Upwards movement was expected to continue and to show an increase in strength. A new all time high was expected.
Volume for the NY Comp today at 3.8 billion shares is well above the 30 day average of 3.4 billion shares, fitting the expectation of strength in this upwards trend.
Summary: The low of December 2018 is expected to most likely remain intact.
The next short-term target is at 3,068 (Elliott wave) to 3,079 (classic analysis from the pennant). This next upwards wave may exhibit further strength. Look for corrections to continue to be very shallow and brief.
The mid-term target remains at 3,104 for a more time consuming consolidation or pullback, which may also be shallow.
The biggest picture, Grand Super Cycle analysis, is here.
Monthly charts were last published here, with video here. There are two further alternate monthly charts here, with video here.
ELLIOTT WAVE COUNTS
The two Elliott wave counts below will be labelled First and Second. They may be about of even probability. When the fifth wave currently unfolding on weekly charts may be complete, then these two wave counts will diverge on the severity of the expected following bear market. To see an illustration of this future divergence monthly charts should be viewed.
FIRST WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
The basic Elliott wave structure consists of a five wave structure up followed by a three wave structure down (for a bull market). This wave count sees the bull market beginning in March 2009 as an incomplete five wave impulse and now within the last fifth wave, which is labelled cycle wave V. This impulse is best viewed on monthly charts. The weekly chart focusses on the end of it.
Elliott wave is fractal. This fifth wave labelled cycle wave V may end a larger fifth wave labelled Super Cycle wave (V), which may end a larger first wave labelled Grand Super Cycle wave I.
The teal Elliott channel is drawn using Elliott’s first technique about the impulse of Super Cycle wave (V). Draw the first trend line from the end of cycle wave I (off to the left of the chart, the weekly candlestick beginning 30th November 2014) to the end of cycle wave III, then place a parallel copy on the end of cycle wave II. This channel perfectly shows where cycle wave IV ended at support. The strongest portion of cycle wave III, the end of primary wave 3, overshoots the upper edge of the channel. This is a typical look for a third wave and suggests the channel is drawn correctly and the way the impulse is counted is correct.
Within Super Cycle wave (V), cycle wave III is shorter than cycle wave I. A core Elliott wave rule states that a third wave may never be the shortest. For this rule to be met in this instance, cycle wave V may not be longer in length than cycle wave III. This limit is at 3,477.39.
The structure of cycle wave V is focussed on at the daily chart level below.
Within cycle wave V, primary waves 1 and 2 may now be complete. Within primary wave 3, no second wave correction may move beyond its start below 2,728.81.
In historic analysis, two further monthly charts have been published that do not have a limit to upwards movement and are more bullish than this wave count. Members are encouraged to consider those possibilities (links below summary) alongside the wave counts presented on a daily and weekly basis.
DAILY CHART
Click chart to enlarge.
Cycle wave V must subdivide as a five wave motive structure. Within that five wave structure, primary waves 1 and 2 may be complete.
Primary wave 3 must move above the end of primary wave 1. Primary wave 3 may only subdivide as an impulse. Within the impulse, intermediate waves (1) and (2) may be complete. Intermediate wave (3) has today moved above the end of intermediate wave (1) meeting a core Elliott wave rule. When it arrives, intermediate wave (4) may not move into intermediate wave (1) price territory below 2,910.61.
When primary wave 3 is over, then primary wave 4 may be a shallow sideways consolidation.
Thereafter, primary wave 5 should move above the end of primary wave 3 to avoid a truncation.
A base channel is drawn about primary waves 1 and 2. The lower edge is drawn from the start of primary wave 1 to the end of primary wave 2, then a parallel copy is placed upon the high of primary wave 1. Along the way up, corrections within primary wave 3 may find support about the lower edge of the base channel. Primary wave 3 may have the power to break above the upper edge of the channel.
Primary wave 1 lasted 86 sessions, 3 short of a Fibonacci 89. Primary wave 2 lasted 22 sessions, 1 longer than a Fibonacci 21. Primary wave 3 may end about a Fibonacci 55 sessions, give or take two or three sessions either side. This is a rough guideline only.
So far primary wave 3 has lasted 13 sessions.
HOURLY CHART
Click chart to enlarge.
Intermediate wave (2) may now be a complete double combination: expanded flat – X – running barrier triangle.
A target is calculated for intermediate wave (3) to end.
Intermediate wave (3) may only subdivide as an impulse. Within intermediate wave (3), minor waves 1 and 2 may now be complete.
Fibonacci Ratios within minor wave 1 are: minute wave iii is just 0.30 short of 4.236 the length of minute wave i, and minute wave v is just 1.48 longer than equality in length with minute wave iii.
A channel is drawn about minor wave 1 using Elliott’s second technique: the first trend line is drawn from the ends of minute waves ii to iv, then a parallel copy is placed upon the end of minute wave iii. This channel may continue to show where price finds resistance and support along the way up, although the strength of minor wave 3 may now be able to break above the upper edge of the channel.
There may now be a series of three overlapping first and second waves complete at primary, intermediate and minor degree. The next wave up for minor wave 3 within intermediate wave (3) within primary wave 3 may be expected to exhibit an increase in strength.
