This Elliott wave count has been expecting a third wave up at multiple degrees. An increase in upwards momentum for a strong upwards day today exactly fits that expectation.

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 underway.

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.

For the short term, the main wave count expects price to remain above 3,963.30. If this price point is breached early next week, then another pullback may be underway, which may find support about 3,822.86.

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

Monthly charts are last updated here with video here.

MAIN WAVE COUNT

WEEKLY CHART

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

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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 waves 1 and 2 within intermediate wave (3) may now be complete. Minor wave 3 may now be underway. When minor wave 3 is complete, then the following pullback or consolidation for minor wave 4 may last about one to two weeks and may not move into minor wave 1 price territory below 3,983.87.

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. Price is currently nearing the upper edge of this channel. It is possible now that the strength of a third wave at multiple degrees may push price above the channel, but in the first instance be aware that this trend line may provide resistance.

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

HOURLY CHART

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Minor wave 2 may be a complete double zigzag.

Minute waves i and ii within minor wave 3 may be complete.

The middle of a large third wave may have passed today. Micro wave 4 may not move into micro wave 1 price territory below 3,994.41.

ALTERNATE HOURLY CHART

After further upwards movement today, this alternate is discarded due to a low probability.

ALTERNATE WAVE COUNT

WEEKLY CHART

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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, another strong close to the week near the weekly high and another bullish long lower wick 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.

RSI and ADX are not extreme. There is plenty of room for an upwards trend to continue.

The measuring gap gives a target at 4,201.57. This gap may offer support at 4,020.63.

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: 4,283.42 on April 5, 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.

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

Last week both price and the AD line have made new all time highs at the weekly chart level. 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 both price and the AD line have made new all time highs. Bearish divergence has now disappeared, so it is considered to have failed.

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 both price and inverted VIX have moved higher, but only price has made a new all time high. There is now mid and long-term bearish divergence, but there is no short-term bearish divergence.

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 moved higher, but inverted VIX has moved lower. This divergence is bearish. It may be an early warning sign of the end of minor wave 3 and the start of minor wave 4. Further bearish divergence may yet develop before the next pullback unfolds.

Comparing VIX and VVIX at the daily chart level:

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.

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 @ 07:43 p.m. ET.

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New updates to this analysis are in bold.