An upwards breakout has support from volume today. Elliott wave targets remain the same.

Summary: The upwards trend remains intact and there is underlying strength in this market still. The next mid-term target is at 3,010.

The final target remains the same at 3,045. Alternate monthly wave counts allow for a target as high as 4,119.

New updates to this analysis are in bold.

The biggest picture, Grand Super Cycle analysis, is here.

Monthly charts were last published here. Video is here.

ELLIOTT WAVE COUNTS

MAIN WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

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, primary waves 1 and 2 may now be complete. Primary wave 3 has moved above the end of primary wave 1. When it arrives, primary wave 4 may not move into primary wave 1 price territory below 2,813.49.

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.

DAILY CHART

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The daily chart will focus on the structure of cycle wave V.

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.

Within primary wave 3, intermediate waves (1) through to (4) may be complete. Intermediate wave (5) to end primary wave 3 may now be in its very early stages, and it may exhibit strength.

If it continues further, then intermediate wave (4) may not move into intermediate wave (1) price territory below 2,852.42.

HOURLY CHART

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Intermediate wave (5) may be unfolding as an impulse, which is the most common structure for a fifth wave. Within the impulse, minor wave 3 may have been over at today’s high, and minor wave 4 may not move into minor wave 1 price territory below 2,908.40.

Minor wave 5 may exhibit strength. Fifth waves to end third wave impulses are sometimes fairly strong. While this is most typical of commodities, the S&P500 does occasionally exhibit this tendency. A recent example is the end of primary wave 3 in January 2018 (seen on the weekly chart).

FIRST ALTERNATE WAVE COUNT

WEEKLY CHART

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This weekly chart is identical to the main wave count up to the end of cycle wave II. Thereafter, the degree of labelling is moved down one degree.

Cycle wave III may be an incomplete impulse.

The target for cycle wave III expects it to exhibit the most common Fibonacci ratio to cycle wave I.

Within cycle wave III, only primary waves 1 and 2 may be complete.

Within primary wave 3, only intermediate waves (1) and (2) may be complete. Intermediate wave (3) has now moved beyond the end of intermediate wave (1). When it arrives, intermediate wave (4) may not move into intermediate wave (1) price territory below 2,813.49.

This wave count now expects very strong upwards movement just ahead as a third wave at three large degrees unfolds.

TECHNICAL ANALYSIS

WEEKLY CHART

Click chart to enlarge. Chart courtesy of et=”_blank”>StockCharts.com.

Resistance about 2,880 has been overcome. Next resistance is about the prior all time high about 2,940.

On Balance Volume makes another new all two weeks ago strongly supporting the Elliott wave count.

A decline in volume while price moves higher is not of concern given current market conditions. This has been a feature of this market for a long time and yet price continues higher.

Last week moved price higher, but the candlestick closed red and the balance of volume was downwards. With a short trading week, it would be best to look inside the week at daily volume bars to judge the short-term volume profile. Overall, this chart remains bullish and supports the Elliott wave count.

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 that on the 8th of April Selling Pressure has reached another new low for this bull market, and Buying Power has reached a new high for this rally. This indicates an expansion in demand and a contraction in supply, which has historically been associated with strong phases of bull markets. This strongly supports the Elliott wave count, which expects new all time highs to come this year.

While the last swing low of the 25th 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. ADX agrees.

Today price closed to a new high above the small consolidation of the last three to five sessions. This is a classic upwards breakout that has support from volume. The signal today from On Balance Volume is very bullish and is given weight in this analysis.

The upwards trend remains intact and new all time highs may come this week.

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 in April, 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 August 2019 at this time.

Last week the AD line moves lower while price moves higher. This divergence is bearish for the short term.

Mid and large caps have both made new highs above the swing high of the 25th of February, but small caps have not. However, small caps AD line has made a new all time high on the 12th of April indicating broad strength underlying this market.

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.

Upwards movement today has support from rising market breadth as the AD line makes another new all time high. This is very bullish.

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 higher, but inverted VIX moved lower. Upwards movement did not come with a normal corresponding decline in VIX. With VIX increasing, this divergence is bearish.

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.

There is now double short-term bearish divergence between price and inverted VIX. While price makes new highs, inverted VIX has not made corresponding highs. Upwards movement has not come with a normal corresponding decline in VIX. This divergence is bearish for the short term, but is given very little weight in this analysis as it has not been particularly reliable lately. More weight will be given to the AD line and On Balance Volume.

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.

Published @ 10:03 p.m. EST.

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