Upwards movement continued a little further before the session ended strongly lower.

Summary: A high may be in place for the mid or long term. A new low now below 3,235.32 would add substantial confidence to this view.

Support may be found about one of either 3,100, 2,927 or 2,646. It is possible that one of the bearish wave counts may be correct and price may fall below 2,191.86.

Bearish wave counts remain valid while price remains below the all time high.

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

Monthly charts are here, with video here.

ELLIOTT WAVE COUNTS

FIRST WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

Confidence in this wave count may be had if price makes a new all time high above 3,393.52.

Cycle wave V may last from one to several years.

Cycle wave V may be underway and would most likely subdivide as an impulse. But if overlapping develops, then an ending diagonal should be considered. This chart considers the more common impulse.

Primary wave 1 may be nearing completion. Primary wave 2 may not move beyond the start of primary wave 1 below 2,191.86.

DAILY CHART

Click chart to enlarge.

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 today be complete. A new low below 3,235.82 would add confidence to this view. This price point is the high labelled minor wave 1. A new low below that point may not be a continuation of minor wave 4, so at that stage primary wave 1 would have to be over.

The channel drawn about primary wave 1 is a best fit. While intermediate wave (5) continues higher, along the way smaller corrections may find support about the lower edge of this channel. A breach of this channel at this stage would add confidence to an end to primary wave 1.

Primary wave 2 may now unfold as a multi-week pullback and may not move beyond the start of primary wave 1 below 2,191.86.

HOURLY CHART

Click chart to enlarge.

The hourly chart focusses on the middle of minor wave 3 from the end of minute wave ii within it.

It is possible now that all waves at all degrees within primary wave 1 are complete. 

Primary wave 2 may unfold as any corrective structure except a triangle. It would most likely be a zigzag. It may end about the 0.236 Fibonacci ratio at 3,100, or the 0.382 Fibonacci ratio at 2,927, or the 0.618 Fibonacci ratio at 2,646. A more shallow correction would be typical for this particular market.

Primary wave 2 may last a few weeks.

A new low below 3,235.32 could not be part of minor wave 4, so at that stage minor waves 4 and 5 would have to be over. This would add substantial confidence to a more sustainable high in place.

SECOND WAVE COUNT

DAILY CHART

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This wave count is the same as the first wave count with the exception of the degree of labelling within cycle wave V. If the degree of labelling is moved up one degree, then it is possible that cycle wave V to end Super cycle wave (V) to end Grand Super Cycle wave I is very close to completion.

Primary waves 1 through to 4 within cycle wave V may be complete. Primary wave 5 may end now at any stage. It is possible that it may be over at today’s high as per the first wave count, but it is also possible that downwards movement of this session may be intermediate wave (4) within primary wave 5. Intermediate wave (4) may not move into intermediate wave (1) price territory below 3,235.32.

Cycle wave V has moved above the end of cycle wave I at 2,940.91, avoiding a truncation. It would still be likely for this wave count that cycle wave V would move above the price territory of cycle wave IV to make a new high above 3,393.52.

Intermediate wave (4) may not move into intermediate wave (1) price territory below 3,235.32.

THIRD WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

The probability of this wave count is reduced with closure of the gap created on the 24th of February.

Cycle wave II would most likely subdivide as a zigzag; thus far that looks like what is unfolding. Primary wave B may now be complete.

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

DAILY CHART

Click chart to enlarge.

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).

Minor wave A may have ended on the 13th of July with an ending contracting diagonal for minor wave 5, followed by a running contracting triangle for intermediate wave (B).

Primary wave B may now be complete.

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

HOURLY CHART

Click chart to enlarge.

Intermediate wave (C) must subdivide as a five wave motive structure, most likely an impulse. It is possible today that intermediate wave (C) and so primary wave B may be complete.

A new low below 3,235.32 (the high of minor wave 1) may not be part of minor wave 4 as minor wave 4 may not move into minor wave 1 price territory.  A breach of this price point would add confidence in  the view of a high in place.

A new low now below the start of intermediate wave (C) at 3,204.13 could not be a second wave correction within intermediate wave (C), so at that stage intermediate wave (C) would have to be over. A new low below 3,204.13 would provide further confidence that a high may be in place.

FOURTH WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

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 a complete single zigzag.

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

TECHNICAL ANALYSIS

WEEKLY CHART

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

A close near highs for last week is bullish. There is still no reversal pattern.

RSI is not overbought; there is room for upwards movement to continue.

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. This gap is now closed. A more bullish analysis expecting new all time highs has now increased in probability.

A target from the flag pole would be at 3,405. This supports the first Elliott wave count.

Double bearish divergence between price and RSI has weakened to only now single bearish divergence, and has further weakened as price continues higher.

RSI and ADX are not extreme; there is room for upwards movement to continue.

However, today completes a Bearish Engulfing candlestick pattern, the strongest bearish reversal pattern. This occurs while there is bearish divergence between price and RSI and while price is at strong resistance at the prior all time high. A trend change to either down or sideways is a reasonable expectation given these conditions.

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.

It is still 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 several weeks is led by large caps, so it lacks breadth. This is normal of an aged bullish move and supports the third or fourth Elliott wave counts.

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 both price and the AD line have moved lower. There is no new short-term 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 both price and inverted VIX have moved higher. There is no new divergence.

Comparing VIX and VVIX: From weeks beginning 1st June to this last week, VIX has made new lows as price has made new highs, but VVIX has failed to make corresponding new lows with VIX. VVIX remains slightly elevated. This divergence is not strong, but it is bearish for price.

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 both price and inverted VIX have moved lower. VIX has made a new short-term low below the prior low of the 5th of August, but price has not. This divergence is bearish for the short term.

Comparing VIX and VVIX at the daily chart level: From the 8th of June to the 7th of August, price has made new highs while both VIX and VVIX have made new lows. The rise in price has support from a normal corresponding decline in VIX and VVIX.

Short-term bearish divergence noted in last two analyses between VVIX, VIX and price has now been followed by a strong downwards session. It may now be resolved.

Today VVIX has made a new short-term high above the prior high of the 3rd of August, but VIX has not. While both are increasing, VVIX is increasing faster. This divergence is again bearish for price.

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.

All of Nasdaq, S&P500 and now DJT have made new swing highs above prior highs of the 8th of June, but DJIA has not.

Published @ 07:07 p.m. ET

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New updates to this analysis are in bold.