filled with an impulsive five down and what looks like a corrective zig zag so far. Let’s see if they can negate these developments. I have seen enough of these initial signals negated to be somewhat cautious….
If minute four underway, looking for a bounce around the 21 day EMA around 2443.50…
For what it’s worth, RUT is at the upper end of a pretty well formed channel with its structure dating back to December. The upper end of the channel is almost exactly 1444 which is where RUT opened this morning. There will either be a breakout or it will go back into the channel.
still fighting – these ***** banksters!
$2477.62, are you the winner of this game?
An interesting pop in futures suggesting we will tag 2480 before minute four gets underway. I had overlooked another bullish DIA 112.50/115 bullish put spread that I will be only to happy to cash in this morning. It goes all the way to the first week of August so I may have been thinking about holding it for minute five up but I think I will take the loot and skedaddle. 🙂
How did you determine the target for minute IV to be between 2,464 and 2,450?
Price territory of the fourth wave of one lesser degree.
Sorry, that would’ve been rather useful information to put in the text, wouldn’t it 🙂