A small inside day fits both Elliott wave counts.
Summary: Confirmation that the correction is over is required with a new low below 1,962.96. Upwards movement may continue while price remains above this point. A low below 1,962.96 by any amount at any time frame would indicate a strong third wave down is most likely beginning.
To see how each of the bull and bear wave counts fit within a larger time frame see the Grand Supercycle Analysis.
To see detail of the bull market from 2009 to the all time high on weekly charts, click here.
Last published monthly charts can be seen here.
If I was asked to pick a winner (which I am reluctant to do) I would say the bear wave count has a higher probability. It is better supported by regular technical analysis at the monthly chart level, it fits the Grand Supercycle analysis better, and it has overall the “right look”.
New updates to this analysis are in bold.
BULL ELLIOTT WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
To see all movement from the all time high without squashing the daily candlesticks up too much, it is time to publish weekly charts regularly.
This wave count is bullish at Super Cycle degree.
Cycle wave IV may not move into cycle wave I price territory below 1,370.58. If this bull wave count is invalidated by downwards movement, then the bear wave count shall be fully confirmed.
Cycle wave II was a shallow 0.41 zigzag lasting three months. Cycle wave IV should exhibit alternation in structure and maybe also alternation in depth. Cycle wave IV may be a flat, or combination. This first daily chart looks at a flat correction.
Cycle wave IV may end within the price range of the fourth wave of one lesser degree. Because of the good Fibonacci ratio for primary wave 3 and the perfect subdivisions within it, I am confident that primary wave 4 has its range from 1,730 to 1,647.
Primary wave C should subdivide as a five.
DAILY CHART – FLAT
Click chart to enlarge.
Within the new downwards wave of primary wave C, intermediate waves (1), (2) and now (3) may be complete. Intermediate wave (4) is continuing higher. Intermediate wave (2) will subdivide either as a single or double zigzag (as will intermediate wave (4) ). There is inadequate alternation between these two corrections, which reduces the probability that the current correction is a fourth wave.
For this wave count, intermediate wave (4) must be complete because there is almost no room left for it to move with the invalidation point near by. Redraw the channel about primary wave C using Elliott’s second technique. Draw the first trend line from the ends of intermediate waves (1) to (4), then a parallel copy on the end of intermediate wave (3). Expect intermediate wave (5) to find support at the lower edge. Intermediate wave (5) is highly likely to end slightly below 1,810.1.
The idea of a flat correction for cycle wave IV has the best look for the bull wave count. The structure would be nearly complete and at the monthly level cycle wave IV would be relatively in proportion to cycle wave II.
HOURLY CHART
Click chart to enlarge.
Comment on structure will be with the bear wave count today.
DAILY CHART – COMBINATION
Click chart to enlarge.
This idea is technically possible, but it does not have the right look. It is presented only to consider all possibilities.
If cycle wave IV is a combination, then the first structure may have been a flat correction. But within primary wave W, the type of flat is a regular flat because intermediate wave (B) is less than 105% of intermediate wave (A). Regular flats are sideways movements. Their C waves normally are about even in length with their A waves and normally end only a little beyond the end of the A wave. This possible regular flat has a C wave which ends well beyond the end of the A wave, which gives this possible flat correction a very atypical look.
If cycle wave IV is a combination, then the first structure must be seen as a flat, despite its problems. The second structure of primary wave Y can only be seen as a zigzag because it does not meet the rules for a flat correction.
If cycle wave IV is a combination, then it would be complete. The combination would be a flat – X – zigzag.
Within the new bull market of cycle wave V, no second wave correction may move beyond the start of its first wave below 1,810.10.
I do not have any confidence in this wave count. It should only be used if price confirms it by invalidating all other options above 2,104.27.
BEAR ELLIOTT WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
This bear wave count fits better than the bull with the even larger picture, super cycle analysis found here. It is also well supported by regular technical analysis at the monthly chart level.
Importantly, there is no lower invalidation point for this wave count. That means there is no lower limit to this bear market.
Downwards movement so far within January still looks like a third wave. This third wave for intermediate wave (3) still has a long way to go. It has to move far enough below the price territory of intermediate wave (1), which has its extreme at 1,867.01, to allow room for a following fourth wave correction to unfold which must remain below intermediate wave (1) price territory.
