New all time highs were overall expected for the S&P. This rise is being led by small caps, which supports the Elliott wave count.

Summary: The pullback may now be complete; the alternate hourly wave count, which looks at the possibility of the pullback moving lower, now has a very low probability and may be discarded tomorrow.

Both main and alternate wave counts (daily and weekly) expect the low of the 30th of October to not be breached for many months.

The next target for the upwards trend is at 4,464 and thereafter at 4,606. About this target another multi-week pullback or consolidation may develop.

An alternate wave count at the weekly chart level has a slightly lower probability with the main weekly chart.

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

Monthly charts are last updated here with video here.

MAIN WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

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

Primary wave 3 has now moved well above the end of primary wave 1. Primary wave 4 may not move into primary wave 1 price territory below 3,588.11.

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.

The blue weekly best fit channel is slightly adjusted, so that the lower edge may better show where price may find support. Copy this over to the daily chart.

DAILY CHART

Click chart to enlarge.

The daily chart focusses on the unfolding impulse of primary wave 3.

Intermediate wave (1) within primary wave 3 may have been complete at the last all time high and the last pullback may be intermediate wave (2).

Intermediate wave (2) may have continued lower as a triple zigzag.

If it continues lower, then intermediate wave (2) may not move beyond the start of intermediate wave (1) below 3,209.45.

HOURLY CHART

Click chart to enlarge.

Intermediate wave (2) may have continued lower as a triple zigzag. If labelling of this structure is correct, then it may not continue lower (three is the maximum number of corrective structures within a multiple). Today I have considered the possibility that intermediate wave (2) may have subdivided as a single zigzag, with minor wave A a leading diagonal. After carefully checking subdivisions of this idea, it will not work because within a leading diagonal the first wave will not subdivide as either a zigzag or an impulse. A chart to illustrate this problem will be provided in comments below this analysis.

Intermediate wave (3) may only subdivide as an impulse. Minor wave 1 within the impulse may be extending higher. This session has closed with increased momentum at the last high; this suggests minute wave iii within minor wave 1 may be extending, not minute wave v as previously labelled. When minor wave 1 may be complete, then minor wave 2 may not move beyond the start of minor wave 1 below 3,723.34.

When minor wave 2 arrives, then it may correct as a brief and shallow pullback.

Intermediate wave (3) within primary wave 3 should exhibit an increase in upwards momentum.

ALTERNATE HOURLY CHART

Click chart to enlarge.

If the degree of labelling is moved down one degree within intermediate wave (2), then it is possible that only minor wave A within intermediate wave (2) is complete at the last low.

Intermediate wave (2) may continue further as a flat. Minor wave B within a flat has now retraced the minimum 0.9 length of minor wave A. Minor wave B is a 1.04 length of minor wave A, indicating a regular flat if it is over at today’s high. The common range for minor wave B would be from 1 to 1.38 times the length of minor wave A.

Minor wave B should exhibit weakness; but at new highs today with small caps leading and the AD line leading price, this upwards movement does not exhibit weakness. This alternate wave count may be discarded tomorrow.

Intermediate wave (2) may not continue sideways as a combination if the first wave down is correctly labelled as a triple zigzag. This structure may not be relabelled minor wave W of a combination because minor wave W may only subdivide as a single corrective structure and not a multiple.

Intermediate wave (2) may not continue sideways as a triangle. Triangles do not unfold as the sole corrective structure in second wave positions.

ALTERNATE WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

This wave count moves the degree of labelling within cycle wave V down one degree. Primary wave 1 may be incomplete.

This alternate is more bullish than the main weekly chart. It expects that cycle wave V may last many more years than the main weekly chart. This wave count now considers intermediate waves (3) and (4) within primary wave 1 may be complete. Intermediate wave (3) is shorter than intermediate wave (1), which reduces the probability of this alternate wave count.

When primary wave 1 may be complete, then a multi-week pullback for primary wave 2 should begin. Primary wave 2 may not move beyond the start of primary wave 1 below 2,191.86.

DAILY CHART

Click chart to enlarge.

Intermediate waves (1) through to (4) within primary wave 1 may be complete. If it continues lower, then intermediate wave (4) may not move into intermediate wave (1) price territory below 3,588.11.

TECHNICAL ANALYSIS

WEEKLY CHART

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

Support at On Balance Volume has held and it has turned up.

The doji candlestick this week is not on its own a reversal; it is a sign of a balance of bulls and bears. Doji may occur within downwards trends.

The last swing low of the 29th of January remains intact. A series of higher highs and higher lows remains intact. The last two weeks of downwards movement still looks most likely to be another pullback within an ongoing upwards trend.

DAILY CHART

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

The series of higher highs and higher lows from the low of the 30th of October continues.

Support at 3,725 has at the end of last week held. The last swing low on the 29th of January remains intact; while this has not been breached, an upwards trend may be assumed to remain in place as a series of higher highs and higher lows remains. Pullbacks are a normal part of an upwards trend.

This rise is led by small caps, which is bullish.

Declining volume is not of a concern in current market 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.

Lowry’s Operating Companies Only AD line has made a new all time high on the 12th of February. This is a strong bullish signal and supports the main Elliott wave count.

Large caps all time high: 3,960.27 on March 11, 2021.

Mid caps all time high: 2,627.47 on March 11, 2021.

Small caps all time high: 1,385.64 on March 11, 2021.

Last week price has moved lower, but the AD line has moved lower. This divergence is bullish for the short term.

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 higher and both have made new all time highs. This rise in price comes with underlying support from rising market breadth. 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.

Last week price has moved lower, but inverted VIX has moved higher. This divergence is bullish for the short term and agrees with bullish divergence at the weekly chart level between price and the AD line.

Comparing VIX and VVIX at the weekly chart level:

Last week both VIX and VVIX have moved lower. There is no new short-term 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 both inverted VIX and price have moved higher, but price has made a new high while inverted VIX has not. There is again all of short, mid and long-term bearish divergence between price and inverted VIX. This will not be given weight in this analysis as it has persisted now for over three years while price keeps rising.

Comparing VIX and VVIX at the daily chart level:

Short-term bearish divergence noted yesterday was not followed by any downwards movement, so it is considered to have failed. Today both VIX and VVIX have moved lower. 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 @ 07:06 p.m. ET.

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New updates to this analysis are in bold.