A target for a pullback to end was at 3,819. The low for Monday was at 3,797.16. Thereafter, the session ended with a strong bounce.

Summary: The wave count expects the low of the 30th of October to not be breached for many months or years.

The next target for the upwards trend is at 4,606. The main wave count expects upwards movement to overall continue with another large consolidation prior to the target to begin before 3,920.24.

The first alternate wave count now is very bullish and expects an increase in upwards momentum in coming weeks.

The second alternate wave count expects a deeper pullback here to a target at 3,735.

An alternate wave count at the weekly chart level has an about even probability with the main weekly chart.

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 tenth 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.

MAIN WAVE COUNT

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 be complete, and intermediate wave (3) may be an incomplete impulse.

Minor waves 1 through to 4 within intermediate wave (3) may be complete. No second wave correction within minor wave 5 may move beyond its start below 3,662.71.

The taupe best fit channel may have provided support for minute wave ii within minor wave 5, and now resistance for a high labelled minuette wave (i).

If minor wave 3 is over, then it would be shorter in length than minor wave 1. Minor wave 3 is just 3.98 points shorter than 0.618 the length of minor wave 1. Because minor wave 3 may not be the shortest actionary wave within intermediate wave (3), minor wave 5 is limited to no longer than equality in length with minor wave 3.

Minor wave 5 may now be close to moving through the middle as a third wave at two degrees within a fifth wave unfolds.

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

HOURLY CHART

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Minute wave iii within minor wave 5 may be underway. It may only subdivide as an impulse. Minuette waves (i) and (ii) within the impulse may be complete. Minuette wave (ii) may have ended at today’s low, falling a little short of the 0.618 Fibonacci ratio of minuette wave (i).

No second wave correction within minuette wave (ii) may move beyond its start below 3,797.16.

FIRST ALTERNATE WAVE COUNT

DAILY CHART

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This first alternate is judged to have about an even probability with the main wave count.

This first alternate wave count is the same as the main wave count, except the degree of labelling within intermediate wave (3) is moved down one degree. It is possible that minor wave 1 may be nearing an end.

Minute wave iii within minor wave 1 is shorter than minute wave i. This limits minute wave v to no longer than equality in length with minute wave iii, so that minute wave iii is not the shortest actionary wave.

When minor wave 1 may be complete, then minor wave 2 may not move beyond the start of minor wave 1 below 3,233.94. Minor wave 2 may be relatively brief and shallow due to the upwards pull of a third wave at three large degrees.

While both the main wave count and this first alternate wave count have a limit for a fifth wave up to end, this alternate expects only a small minor degree pullback to occur prior to the limit, which may be over briefly where the main wave count sees the limit as more important because it expects an intermediate degree correction to begin prior to it.

HOURLY CHART

Click chart to enlarge.

This wave count is very bullish. The middle and end of intermediate wave (3) may see an increase in upwards momentum in coming weeks.

For the short term, another small pullback would for this wave count is labelled subminuette wave ii. No second wave correction within subminuette wave iii may move beyond its start below 3,797.16.

SECOND ALTERNATE WAVE COUNT

DAILY CHART

Click chart to enlarge.

It is also possible that intermediate wave (3) is complete and intermediate wave (4) may move lower. Intermediate wave (4) may find support about the lower edge of the weekly best fit channel although if it lasts long enough to exhibit a good proportion to intermediate wave (2), then it may breach the channel.

Intermediate wave (2) was a very deep zigzag lasting 14 sessions. Intermediate wave (4) may be unfolding as an expanded flat or running triangle.

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

HOURLY CHART

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Intermediate wave (4) may have begun. Intermediate wave (4) may be subdividing as either an expanded flat or a running triangle. Within both, minor wave B may move beyond the start of minor wave A.

If intermediate wave (4) is subdividing as an expanded flat, then a target is calculated for minor wave C to exhibit a common Fibonacci ratio to minor wave A.

If intermediate wave (4) is subdividing as a running triangle, then minor wave C may not move beyond the end of minor wave A below 3,749.62.

Minor wave C may have begun with a leading expanding diagonal for minute wave I that was followed by a deep correction for minute wave ii.

This wave count does not have good support from classic technical analysis. There is too much strength with expanding breadth in recent upwards movement to be a convincing B wave.

Confidence points for this wave count are given on the chart. 

ALTERNATE WEEKLY CHART

Click chart to enlarge.

This wave count is the same as the first weekly chart with the exception of the degree of labelling within cycle wave V.

If the degree of labelling within cycle wave V is moved down one degree, then only primary wave 1 may be currently unfolding. When primary wave 1 may be complete, then a multi-week pullback or consolidation may begin for primary wave 2. Primary wave 2 may not move beyond the start of primary wave 1 below 2,191.86.

This wave count is more bullish than the main weekly chart. It expects that cycle wave V may be in an earlier stage and may yet last many more years than the main weekly chart expects it to. These two weekly wave counts are of an even probability. In coming months to years classic technical analysis will be used to judge the probability of these two weekly wave counts.

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 still not extreme. There is room for this upwards trend to continue.

On Balance Volume now has a new range.

A lack of support last week from volume for upwards movement is not of any concern in current market conditions.

DAILY CHART

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

Overall, this chart is fairly bullish and supports the main or first alternate Elliott wave count (or the weekly alternate, which is more bullish).

Neither ADX nor RSI are extreme. There is plenty of room for an upwards trend to continue before extreme conditions are met.

The long lower wick and a push higher from volume today is bullish.

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 20th of January. This is a strong bullish signal and supports the main Elliott wave count.

Large caps all time high: 3,861.45 on January 21, 2021.

Mid caps all time high: 2,482.63 on January 25, 2021.

Small caps all time high: 1,258.83 on January 25, 2021.

Last 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.

Today’s upwards movement was led by small caps. 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.

Today price has completed an outside day that closed green and was dominated by up volume, but  the AD line has declined. 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 made new all time highs, but inverted VIX has failed to make new short-term highs. There is all of short, mid and long-term bearish divergence between price and inverted VIX.

Comparing VIX and VVIX: Both VIX and VVIX have moved lower. There is no new divergence.

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 completed an outside day that closed green and was dominated by up volume, but inverted VIX has declined. This divergence is bearish for the short term.

Comparing VIX and VVIX at the daily chart level: Both VIX and VVIX have moved higher. There is no new 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 @ 07:19 p.m. ET.

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New updates to this analysis are in bold.