Today’s session was quiet (markets closed early, at 1 p.m.) and leaves this analysis unchanged.

Price continues to move overall higher, with higher highs and higher lows, as the Elliott wave count expects. Breadth strongly supports this rise in price.

Summary: The wave count expects the low of the 30th of October to not be breached for many months or years. A new mid-term target is at 3,785. The next target is at 4,606. The invalidation point is at 3,645.84.

An alternate is considered at the daily chart level. It is judged to have a very low probability. For confidence it requires a new low below 3,645.84 and then below 3,549.85.

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

Monthly charts are last updated here with video here.

ELLIOTT WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

Cycle wave V may last from one to several years. So far it is in its ninth month.

This wave count may allow time for the AD line to diverge from price as price makes final highs before the end of the bull market. The AD line most commonly diverges a minimum of 4 months prior to the end of a bull market. A longer divergence is positively correlated with a deeper bear market. A shorter divergence is positively correlated with a more shallow bear market. With zero divergence at this stage, if a surprise bear market does develop here, then it would likely be shallow.

Cycle wave V 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 waves 1 and 2 may be complete.

Primary wave 3 may only subdivide as an impulse.

There is already a Fibonacci ratio between cycle waves I and III within Super Cycle wave (V). The S&P500 often exhibits a Fibonacci ratio between two of its actionary waves but rarely between all three; it is less likely that cycle wave V would exhibit a Fibonacci ratio. The target for Super Cycle wave (V) to end would best be calculated at primary degree, but that cannot be done until all of primary waves 1, 2, 3 and 4 are complete.

DAILY CHART

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Primary waves 1 and 2 may both be complete. Primary wave 3 may be underway.

Primary wave 3 may only subdivide as an impulse. Within primary wave 3: Intermediate waves (1) and (2) may both be complete, and intermediate wave (3) may be underway and may only subdivide as an impulse. A target is calculated for intermediate wave (3).

Intermediate wave (4) may not move into intermediate wave (1) price territory below 3,549.85.

Primary wave 1 looks extended. The target for primary wave 3 expects it to also be extended.

This wave count now expects that a third wave at three large degrees (minor, intermediate and primary) may have passed through its middle portion. Each successive fourth wave correction must remain above its corresponding first wave price territory.

When third waves extend they do so in price as well as time. Extended waves usually exhibit corrections within them that are more time consuming than those within waves that are not extended.

The best fit channel has provided support for downwards movement. It may now provide resistance to upwards movement, so it may be useful to show where the next pullback may arrive.

HOURLY CHART

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Minute wave iii may have been over at the last high and minute wave iv over at the last low. All subdivisions fit on the hourly chart, and this has a good look on the daily chart.

If minute wave iii is over at the last high, then it exhibits no Fibonacci ratio to minute wave i. This makes it more likely that minute wave v may exhibit a Fibonacci ratio to minute waves i or iii. If minute wave v were to exhibit the most common Fibonacci ratio of equality in length to minute wave i, then it would be truncated. The next Fibonacci ratio in the sequence is used to calculate a ratio for minute wave v.

Minute wave v may have begun with a series of three overlapping first and second waves. If micro wave 2 within subminuette wave iii is incomplete, then it may not move beyond the start of micro wave 1 below 3,681.09.

This wave count expects an increase in upwards momentum next week.

ALTERNATE HOURLY CHART

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It is possible that minuette wave (ii) may continue sideways and lower to make another test of support at the lower edge of the best fit channel. Minuette wave (ii) may continue as either a double zigzag or double combination.

Minuette wave (ii) may not move beyond the start of minuette wave (i) below 3,636.48.

ALTERNATE DAILY CHART

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In the interest of always trying to consider all possibilities (so as to not be left without a potential pathway should the main wave count become invalidated) this alternate is considered.

This alternate wave count does not have support from classic technical analysis at this time, so it is judged to have a low probability. However, low probability does not mean no probability. Confidence / invalidation points may be used to judge any change in probability between the two wave counts.

It is possible that primary wave 2 may be an incomplete expanded flat correction.

Intermediate wave (B) may have continued higher as a double zigzag. Intermediate wave (B) is now 1.39 times the length of intermediate wave (A), which is just beyond the common range of up to 1.38.

There is no rule for flat corrections that state a limit for B waves, so it is possible that intermediate wave (B) may extend higher. If intermediate wave (B) were to reach twice the length of intermediate wave (A) at 3,942.28, then the idea of a flat correction should be discarded based upon a very low probability.

TECHNICAL ANALYSIS

WEEKLY CHART

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

This chart is bullish and still supports the main Elliott wave count. All of volume, ADX and MACD are bullish. There is no bearish candlestick reversal pattern. Conditions are not extreme. There is room for this upwards trend to continue.

DAILY CHART

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

Overall, this chart is bullish and still supports the Elliott wave count. There is a series of higher highs and lower lows from the low on the 24th of September.

RSI is not extreme. There is room for an upwards trend to continue.

Price is consolidating with resistance about 3,725 and support about 3,645. The last three sessions complete as very small range days with declining volume. This is neither bullish nor bearish. Overall, an upwards breakout looks more likely as the larger trend at the weekly chart time frame is up.

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.

Lowry’s Operating Companies Only AD line has made a new all time high on the 17th of December. This is a strong bullish signal and supports the main Elliott wave count.

Large caps all time high: 3,726.70 on December 18, 2020.

Mid caps all time high: 2,318.43 on December 23, 2020.

Small caps all time high: 1,126.31 on December 24, 2020.

Small caps have led this week with a new all time high. This is bullish.

This week price moved overall lower, but the AD line moved higher. The AD line has made a new all time high at the end of the week, but price has not. This divergence is bullish 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.

On Thursday the AD line has made a new all time high, but price has not. This divergence is bullish and supports the main 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.

Inverted VIX remains well below all time highs. The all time high for inverted VIX was in the week beginning October 30, 2017. There is over 3 years of bearish divergence between price and inverted VIX. There is all of long, mid and short-term bearish divergence. This bearish divergence may develop further before the bull market ends. It may be a very early indicator of an upcoming bear market, but it is not proving to be useful in timing.

This week price has moved overall lower, but inverted VIX has moved very slightly higher. This divergence is bullish for price; declining VIX (increasing inverted VIX) corresponds normally with increases in price.

Comparing VIX and VVIX: There is a cluster of bearish signals between VIX and VVIX. This week VIX moves slightly lower, but VVIX moves higher. This divergence is again 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.

On Thursday price moved overall lower, but inverted VIX has moved higher. This divergence is bullish for price.

Comparing VIX and VVIX at the daily chart level: VIX has made a slight new high above the prior swing high of the 14th of December, but VVIX has not. With volatility of VIX less, this divergence is bullish for price. Today both VIX and VVIX have moved lower. There is no new short-term divergence.

DOW THEORY

Dow Theory confirms a new bull market with new highs made on a closing basis:

DJIA: 29,568.57 – closed above on 16th November 2020.

DJT: 11,623.58 – closed above on 7th October 2020.

Adding in the S&P and Nasdaq for an extended Dow Theory, confirmation of a bull market would require new highs made on a closing basis:

S&P500: 3,393.52 – closed above on 21st August 2020.

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

Published @ 08:46 p.m. ET.

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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.