The upwards trend was expected to continue. An inside day today closes green, and the balance of volume was upwards. Elliott wave and classic analysis targets remain the same.
Summary: The upwards trend should continue. The mid-term Elliott wave target remains the same at 3,010 and the target calculated using the pennant pattern is at 2,956.
Lowry’s Selling Pressure has reached a new low for the entirety of this bull market, which began in March 2009. This strongly supports a bullish Elliott wave count.
The final target remains the same at 3,045.
New updates to this analysis are in bold.
The biggest picture, Grand Super Cycle analysis, is here.
Last published monthly charts are here. Video is here.
ELLIOTT WAVE COUNTS
WEEKLY CHART
This weekly chart shows all of cycle waves III, IV and V so far.
Cycle wave II fits as a time consuming double combination: flat – X – zigzag. Combinations tend to be more time consuming corrective structures than zigzags. Cycle wave IV has completed as a multiple zigzag that should be expected to be more brief than cycle wave II.
Cycle wave IV may have ended at the lower edge of the Elliott channel.
Within cycle wave V, no second wave correction may move beyond the start of its first wave below 2,346.58.
Although both cycle waves II and IV are labelled W-X-Y, they are different corrective structures. There are two broad groups of Elliott wave corrective structures: the zigzag family, which are sharp corrections, and all the rest, which are sideways corrections. Multiple zigzags belong to the zigzag family and combinations belong to the sideways family. There is perfect alternation between the possible double zigzag of cycle wave IV and the combination of cycle wave II.
Although there is gross disproportion between the duration of cycle waves II and IV, the size of cycle wave IV in terms of price makes these two corrections look like they should be labelled at the same degree. Proportion is a function of either or both of price and time.
Draw the Elliott channel about Super Cycle wave (V) with the first trend line from the end of cycle wave I (at 2,079.46 on the week beginning 30th November 2014) to the high of cycle wave III, then place a parallel copy on the low of cycle wave II. Cycle wave V may find resistance about the upper edge.
It is possible that cycle wave V may end in October 2019. If it does not end there, or if the AD line makes new all time highs during or after June 2019, then the expectation for cycle wave V to end would be pushed out to March 2020 as the next possibility. Thereafter, the next possibility may be October 2020. March and October are considered as likely months for a bull market to end as in the past they have been popular. That does not mean though that this bull market may not end during any other month.
MAIN WAVE COUNT
DAILY CHART
The daily chart will focus on the structure of cycle wave V.
Within Super Cycle wave (V), cycle wave III may not be the shortest actionary wave. Because cycle wave III is shorter than cycle wave I, this limits cycle wave V to no longer than equality in length with cycle wave III at 3,477.39. A target is calculated for cycle wave V to end prior to this point.
However, members are reminded that there is an alternate monthly wave count that does not have a limit to upwards movement. There is a link to it at the start of each analysis.
Cycle wave V must subdivide as a five wave motive structure, either an impulse or an ending diagonal. An impulse is much more common and that will be how it is labelled. A diagonal would be considered if overlapping suggests it.
Primary wave 2 may have been a very brief and shallow expanded flat correction.
Primary wave 3 may now exhibit an increase in upwards momentum. A target is calculated that fits with the higher target for cycle wave V to end.
Primary wave 3 may now be moving through its middle. Within primary wave 3, intermediate waves (1) and (2) may be complete. Intermediate wave (3) may only subdivide as an impulse. Within intermediate wave (3), minor wave 2 may not move beyond the start of minor wave 1 below 2,785.02.
The channel is adjusted to better show where current small pullbacks are finding support.
HOURLY CHART
Intermediate wave (3) has now moved above the end of intermediate wave (1) meeting a core Elliott wave rule.
So far this labelling agrees with MACD. Minor wave 3 exhibits an increase in momentum beyond that of minor wave 1.
An Elliott channel is now drawn about minor wave 3. Draw the first trend line from the end of minor wave 1 to the end of minor wave 3, then pull a parallel copy down to the end of minor wave 2. Minor wave 4 may find support about the lower edge of this channel.
Minor wave 4 may be completing as a very shallow regular barrier triangle. Only the final short wave down for minute wave e may be needed to complete the structure. Minute wave e may not move beyond the end of minute wave c below 2,867.14.
If the triangle is invalidated with a new low below 2,867.14, then minor wave 4 may be completing as a combination.
At this stage, today minor wave 4 looks incomplete.
Minor wave 4 may not move into minor wave 1 price territory below 2,829.87.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of et=”_blank”>StockCharts.com.
The last completed week is an outside week that closes green with the balance of volume upwards. Volume within last week does not appear to support upwards movement, but a clearer picture may be obtained by looking inside last week’s daily volume bars.
The close for last week is near highs, suggesting more upwards movement to follow.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
The December 2018 low is expected to remain intact. The two 90% upwards days on 26th December 2018 and 6th January 2019 indicate this upwards trend has internal strength.
Lowry’s data shows Selling Pressure has reached yet another new low for the entirety of this bull market, which began back in March 2009. This is very bullish and supports the Elliott wave count.
While the last swing low of the 8th of March remains intact, there exists a series of higher highs and higher lows from the major low in December 2018. It would be safest to assume the upwards trend remains intact.
The pennant pattern is a reliable short-term continuation pattern. A target calculated using the flag pole is about 2,956.
The gap upwards on the 1st of April may be a breakaway gap. These are not usually closed for some time. It may be used as an area of support; the lower edge is at 2,836.03.
A decline in volume for overall upwards movement is not of a concern in current market conditions. Price has been rising on light and declining volume for many months.
