The year ends with new all time highs from both price and the AD line. This is exactly in line with the larger picture from the Elliott wave count.

Summary: The wave count expects the low of the 30th of October to not be breached for many months or years. The next target is at 3,818. The following target is at 4,606. The short-term invalidation point is at 3,702.90.

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

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. When minor waves 3 and 4 may be complete, then a target may again be 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.

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 will require a recalculation of a target for intermediate wave (3) which may be done when minor waves 3 and 4 may be complete.

Minuette wave (iv) within minute wave v may not move into minuette wave (i) below 3,702.90.

This wave count expects two more small pullbacks for subminuette wave iv and minuette wave (iv) along the way up to complete minor wave 3.

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. The last pullback may have been minuette wave (iv).

This wave count expects no more reasonably sized pullbacks along the way up to complete minor wave 3.

No second wave correction within subminuette wave iii may move beyond its start below 3,726.88.

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 1.49 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.

Light volume for the last two weeks is not of a concern as both weeks are short weeks.

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.

A new all time high to end the year is bullish. After the last small upwards breakout accompanied by a gap, a small back test of support now looks complete.

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: 3,760.20 on December 31, 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.

This week both price and the AD line have made new all time highs. Upwards movement in price has support from rising market breadth. This is bullish.

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.

To end the week and the year both price and the AD line have made new all time highs. This is bullish.

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 higher, but inverted VIX has moved lower. This divergence is bearish for the short term and may develop further before a reasonable pullback arrives.

Comparing VIX and VVIX: VIX has increased, but VVIX has declined this week. This divergence is bullish for price and contradicts divergence between VIX and 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 made a new all time high, but inverted VIX has failed to make a new short-term high. This is new short-term bearish divergence.

Comparing VIX and VVIX at the daily chart level: Both VIX and VVIX at the end of the week are close to flat. 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.

The following major swing lows would need to be seen on a closing basis for Dow Theory to confirm a change from bull to a bear market:

DJIA: 18,213.65

DJT: 6,481.20

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

S&P500: 2,191.86

Nasdaq: 6,631.42

Published @ 09:08 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.