Another new all time high continues the bullish trend, which is what this Elliott wave count has long been expecting, with support from classic technical analysis.

Summary: The trend is up. The next target for the next wave up is at 4,922.

A new short-term hourly wave count is considered today. If price makes a new low tomorrow below 4,234.07, then another short-term pullback may find support about 4,209.89 and about the lower edge of the pink Elliott channel. This alternate short-term Elliott wave count has support now from the AD line, VIX and VVIX.

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 fifteenth 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.

A longer divergence between price and the AD line would be expected towards the end of Grand Super Cycle wave I.

It is possible that cycle wave V may continue until 2029, if the 2020s mirror the 1920s. Either March or October 2029 may be likely months for the bull market to end.

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.

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.

Primary wave 1 within cycle wave V may be incomplete. This gives a very bullish wave count, expecting a long duration for cycle wave V which has not yet passed its middle strongest portion.

Within primary wave 1: Intermediate waves (1) and (2) may be complete, and intermediate wave (3) may now be approaching an end.

Within intermediate wave (3): Minor waves 1 and 2 may be complete, and minor wave 3 may be nearing an end.

Intermediate wave (4) may not move into intermediate wave (1) price territory below 3,588.11.

A best fit channel is drawn about cycle wave V. Draw the first trend line from the end of intermediate wave (1) to the last high, then place a parallel copy on the end of intermediate wave (2). The channel may need to be redrawn as price continues higher. The channel may show where price may find resistance and support along the way up.

When primary wave 1 may be complete, then a multi-month pullback or consolidation may unfold for primary wave 2. It is possible that primary wave 2 may meet the technical definition of a bear market; it may correct to 20% or more of market value.

Primary wave 2 may not move beyond the start of primary wave 1 below 2,191.86.

DAILY CHART

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The daily chart focusses on minor wave 3 within intermediate wave (3).

Intermediate wave (3) may be extending. Third waves are most commonly extended for the S&P500, so this wave count follows a common tendency. A target is calculated for minor wave 3, which is also expected to be extending.

Minuette wave (ii) may not move beyond the start of minuette wave (i) below 4,056.88.

Draw the pink channel using Elliott’s second technique. Draw the first trend line from the ends of minute waves ii to iv, then place a parallel copy on the end of minute wave iii. This channel may show where minute wave v may end, either mid way within the channel or about the upper edge. It may then be used to confirm a subsequent trend change, when it is breached by downwards movement.

The channel is overshot for the low labelled subminuette wave ii, which for this market is acceptable, and price has moved back within the channel. This market does not always sit neatly within channels as its impulses come to an end. It is possible that as minor wave 3 ends channels may need to be redrawn.

HOURLY CHART

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Micro waves 1 and 2 within subminuette wave iii may be complete.

This wave count now expects that a third wave at six low degrees may continue higher. There will be pullbacks and consolidations along the way, which is normal and to be expected. Sub-nano wave ii may not move beyond the start of sub-nano wave i below 4,234.07.

An increase in upwards momentum may now be seen as price has broken above resistance, which would be expected for the middle of a third wave.

ALTERNATE HOURLY CHART

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If the main wave count is invalidated tomorrow with a new low below 4,234.07, then this alternate may be used.

It is possible that minuette wave (i) was over at today’s high. Minuette wave (ii) may move lower over the next one to very few sessions. If a pullback finds support about the lower edge of the pink Elliott channel, then it may end about the 0.236 Fibonacci ratio of minuette wave (i) at 4,209.89.

Minuette wave (ii) may not move beyond the start of minuette wave (i) below 4,056.88.

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 4,056.88. 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.

This chart has the look of a sustainable bull market in a relatively early stage; there is as yet no evidence that a larger correction should begin here. Although RSI is again overbought, this market has a strong bullish bias and RSI can move deeply overbought and remain there for years prior to a bull market ending.

Now three long lower wicks on two weekly candlesticks are bullish for the short term.

Last week has effected an upwards breakout from a small consolidation. Energy may now be released to the upside and momentum may increase.

DAILY CHART

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

The upwards trend remains intact. If support at 4,238 is breached, then next support below would be about 4,100.

ADX is now well below both DX lines. If ADX reaches 15, then it would give a strong bullish signal. RSI is neutral. There is plenty of room for an upwards trend to continue 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 8th of June (data is not yet available for the 11th of June). This supports the Elliott wave count.

Large caps all time high: 4,257.16 on Jun 15, 2021.

Mid caps all time high: 2,778.84 on April 29, 2021.

Small caps all time high: 1,417.45 on June 8, 2021.

Overall, it is large caps that are mostly leading now.

Last week both price and the AD line have moved higher. Upwards movement has support from underlying rising market breadth; this is bullish and supports the Elliott wave count.

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.

The AD line has moved lower again while price has moved higher. There is now a small developing cluster of short-term bearish divergence between price and the AD line, which supports the new alternate 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. 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. Price has made new highs, but inverted VIX has not. There is no longer any short-term divergence, but mid-term bearish divergence remains.

Comparing VIX and VVIX at the weekly chart level:

Last week VIX has again moved slightly lower, but VVIX has moved higher. Volatility of VIX is elevated. This short-term divergence is bearish for 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.

Price has moved higher again, but inverted VIX has moved lower. There is now a small developing cluster of short-term bearish divergence, which supports the alternate Elliott wave count.

Comparing VIX and VVIX at the daily chart level:

Today VVIX has made a new short-term high, but VIX has not. There is a small cluster of short-term bearish divergence, which supports the alternate Elliott wave count.

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.

Most recently, on 10th May 2021 both DJIA and DJT have made new all time highs. An ongoing bull market is again confirmed by Dow Theory.

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 @ 06:28 p.m. ET.

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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.

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