Upwards movement for Monday leaves the short-term alternate hourly Elliott wave count as most likely.

The target is now calculated at two degrees.

Summary: Both main and alternate wave counts expect the low of the 30th of October to not be breached for many months or years.

The next target zone for the upwards trend is at 4,585 – 4,608. About this target zone another multi-week pullback or consolidation may develop.

An alternate wave count at the weekly chart level has an about even 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 tenth 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. The target for primary wave 3 is now calculated at both primary and intermediate degrees, so it widens to a zone.

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.

DAILY CHART

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Primary waves 1 and 2 may both be complete. Primary wave 3 may be underway.

Primary wave 3 may only subdivide as an impulse.

Intermediate wave (4) may also be complete. At the hourly chart level, upwards movement of this last session is now too deep to reasonably be part of minor wave C. However, it remains possible that intermediate wave (4) may continue sideways as a double flat or double combination.

An Elliott channel is added in beige about primary wave 3. If it is long lasting enough, then intermediate wave (4) may find support about the lower edge of this channel.

Intermediate wave (2) was a very deep zigzag lasting 14 sessions. Intermediate wave (4) may be a complete expanded flat lasting 14 sessions. There is alternation and perfect proportion between intermediate waves (4) and (2).

If it continues further sideways, then intermediate wave (4) may not move into intermediate wave (1) price territory below 3,549.85.

Primary wave 1 looks extended. The target for primary wave 3 expects it to also be extended.

HOURLY CHART

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Intermediate wave (4) may be complete as an expanded flat. This exhibits alternation with the zigzag of intermediate wave (2). There is now perfect proportion between intermediate waves (2) and (4).

Minor wave 2 within intermediate wave (5) may not move beyond the start of minor wave 1 below 3,694.12.

When minor wave 1 may be a complete five wave impulse, then draw a Fibonacci retracement along its length. The 0.382 and 0.618 Fibonacci ratios of minor wave 1 would be targets for support for minor wave 2.

ALTERNATE WAVE COUNT

WEEKLY CHART

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This wave count is the same as the first weekly chart with the exception of the degree of labelling within cycle wave V.

If the degree of labelling within cycle wave V is moved down one degree, then only primary wave 1 may be currently unfolding. When primary wave 1 may be complete, then a multi-week pullback or consolidation may begin for primary wave 2. Primary wave 2 may not move beyond the start of primary wave 1 below 2,191.86.

This wave count is more bullish than the main weekly chart. It expects that cycle wave V may be in an earlier stage and may yet last many more years than the main weekly chart expects it to. These two weekly wave counts are of an even probability. In coming months to years classic technical analysis will be used to judge the probability of these two weekly wave counts.

DAILY CHART

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This wave count is the same as the first daily chart except the degree of labelling is one degree lower within primary wave 1.

The target for a third wave up to end is the same.

TECHNICAL ANALYSIS

WEEKLY CHART

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

Last week completes a strong bearish candlestick reversal pattern that has support from volume. This has come when the prior upwards trend did not exhibit extreme conditions. A normal pullback within an ongoing trend looks most likely here.

On Balance Volume suggests more downwards movement here for the short term.

DAILY CHART

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

ADX now indicates a downwards trend.

Today there is some evidence that another pullback may be complete. There is a bullish signal from On Balance Volume. Both price and On Balance Volume remain above support. The AD line also gives a bullish signal.

A lack of volume supporting upwards movement today is not 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 20th of January. This is a strong bullish signal and supports the main Elliott wave count.

Large caps all time high: 3,870.90 on January 26, 2021.

Mid caps all time high: 2,482.63 on January 25, 2021.

Small caps all time high: 1,258.83 on January 25, 2021.

Last week both price and the AD line have moved lower. Downwards movement in price has support from declining market breadth, but breadth is not declining faster than price. There is no 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 price and the AD line have moved higher. The AD line has made a new short-term high above the prior high three sessions ago, but price has not. This divergence is bullish and supports the 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 both price and inverted VIX have moved lower. Inverted VIX has made new lows below the week beginning December 3, 2020, but price has not. This divergence is bearish for the short term.

Comparing VIX and VVIX: Both VIX and VVIX have moved higher. There is no new 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.

Following bullish divergence on Friday, on Monday both price and inverted VIX have moved higher. Bullish divergence may now be resolved. There is no new short-term divergence.

Comparing VIX and VVIX at the daily chart level: VVIX has made a new high above the high of October 28, 2020, but VIX has not. This divergence is bearish for the mid term. Both VIX and VVIX have for the last session moved lower. VVIX has made a new short-term low below the low 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 @ 07:03 p.m. ET.

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New updates to this analysis are in bold.