A higher high and a higher low complete another upwards session. However, a strong close lower completes a bearish candlestick pattern.

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 3,702.90 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

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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. This target is now close. If price reaches this target, and the structure is incomplete, or if price keeps rising through this target, then the next target for minute wave v to complete minor wave 3 would be at 3,818 where minute wave v would reach 2.618 the length of minute wave i. This target would also require the target for intermediate wave (3) on the daily chart to be recalculated.

Minute wave v may have just passed through its middle portion. Micro wave 4 within minute wave v may not move into micro wave 1 price territory below 3,711.24.

Micro wave 4 may end about the 0.618 Fibonacci ratio of micro wave 1 at 3,714.81.

If price makes a new low tomorrow below 3,711.24, then the alternate hourly wave count below should be used.

ALTERNATE HOURLY CHART

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It is possible that all of micro wave 4, subminuette wave (iv), and minuette wave (iv) are complete. Downwards movement of this last session may be minuette wave (iv).

Minuette wave (iv) may end about the 0.618 Fibonacci ratio of minuette wave (iii) at 3,706.70. Minuette wave (iv) may not move into minuette wave (i) price territory below 3,702.90.

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 1.47 times the length of intermediate wave (A), which is beyond the common range of up to 1.38. The probability of this wave count declines as price continues higher.

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.

Yesterday saw an upwards breakout with a little support from volume, with price closing to a new all time high. The opening gap yesterday may provide support at 3,703.82. Downwards movement today may be a back test of support at prior resistance.

The Dark Cloud cover pattern is bearish, but it lacks support from volume. Volume today was lighter than yesterday. Like the Bearish Engulfing pattern on 9th December, the Dark Cloud cover today may herald a relatively short-term pullback rather than a full 180° reversal.

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: 3,756.12 on December 29, 2020.

Mid caps all time high: 2,334.51 on December 28, 2020.

Small caps all time high: 1,133.23 on December 28, 2020.

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

Last 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.

Today price has moved higher to make a new all time high, although the session closed red. The AD line has not made a new high and has moved lower. This divergence is bearish for the short term.

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.

Last 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. Last 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.

Today price has moved higher to make a new all time high, although the session closed red. Inverted VIX has moved lower. This divergence is bearish for the short term.

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 higher. 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 @ 05:46 p.m. ET.

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New updates to this analysis are in bold.