Last analysis expected the new trading week to begin with a little upwards movement, which is what has happened.

Summary: With the best fit channel breached, it is possible that the bounce is over and the bear market has resumed. A new low below 3,127.66 would add reasonable confidence to this view. A new low below 2,965.66 would invalidate the alternate bullish wave count and add strong confidence in a bearish wave count.

The third alternate wave count is bullish. A new high above 3,393.52 is still required for confidence in this wave count. A new high above 3,328.45 would increase probability of a bullish wave count.

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

Last monthly charts are here. Video is here.

ELLIOTT WAVE COUNTS

MAIN WEEKLY CHART

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This main Elliott wave count expects that the bull market beginning in March 2009 was cycle wave I of Super Cycle wave (V). The trend change in February 2020 may have been only at cycle degree. Cycle wave II may last from one to a few years.

Cycle wave II would most likely subdivide as a zigzag; thus far that looks like what is unfolding. At the end of this week, again both of primary waves A and B may be complete. A target is calculated for primary wave C to end.

As price approaches the first target, if the structure may be complete, then it may end there. But if the structure is incomplete or price keeps falling, then attention would turn to the second target.

Cycle wave II may not move beyond the start of cycle wave I below 666.79.

DAILY CHART

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Draw the wide maroon trend channel carefully: draw the first trend line from the end of primary wave 1 at 2,093.55 (December 26, 2014), to the end of primary wave 3 at 2,940.91 (September 21, 2018), then place a parallel copy on the end of primary wave 2 at 1,810.10 (February 11, 2016). The channel was fully breached in March 2020 indicating a trend change from the multi-year bull trend to a new bear trend. Resistance at the lower edge has been overcome; price has closed above this trend line. During the next downwards wave this line may offer some support.

Cycle wave II may subdivide as any Elliott wave corrective structure except a triangle. It would most likely be a zigzag (zigzags subdivide 5-3-5).

Primary wave B may now be a complete double zigzag.

If primary wave A is correctly labelled as a five wave impulse, and if primary wave B continues higher, then it may not move beyond the start of primary wave A above 3,393.52.

HOURLY CHART

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Copy the best fit channel over from the daily chart to the hourly chart. The lower edge of the best fit channel is breached by a full hourly candlestick that is now not touching the trend line, although it is not breached by downwards movement as the candlestick which breaches it is green.

Minute wave ii may end about the 0.618 Fibonacci ratio of minute wave i at 3,249.

A new low now below 3,127.66 would invalidate the alternate hourly chart and provide some confidence in this wave count.

A new low below 2,965.66 would invalidate the bullish alternate wave count below and provide further confidence in this wave count.

ALTERNATE HOURLY CHART

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Primary wave B may still be an incomplete double zigzag. Primary wave B may not move beyond the start of primary wave A above 3,393.52.

Minor waves A and B within the double zigzag of intermediate wave (Y) may be complete. Minor wave B may have completed as a relatively quick zigzag.

There is now, from the end of minor wave B, what looks like a five wave impulse upwards complete. This may be minute wave i within minor wave C. Minute wave iii may be shorter than minute wave I, and minute wave v may be shorter than minute wave iii. Minor wave C may end just below the gap of the 24th of February 2020.

Minute wave ii may not move beyond the start of minute wave i below 3,127.66.

FIRST ALTERNATE WEEKLY CHART

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This alternate weekly chart follows the First Alternate Monthly chart. It is best viewed on a weekly chart time frame.

By simply moving the degree of labelling in the bull market beginning March 2009 up one degree, it is possible that a Grand Super Cycle trend change occurred on February 19, 2020. The bull market from March 2009 to February 2020 may have been a complete fifth wave labelled Super Cycle wave (V).

A bear market at Grand Super Cycle degree may be expected to last at least a decade, possibly longer. Corrections for this market tend to be much quicker than bullish moves, and so a fair amount of flexibility is required in expectations for duration of the different degrees.

Grand Super Cycle II would most likely subdivide as a zigzag, although it may be any corrective structure except a triangle. It should begin with a five down at the weekly chart time frame, which would be incomplete.

The first wave down on the daily chart is labelled cycle wave I. If this degree of labelling is wrong, it may be too high; it may need to be moved down one degree.

Following cycle wave I, cycle wave II may be an incomplete double zigzag.

If it continues any higher, then cycle wave II may not move beyond the start of cycle wave I above 3,393.52.

THIRD ALTERNATE DAILY CHART – BULLISH

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This alternate daily chart follows the third alternate monthly chart. It will be published daily because the structure of the current upwards wave is different and so the invalidation point is different. This alternate chart labels the subdivisions of the long bull market differently. The channel is a best fit.

