Upwards movement continues.

A new alternate Elliott wave count is published this week.

Summary: Upwards movement may still complete prior to 3,432.15. However, if price passes 3,432.15, then a target for upwards movement to end would be at 3,800.

Confidence points for downwards movement are 2,954.86 and 2,637.01. Further confidence in a sustainable high may be had as each price point is passed.

A new low below 2,191.86 would be extremely bearish.

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

Monthly charts are here, with video here.

ELLIOTT WAVE COUNTS

FIRST WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

Cycle wave V may last from one to several years.

Cycle wave V may be underway and 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 wave 1 may be incomplete. Primary wave 2 may not move beyond the start of primary wave 1 below 2,191.86.

DAILY CHART

Click chart to enlarge.

The target for the end of this bull market is provisional. It would best be calculated at primary degree, but that cannot be done until all of primary waves 1 through to 4 are complete. At that stage, the target will be recalculated and will very likely change.

Cycle wave V must subdivide as a five wave motive structure, most likely an impulse.

Primary wave 1 must end before or at 3,432.15 where intermediate wave (5) would reach equality in length with intermediate wave (3). Intermediate wave (3) is shorter than intermediate wave (1), so it may not be the shortest actionary wave.

Primary wave 2 may unfold as a multi-week pullback and may not move beyond the start of primary wave 1 below 2,191.86.

HOURLY CHART

Click chart to enlarge.

The structure of intermediate wave (5) is reanalysed on the hourly chart. It may be near to completion. This fits with the limit at 3,432.15.

No second wave correction within minor wave 5 may move beyond its start below 3,354.69. 

ALTERNATE DAILY CHART

Click chart to enlarge.

This wave count is new. It labels primary wave 1 differently.

It is possible to see primary wave 1 as an impulse in which intermediate wave (3) is longer than intermediate wave (1).

This wave count breaks up the first impulse up. The main daily chart sees intermediate wave (1) ending on the 29th of April whereas this alternate sees this as a series of first and second waves. This upwards movement looks best labelled as one complete impulse, which the main daily chart does, so this alternate has a lower probability.

A  target is calculated for intermediate wave (5) based upon the most common Fibonacci ratio to intermediate wave (1).

If intermediate wave (4) continues further, then it may not move into intermediate wave (1) price territory below 2,637.01. If intermediate wave (4) continues lower, then it would most likely find support about the lower edge of the best fit channel. This wave count would be discarded long before it would be invalidated based upon the wrong look.

SECOND WAVE COUNT

DAILY CHART

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This wave count is the same as the first wave count with the exception of the degree of labelling within cycle wave V. If the degree of labelling is moved up one degree, then it is possible that cycle wave V to end Super cycle wave (V) to end Grand Super Cycle wave I is very close to completion.

Primary waves 1 through to 4 within cycle wave V may be complete. Primary wave 5 may be almost complete.

A new low below 2,191.86 would invalidate the first wave count and provide full confidence in this second wave count.

Cycle wave V has moved above the end of cycle wave I at 2,940.91, avoiding a truncation. It has now also moved beyond the price territory of cycle wave IV to a new all time high above 3,393.52.

The alternate daily chart for the first wave count works in the same way for this second wave count. The limit is removed; it may be passed and this wave count would remain valid. If the limit is passed, then cycle wave V would be labelled in the same way as the alternate daily chart above.

HOURLY CHART

Click chart to enlarge.

At the hourly chart level, this wave count is exactly the same as the first wave count with the sole exception being the degree of labelling. Here, the degree of labelling is one degree higher.

TECHNICAL ANALYSIS

WEEKLY CHART

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

A further decline in range and volume this week indicates weakness. This week has closed above the prior all time high at 3,393.52. Now that this has been breached, it is possible that some energy may be released and price may move up with a little more strength.

RSI is not overbought, but it does exhibit bearish divergence with price. Sometimes this can disappear, but it is often a signal of weakness and appears before a sustainable high.

For the short term, a close near highs for the week and a slightly bullish lower wick suggest more upwards movement next week.

DAILY CHART

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

A target from the flag pole would be at 3,405. This has been almost met.

A Bearish Engulfing candlestick pattern has appeared for the second time in recent price history (on the 11th and 19th of August) and yet price continues higher.

Risk of a multi-week pullback is still high. ADX is extreme and RSI is near overbought and exhibits bearish divergence. However, there is at this stage no signal of a trend change.

Assume the trend remains the same, upwards, until proven otherwise.

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 still not made new all time highs. The last high for the OCO AD line was in the week beginning January 13, 2020. There is now 7 months of bearish divergence between price and the OCO AD line. This may now support the more bearish second wave count. It is possible now that a major trend change may occur.

The NYSE All Issues AD line made new highs in the week beginning 1st of June. 

This week price has continued higher, but the AD line has declined. This is a single week instance of bearish divergence.

Large caps all time high: 3,399.96 on 21st August 2020.

Mid caps all time high: 2,109.43 on 20th February 2020.

Small caps all time high: 1,100.58 on 27th August 2018.

This week only large caps have made new all time highs. This rise is led by large caps, which is a feature of an aged bull market.

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 on Friday, but the AD line has moved strongly lower to make another new low below the prior low of the 11th of August. This divergence is bearish. There is now a cluster of bearish signals from the AD line.

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. There remains over two years of strong bearish divergence between price and inverted VIX.

This week price has moved higher, but inverted VIX has moved lower. This divergence is bearish.

Comparing VIX and VVIX: From weeks beginning 1st June to last week, VIX has made new lows as price has made new highs, but VVIX has failed to make corresponding new lows with VIX. VVIX remains slightly elevated. This divergence is not strong, but it is bearish for price.

This week VIX has moved higher, but VVIX has moved lower. This divergence is bullish for price 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 inverted VIX have moved higher. There is no new short-term divergence. There is still a cluster of three bearish signals.

Comparing VIX and VVIX at the daily chart level: VIX is making new lows, but VVIX remains slightly elevated. This divergence is bearish.

DOW THEORY

Dow Theory still concludes a bear market is in place.

DJIA DAILY CHART

Dow Theory confirmed a bear market with the following low made on a closing basis:

DJIA: 21,712.53 – a close below this point was been made on the March 12, 2020.

At this time, to shift Dow Theory from viewing a bear market to confirmation of a new bull market would require new highs made on a closing basis:

DJIA: 29,568.57

DJT DAILY CHART

Dow Theory confirmed a bear market with the following low made on a closing basis:

DJT: 8,636.79 – a close below this point was been made on March 9, 2020.

At this time, to shift Dow Theory from viewing a bear market to confirmation of a new bull market would require new highs made on a closing basis:

DJT: 11,623.58

SPX DAILY CHART

Adding in the S&P and Nasdaq for an extended Dow Theory, a bear market was confirmed:

S&P500: 2,346.58 – a close below this point was made on March 20, 2020.

At this time, to shift Dow Theory from viewing a bear market to confirmation of a new bull market would require new highs made on a closing basis:

S&P500: 3,393.52 – closed above on 21st August 2020.

NASDAQ DAILY CHART

Extended Dow Theory confirmed a bear market with the following low made on a closing basis:

Nasdaq: 7,292.22 – a close below this point was made on the March 12, 2020.

At this time, to shift Dow Theory from viewing a bear market to confirmation of a new bull market would require new highs made on a closing basis:

Nasdaq: 9,838.37 – closed above on June 8, 2020.

Published @ 07:56 p.m. ET

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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.

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New updates to this analysis are in bold.