BREADTH – AD LINE
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com. So that colour blind members are included, bearish signals
will be noted with blue and bullish signals with yellow.
Every single bear market from the Great Depression and onwards has been preceded by a minimum of 4 months divergence between price and the AD line. With the AD line making a new all time high again last week, the end of this bull market and the start of a new bear market must be a minimum of 4 months away, which is the end of July 2019 at this time.
Last week the AD line makes another new all time high. Bullish mid-term divergence continues.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com. So that colour blind members are included, bearish signals
will be noted with blue and bullish signals with yellow.
Breadth should be read as a leading indicator.
Today the AD line has made another new all time high, but price has not. This divergence is bullish and supports the Elliott wave count.
VOLATILITY – INVERTED VIX CHART
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com. So that colour blind members are included, bearish signals
will be noted with blue and bullish signals with yellow.
Last week price moved lower with a lower low and a lower high, but inverted VIX moved higher. This divergence is bullish for the short term.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com. So that colour blind members are included, bearish signals
will be noted with blue and bullish signals with yellow.
Price has moved higher overall today with an increase in inverted VIX. Mid-term and longer term bearish divergence remains.
DOW THEORY
Dow Theory confirmed a bear market in December 2018. This does not necessarily mean a bear market at Grand Super Cycle degree though; Dow Theory makes no comment on Elliott wave counts. On the 25th of August 2015 Dow Theory also confirmed a bear market. The Elliott wave count sees that as part of cycle wave II. After Dow Theory confirmation of a bear market in August 2015, price went on to make new all time highs and the bull market continued.
DJIA: 23,344.52 – a close on the 19th of December at 23,284.97 confirms a bear market.
DJT: 9,806.79 – price has closed below this point on the 13th of December.
S&P500: 2,532.69 – a close on the 19th of December at 2,506.96 provides support to a bear market conclusion.
Nasdaq: 6,630.67 – a close on the 19th of December at 6,618.86 provides support to a bear market conclusion.
With all the indices moving now higher, Dow Theory would confirm a bull market if the following highs are made:
DJIA: 26,951.81
DJT: 11,623.58
S&P500: 2,940.91
Nasdaq: 8,133.30.
For the short term, now DJT has made a very slight new low below the prior swing low of the 8th of March. All of the S&P500, DJIA and Nasdaq remain above their prior swing lows of the 8th of March.
Published @ 06:48 p.m. EST.
—
Careful risk management protects your trading account(s).
Follow my two Golden Rules:
1. Always trade with stops.
2. Risk only 1-5% of equity on any one trade.
It is possible now that intermediate (3) is complete.
If it is then intermediate (4) would have to be a very shallow sideways consolidation. Resistance would be about todays high and support about 2,860.
It is also possible that minor wave 5 may extend higher.
Thanks Lara.
I’m wondering if perhaps the minor 4 ended where you have the minute a, and there’s a complete minute i (your minute b), ii (your minute c), iii (your minor 5 complete here), and now (today) iv in place, with the minute v in play now (price rising after your chart capture). Okay, I threw up an hourly to show what I’m taking about. This structure supports getting up to the overhead 2900 round and fibos’ just beyond, as well as allows for price to make a closer approach to the upper channel line, before the intermediate 4 kicks in.
That certainly could be the case.
My minute b within minor 4 is slightly contrived so….
This was just the first idea I saw this morning on only one coffee. Onto coffee #2 now so things may change…
I have AMGN (daily chart) taking off in a significant 3 up here after a complex WXY correction of almost six months. I’m getting long (again).
I view this upper channel line that price has now touched as serious potential resistance. A turn off it would be Significant IMO. Pushing through it would also be significant. It’s a critical level in SPX (daily shown), right here right now.
I have that channel line at 2889 (SPX) here. Anything much above that and price is through it. Which may be the case by the time you see this. Or…not.
Late in the day session and that upper channel line is hang tough. This is /ES with overnight data, 4 hour bars.
This chart suggests strongly to me that the minor 5 up is complete and the intermediate 4 is starting/about to start. Obviously no confirmation of that yet, just a…strong suggesting that might be the situation next week. I’m flat re: equities at the moment. Waiting to see what’s up over the weekend and Monday morn. One scenario that would not surprise me: over the weekend price moves up and tags the 2900-2910 zone and the fibo’s up there. And the rest of the week sells off.
Well, that new higher high above 2885 is not what was expected.
In strong bull markets / rallies like we have now, surprises will most likely be to the upside. It is the fear of getting left behind crowd that is pushing this market up. Go green!
Spy up only slightly on more trade deal headlines
Looks like the “goosing” of the algos is feacjing it’s limits with the same headline
S and p up 6 many days .. 120 point bounce in a week
Everyone reaching for more
If markets is only up a couple points tomorrow at open
I’ll be looking for cheap puts within a buck or two of price
In case they want a quick cheap push down to complete
Caution
I see a very high potential turn zone just up ahead, at the confluence of the more recent upper trend line (flattening -> decreasing aggregate momentum) and a big cluster of projection fibos and a prior swing high…AND a major roundie, 2900-2910.
The next cluster above that is at/just above the ATH, 2947-2960. Obviously, a yet even more likely turn zone. But first, 29000-2910. Another iv, perhaps larger, starting there is my expectation. Right about the start of earnings season, as the first results start confirming a slowing economy.
I’ll be taking shorts incrementally on sell triggers after a touch of that 2900-2910 zone.
Thank you, Lara, as always! I hope that wounded digit is feeling better!
You’re welcome Curtis.
It’s a pretty spectacular injury, but healing very well. Now to see how it fares after being dunked in salt water for a couple of hours…