The target for the end of this bull market is provisional. It would best be calculated at primary degree, but that cannot be done until all of primary waves 1 through to 4 are complete. At that stage, the target will be recalculated and will very likely change.

Cycle wave V must subdivide as a five wave motive structure, most likely an impulse. Primary wave 1 within cycle wave V may be nearing completion.

Within primary wave 1: intermediate waves (1) through to (4) may be complete.

Use Elliott’s first technique to draw a channel about primary wave 1. Draw the first trend line from the ends of intermediate waves (1) to (3), then place a parallel copy on the end of intermediate wave (2). The lower edge of this channel is now breached by three full daily candlesticks below it. The channel is no longer showing where price is finding support. This slightly reduces the probability of this wave count.

Intermediate wave (3) within primary wave 1 is shorter than intermediate wave (1). Because intermediate wave (3) may not be the shortest actionary wave, intermediate wave (5) is limited to no longer than equality in length with intermediate wave (3) at 3,432.15.

When primary wave 1 may be a complete five wave structure, then primary wave 2 should then unfold as a multi-week pullback and may not move beyond the start of primary wave 1 below 2,191.86.

In the short term, invalidation of this wave count by a new low below 2,965.66 would add confidence to a bearish wave count.

This alternate wave count is bullish.

Bearish divergence between price and inverted VIX and RSI do not support this wave count. Weak volume does not support this wave count.

Cycle wave V may last from one to several years.

THIRD ALTERNATE HOURLY CHART

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Minor wave 1 within intermediate wave (5) may be a complete leading contracting diagonal. Minor wave 2 may also be complete. Minor wave 3 may be underway. Now only minute wave i within minor wave 3 may be complete.

Minute wave ii may not move beyond the start of minute wave i below 3,127.66.

Minor wave 3 should exhibit strength.

TECHNICAL ANALYSIS

WEEKLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

Last week completes a Shooting Star bearish candlestick pattern.

DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

The breakaway gap of 24th February has its upper edge at 3,328.45. A bearish analysis remains reasonable while this gap remains open. If this gap is closed, then a more bullish analysis that would expect new all time highs would increase in probability.

At the high within last week is a Bearish Engulfing pattern. This appears while RSI reached overbought and then exhibited bearish divergence with the prior swing high of the 8th of June. This supports the main Elliott wave count.

Upwards movement during Monday’s session was relatively weak with up volume only 53% of total up / down volume. This supports the main Elliott wave count.

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.

Breadth should be read as a leading indicator.

Last week the NYSE all issues AD line has made another new all time high, although Lowry’s Operating Companies Only AD line still has not. This divergence is bullish and noted on this chart, but failure of the OCO AD line to confirm this divergence reduces the strength of the signal.

Large caps all time high: 3,393.52 on 19th February 2020.

Mid caps all time high: 2,109.43 on 20th February 2020.

Small caps all time high: 1,100.58 on 27th August 2018.

Again, at the end of last week, it is only large caps that have made new swing highs above the prior high of the 8th of June. Small and mid caps have not. The rise over the last six weeks is led by large caps, so it lacks breadth. This is normal of an aged bullish move and supports the main Elliott wave count.

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.

Weak short-term bullish divergence noted in last analysis has now been followed by a little upwards movement, so it may now be resolved.

Today both price and the AD line have moved higher. Neither have made new short-term highs. There is no new divergence.

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.

Inverted VIX remains well below all time highs. There remains over two years of strong bearish divergence between price and inverted VIX.

Last week price has moved higher, but inverted VIX is flat to slightly declining. This divergence is bearish and adds to bearish divergence between swing highs.

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.

Weak short-term bullish divergence noted in last analysis has now been followed by a little upwards movement. so it may now be resolved.

Today both price and inverted VIX have moved higher. Neither have made new short-term highs. There is no new divergence.

DOW THEORY

Dow Theory has confirmed a bear market with the following lows made on a closing basis:

DJIA: 21,712.53 – a close below this point has been made on the March 12, 2020.

DJT: 8,636.79 – a close below this point has been made on March 9, 2020.

Adding in the S&P and Nasdaq for an extended Dow Theory, a bear market has now been confirmed:

S&P500: 2,346.58 – a close below this point has now been made on March 20, 2020.

Nasdaq: 7,292.22 – a close below this point was made on the March 12, 2020.

At this time, to shift Dow Theory from viewing a bear market to confirmation of a new bull market would require new highs made on a closing basis:

DJIA – 29,568.57

DJT – 11,623.58

Adding in the S&P and Nasdaq for an extended Dow Theory:

S&P500 – 3,393.52

Nasdaq – 9,838.37 – closed above on June 8, 2020.

Published @ 06:19 p.m. ET

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New updates to this analysis are in bold.