A new all time high today invalidates the alternate Elliott wave count. The main Elliott wave count for the mid term remains the same.

Summary: The main wave count (daily and weekly) expects the low of the 30th of October to not be breached for many months. This wave count is now very bullish, expecting a third wave at three large degrees is in its very early stages.

For the short term, the next pullback may end tomorrow about 3,961.16 or 3,940.58.  

An alternate hourly chart today has some support from classic analysis: bearish divergence between price and the AD line, bearish divergence between price and VIX, and now a Shooting Star candlestick pattern. This wave count expects a pullback to continue here to end about 3,822.86.

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. If targets are wrong, then they may not be high enough.

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 be complete.

Intermediate wave (2) may also be complete as a triple zigzag.

Intermediate wave (3) within primary wave 3 may now have begun.

Minor wave 1 and 2 within intermediate wave (3) may now be complete. If minor wave 2 continues sideways and lower as a flat correction, then it may not move beyond the start of minor wave 1 below 3,723.34.

The beige Elliott channel is drawn about intermediate wave (1) using Elliott’s first technique: Draw the first trend line from the ends of minor waves 1 to 3, then place a parallel copy on the end of minor wave 2. The upper edge has initiated multiple pullbacks, so it may again be an important line of resistance in the future.

The next upwards wave for this wave count is expected to be a third wave at minor, intermediate and primary degree. An increase in upwards momentum may be expected.

HOURLY CHART

Click chart to enlarge.

Minor wave 1 may be complete, falling a little short of the upper edge of the beige Elliott channel copied over from the daily chart.

Minor wave 2 may be a complete double zigzag. A breach of the best fit channel about minor wave 2 adds a little confidence to this view.

Minute wave i within minor wave 3 may be complete. Minute wave ii within minor wave 3 may move lower to end close to either the 0.236 Fibonacci ratio at 3,961.16 or the 0.382 Fibonacci ratio at 3,940.58.

Minute wave ii may not move beyond the start of minute wave i below 3,853.50.

ALTERNATE HOURLY CHART

Click chart to enlarge.

It remains possible that minor wave 2 may continue sideways and lower as a flat correction.

Both minute waves a and b within a flat correction must subdivide as corrective structures. Minute wave b must retrace a minimum 90% of minute wave a. These conditions are now met.

Minute wave b within a flat correction would most likely end within the most common range from 1 to 1.38 times the length of minute wave a, from 3,983.87 to 4,033.41. If minute wave b continues higher, then it may end somewhere within this range.

Today minute wave b may have moved a little higher. It is now 1.08 the length of minute wave a, indicating an expanded flat, which is the most common type of flat.

Minute wave c within a flat would be extremely likely to move at least slightly below the end of minute wave a at 3,853.50 to avoid a truncation.

Minor wave 2 may not move beyond the start of minor wave 1 below 3,723.34.

ALTERNATE WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

With a new all time high today, the last alternate wave count is discarded. This alternate wave count is new.

This wave count sees subdivisions within cycle wave V the same except the degree of labelling is moved down one degree. Primary wave 1 within cycle wave V may be incomplete.

Within primary wave 1: Intermediate waves (1) and (2) may be complete, intermediate wave (3) may be extending, and intermediate wave (4) may not move into intermediate wave (1) price territory below 3,588.11.

When primary wave 1 may be complete (in several months time), then a deeper and longer lasting pullback for primary wave 2 may unfold. Primary wave 2 may not move beyond the start of primary wave 1 below 2,191.86.

TECHNICAL ANALYSIS

WEEKLY CHART

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

A series of higher highs and higher lows off the low of March 2020 continues. The last short-term swing low is now at 3,723.34. While this remains intact, the dominant view should be of an upwards trend. There is a long way for this trend to run before conditions may become extreme.

For the short term, a strong close to the week near the weekly high, and a bullish long lower wick, both suggest more upwards movement this week.

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.

The last swing low is the 4th of March at 3,723.34. While this remains intact, the upwards trend may be assumed to continue. Pullbacks are a normal and to be expected part of a bullish trend.

Today a Shooting Star candlestick pattern suggests a pullback may unfold here.

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 15th of March. This supports the main Elliott wave count.

Large caps all time high: 3,994.41 on March 31, 2021.

Mid caps all time high: 2,682.94 on March 15, 2021.

Small caps all time high: 1,399.31 on March 12, 2021.

Today the new high was found only in large caps. With large caps leading, this last rise is bearish for the short term.

Last week price has moved lower (although the candlestick has closed green), but the AD line has moved higher. 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 price has made a new all time high, but the AD line has not. There is now clear short-term bearish divergence, which supports the alternate hourly 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.

Last week price has moved lower with a lower low and a lower high, although the week ended strongly and the candlestick closed green. Inverted VIX has moved higher. This divergence is bullish for the short term and supports the view that the last pullback may now be complete.

Comparing VIX and VVIX at the weekly chart level:

Both VIX and VVIX have moved lower last week. 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 price has made a new all time high, but inverted VIX has not. There is new short-term bearish divergence, which supports the bearish view from the AD line and supports the alternate hourly Elliott wave count.

Comparing VIX and VVIX at the daily chart level:

Again, both VIX and VVIX have moved lower. VVIX has made another new short-term low below the prior low of two sessions prior, but VIX has not. This divergence is bullish for price for the short term.

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 @ 06:37 p.m. ET.

—
Careful risk management protects your trading account(s).

Follow my two Golden Rules:

1. Always trade with stops.

2. Risk only 1-5% of equity on any one trade.

—
New updates to this analysis are in bold.