A small range day makes a new all time high.
Today RSI, the AD line and VIX are used to indicate which of two Elliott wave counts may be most likely.
Summary: The bull market is expected to continue and corrections are expected to be shallow.
A pullback looks still most likely to continue from here. The target is now 2,933 to 2,930. If this target is wrong, it may be too low; the pullback may be remarkably shallow.
An alternate chart is published today that expects strong upwards movement from here, but it has less support from classic technical analysis.
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
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 charts below will now focus on price movement from the high of primary wave 1.
DAILY CHART
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 (this rule has now been met). Primary wave 3 may only subdivide as an impulse.
Within the impulse of primary wave 3, only intermediate wave (1) may now be complete. Intermediate wave (2) may have begun. Intermediate wave (2) may not move beyond the start of intermediate wave (1) below 2,728.81.
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.
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 26 sessions.
Within primary wave 3, intermediate wave (1) lasted 22 sessions, 1 longer than a Fibonacci 21. Intermediate wave (2) may be more brief; it may last a Fibonacci 13 sessions. So far it has lasted 4.
HOURLY CHART
Intermediate wave (1) may be a long extension. It fits within a channel drawn using Elliott’s second technique.
Intermediate wave (2) may be expected to be shallow. If the target of the 0.236 Fibonacci ratio at 2,933 is wrong, it may be too low. Intermediate wave (2) may subdivide as any Elliott wave corrective structure except a triangle. It would most likely be a zigzag, but it may also be a flat or combination.
Today the degree of labelling within intermediate wave (2) is moved up one degree. Intermediate wave (2) may be subdividing as an expanded flat correction. Within intermediate wave (2), minor wave B may now be complete, ending within the most common range of from 1.00 to 1.38 times the length of minor wave A, and minor wave B itself subdivides as an expanded flat.
A target is calculated for minor wave C. If this target is wrong, it may be too low. Minor wave C may subdivide over about two weeks.
ALTERNATE DAILY CHART
There is more than one way to label subdivisions within primary wave 3. It is also possible that intermediate waves (1) and (2) may both be over.
Intermediate wave (3) may only subdivide as an impulse. Within intermediate wave (3), minor waves 1 and 2 may be complete, and minor wave 3 may today have moved above the end of minor wave 1.
Within minor wave 3, no second wave correction may move beyond the start of its first wave below 2,963.44.
This wave count now expects a strong increase in upwards momentum as a third wave at three degrees unfolds. If tomorrow moves price higher, with support from volume and strength, this may be the only wave count.
SECOND WAVE COUNT
WEEKLY CHART
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 StockCharts.com.
The long lower wick on the last weekly candlestick suggests more upwards movement this week.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Rising price on light and declining volume has been a feature of this market now for years at all time frames. While some support from volume is expected as likely for the Elliott wave count which expects the middle of a third wave may be unfolding, it is not necessary to see in current market conditions.
For the short term, there may be a slightly elevated risk of another pullback or consolidation developing: the last gap is now closed (now relabelled an exhaustion gap), volume pushed price lower on Friday, and On Balance Volume turned down from resistance.
While upwards movement has a little support from volume, there is a slightly bearish longer upper candlestick wick today and single bearish divergence between price and both of RSI and Stochastics. This supports the main daily Elliott wave count. However, sometimes divergence can simply disappear. With the data in hand, today it is evident but may not be reliable.
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 again this week, 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 early November 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.
Last week both price and the AD line make new all time highs. Upwards movement in price has good support from rising market breadth. This is bullish.
Last week only large caps have made new all time highs. Mid caps are a little way off and small caps are lagging. This is normal behaviour in the later stages of a bull 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.
Today price has made a new all time high, but for the short term the AD line has failed to make a corresponding high by a small margin. This divergence is bearish for the short term and supports the main daily 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.
Long-term bearish divergence remains. It may develop further before the upwards trend ends.
Last week both price and inverted VIX have moved higher, but price has made new all time highs while inverted VIX has not. There is short, mid and long-term bearish divergence now between price and VIX.
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 slight new high, but inverted VIX has failed to make a corresponding new high. There is new short-term bearish divergence between price and VIX. This will be given a very small weight in this analysis today because it confirms divergence between price and the AD line and RSI.
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 – a new all time high has been made on the 3rd of July 2019.
DJT: 11,623.58
S&P500: 2,940.91 – a new all time high has been made on the 29th of April 2019.
Nasdaq: 8,133.30 – a new high has been made on 24th of April 2019.
Published @ 08:57 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.
Okay, I’ve emailed the pdf file to a few of you who have asked for it.
I may not check these comments again, so if anyone else would like a copy please email me at admin@elliottwavestockmarket.com and I’ll send it to you.
thanks.
Please , would love to see it
Hey everybody, I did some analysis of individual equities about 2 weeks ago for my family in Texas who are investing.
It’s the top down macro economic to individual equities, using Relative Rotation Graphs and individual chart analysis.
Would anyone like a copy? (even though now it’s 2 weeks out of date, it does take a very long term view) Let me know and I’ll email it to you.
It’s for the S&P500 universe.
I would please
Oh that would be great Lara. Thanks.
I am not sure but r u taking any requests for extra instruments, if yes then I would really appreciate your view on DAX (german index). But I understand it takes a lot of time, so It’s ok if you can’t .
BTW, I appreciate your coverage now of BItcoin. Thanks
Yes please
Hourly chart updated:
If intermediate (2) is continuing, there may now be a series of three small first and second waves correct within minor C. That predicts strong downwards movement as the middle of a small third wave unfolds, maybe tomorrow?
But as Kevin notes below, the proportions aren’t looking so good anymore.
I’m going to possibly publish an hourly chart for the bullish case today. (that depends on Lowry’s data, and volume and the AD line)
And I’m going to take a blank hourly chart for intermediate (2) and see what else I can see…
bgt a SPY put butterfly 299-297-295 for tomorrow. I’m in the money between 295.50 and 298.50. Capture the flag? No, capture that premium…
SPX at symmetry with the June move up.
I don’t think Rodney found any bears.
My count is still alive for RUT, and if (IF) it’s right…a high momentum iii of 3 situation is setting up right now, if and as the current shallow sideways ii correction completes. I’ll be buying a break up and out myself.
In fact it would be a (iii) of a [iii] of a 3.
CRON breaking up through descending trend lines. Again, this 15.8 stock could easily be at 24 in a month. I’m taking 1/2 at a 4% profit level and going for the gold in the second half (assuming I get that far). It’s a sweet set up.
At a bit of a crossroads here between main and alternative. Stuck right at 3,000.
I’m watching VIX get crushed this morning, seems to be a lack of downside risks in the near term. I will get long if we establish 3,000 but cautious of a trap here.
I don’t buy the a-b (with c down pending) structure of a hypothetical intermediate 2 down at this point. It’s all out of proportion to start with, and the strength of “b” is “too much”. Everything about the overall SPX chart at the moment looks strongly bullish to me. Of course some sharp selling later today could change my mind. Just like the marketing guy who was asked by the engineering manager for the requirements for the new product. “Well…” he said, “let me think…no wait, changing….changing….changing…”. “No problem” said the engineering manager, “I’ll just hire some goons to beat them out of you”. I have to say, as an engineering manager for about 30 years, that Dilbert always really spoke to me!
I bought it ….
I had a nice little chuckle over that with my morning coffee, thanks Kevin!
It’s interesting how many members here have engineering backgrounds. I think a background based on science and the scientific method may lead one to a more technical data based approach to markets.
Firstest!
Secondest???