SECOND WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
This weekly chart is almost identical to the first weekly chart, with the sole exception being the degree of labelling.
This weekly chart moves the degree of labelling for the impulse beginning in March 2009 all down one degree. This difference is best viewed on monthly charts.
The impulse is still viewed as nearing an end; a fifth wave is still seen as needing to complete higher. This wave count labels it primary wave 5.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of et=”_blank”>StockCharts.com.
Weight will be given in this analysis to the strong bullish reversal pattern, which has support from volume. This supports the main Elliott wave counts.
The Doji candlestick last week represents indecision, a balance of bulls and bears. A Doji on its own is not a reversal signal; they can appear within trends as a small pause.
A new support line is drawn on On Balance Volume.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
A target from the flag pole is recalculated about 3,079. This is 11 points above the short-term Elliott wave target at 3,068.
The breakaway gap may offer support at 2,897.27.
There is an upwards trend still intact and it is far from extreme. Stochastics may remain extreme for long periods of time when this market trends. RSI has further room to rise before it reaches overbought. ADX indicates the trend has reasonable room to run before it reaches extreme. This chart is fully bullish.
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.
Bear markets from the Great Depression and onwards have been preceded by an average minimum of 4 months divergence between price and the AD line with only two exceptions in 1946 and 1976. With the AD line making new all time highs daily, the end of this bull market and the start of a new bear market is very likely a minimum of 4 months away, which is mid October 2019.
In all bear markets in the last 90 years there is some positive correlation (0.6022) between the length of bearish divergence and the depth of the following bear market. No to little divergence is correlated with more shallow bear markets. Longer divergence is correlated with deeper bear markets.
If a bear market does develop here, it comes after no bearish divergence. It would therefore more likely be shallow.
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 price and the AD line have both made new all time highs as bullish divergence expected.
Upwards movement has strong support from rising market breadth. This is 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.
Bearish divergence noted two weeks ago has not been followed by any downwards movement.
Last week both price and inverted VIX have moved higher. There is no new short-term divergence.
Long-term bearish divergence remains.
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.
Today price has made a new all time high, but inverted VIX has failed by a wide margin to make a corresponding new high. This divergence is bearish and is multiple over months. It may be an early warning sign of the end of cycle wave V approaching. It may yet develop further before price turns downwards.
Today price moved higher, but inverted VIX moved lower. Upwards movement in price today does not come with a corresponding decline in VIX as VIX increases. This divergence is bearish for the short term. It may yet develop further before it is followed by any downwards movement in price.
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 having moved higher following a Dow Theory bear market confirmation, 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 – a new all time high has been made on the 29th of April 2019 and another on the 20th of June.
Nasdaq: 8,133.30 – a new high has been made on 24th of April 2019.
Published @ 06:57 p.m. EST.
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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.
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New updates to this analysis are in bold.
I really like this set up in MDCO. Long and steady up on the weekly (not shown). This daily. Second day of squeeze, at end (?) of several week pullback to the 21 ema. Two white bars in a row, trend is showing neutral (but strong up on the weekly). The hourly is in many hours now of squeeze. Should this break to the upside, it’s likely to run a bit.
Full disclosure, I am long the stock.
Hourly chart update:
I’m changing the count for the short term today to see minor 2 continuing when markets open next week. I’m doing this because on the 5 minute chart the little wave up to todays high which I am labelling minuette wave (c) fits so well as a five wave impulse.
This suggests the last wave up I have labelled minute b may be a zigzag.
At 2,924 minute c would = 1.618 X minute a. This is 6 points off the 0.382 Fibonacci ratio of minor wave 1, giving a 6 point target zone for a pullback next week.
If upwards movement today exhibits strength then this count may change. B waves should exhibit weakness.
For any on the more aggressive side of the trading equation, BLUE is in an interesting set up. Volatility of this thing is HIGH, meaning, you win fast and/or you lose fast. It’s 5-6% (FB is about 2% by way of comparison). It’s come down (from 163 to 115!) to a major 61.8%, formed a double bottom with two daily “long tail” bars. And interestingly, my trend indicator is even reading mild uptrend (though looking at the chart it’s not obvious why the math works out that way! Doesn’t “look” like a daily up trend, but the CCI+DMI math works out that way).
Well, it’s not for all, even for many. I’m trading it, but in a 1/2 size position and only look for a quick 4% profit (bought at 117, exiting at 121.6 on a limit), expect at a minimum some sideways ranging action here that should score me by 4%. My stop is “out of the way” of random noise action, down at 99.
BLUE price has moved up a little, and now my stop is exactly the opposite, super tight at 115.57 (my buy was at 117.91), a 2% loss stop. Because with the upward action, a reversal would indicate to me that there’s likely “a lot” more down to come, and I’d rather reload deeper. A dollar saved can be a dollar earned…if you play it right. I’m also considering only selling 1/2 at my 4% profit target, and seeing if I can catch a big runner with the second half. There’s potential.
I’m always here early and leave it for some else but this time… 1.
Well then JP, for today you are the champ and I am the chump.
It looks like today we will see a small and short (time) pull back for Minute ii to be followed by a new ATH as Minor 3 continues.
Have a good day everyone.