Intermediate wave (2) was a very deep 0.93 zigzag. Because intermediate wave (2) was so deep the best Fibonacci ratio to apply for the target of intermediate wave (3) is 2.618 which gives a target at 1,428. If intermediate wave (3) ends below this target, then the degree of labelling within this downwards movement may be moved up one degree; this may be primary wave 3 now unfolding and in its early stages.
DAILY CHART
Click chart to enlarge.
Intermediate wave (2) lasted 25 sessions (not a Fibonacci number) and minor wave 2 lasted 11 sessions (not a Fibonacci number).
Minute wave ii has now lasted fifteen sessions, four longer than minor wave 2. At this stage, the size of minute wave ii no longer gives the wave count the right look, so for this reason the alternate below is published.
Minute wave ii may not move beyond the start of minute wave i above 2,104.27.
A small channel is added to this bear market rally on the daily chart. This channel needs to be breached before confidence may be had that the rally is over.
HOURLY CHART
Click chart to enlarge.
There are two ways to see this upwards movement: as a double zigzag as shown here or as a single zigzag as shown for the alternate below. Both ways to label it work in the same way for this and the alternate wave count below.
If upwards movement is a double zigzag, then the structure again looks complete.
Within the first zigzag of the double, subminuette wave c is just 2.18 points short of 0.382 the length of subminuette wave a.
Within the second zigzag of the double, subminuette wave c is now 5.36 points longer than equality in length with subminuette wave a.
There is alternation between the two zigzags: the first zigzag has a long A wave and a short C wave, while the second zigzag has A and C waves close to equality.
Earliest confirmation of a trend change would come with a breach of the channel. However, the S&P does not always fit neatly into channels as it nears the end of a trend. It tends to form rounding tops, breaching a channel before continuing further.
First price confirmation of a trend change would come with a new low below 1,974.08. At that stage, micro wave 5 within subminuette wave c would have to be over because downwards movement could not be a second wave correction within it, so micro wave 5 could not extend.
Strong price confirmation of a trend change would come with a new low below 1,962.96 which would invalidate the alternate below.
On the five minute chart, the last two waves down both subdivide best as fives. This is not enough evidence of a trend change, but it does slightly support the idea.
ALTERNATE DAILY CHART
Click chart to enlarge.
If intermediate wave (2) ends on 2nd December, 2015, then it will only fit as a zigzag with a truncated C wave. I have tried to see other ways of labelling this movement with the same end and so far I cannot find a better solution. The truncation is large at 12.19 points which gives this wave count a very low probability. But this now resolves the problem the main wave count has of proportion.
Intermediate wave (2) for this wave count is 45 days in duration. Minor wave 2 is now sixteen days in duration, so the proportions look good.
Minor wave 2 may not move beyond the start of minor wave 1 above 2,104.27.
This alternate makes a difference to the target. At 1,416 intermediate wave (3) would reach 2.618 the length of intermediate wave (1).
Click chart to enlarge.
Upwards movement may be an incomplete single zigzag. At 2,086 minute wave c would reach 1.618 the length of minute wave a.
Minute wave b is seen as an expanded flat correction.
The channel is drawn in the same way, so it should be used in the same way for earliest indication of a trend change.
Minuette wave (iv) should find strong support at the lower edge of the channel. It may not move into minuette wave (i) price territory below 1,962.96.
Minute wave c shows weaker momentum than minute wave a. There is persistent divergence with price and MACD from the high of minute wave a onwards. For the end of last week, as price made new highs, MACD was essentially flat. This indicates weakness in price.
Minuette wave (iv) may be unfolding as a regular contracting triangle. However, the subdivisions do not have a good fit on the five minute chart. Both of subminuette waves a and c subdivide best as fives, not threes, on the five minute chart.
TECHNICAL ANALYSIS
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Volume data on StockCharts is different to that given from NYSE, the home of this index. Comments on volume will be based on NYSE volume data when it differs from StockCharts.
Price moved higher for three days in a row on declining volume from 1st to 3rd March. Friday’s session for 4th March saw some increase in volume; the rise in price for Friday was supported by volume. However, volume for Friday remains below 29th February which was a downwards day. Monday’s session saw decreased volume for an upwards day on both StockCharts and NYSE volume data. This is bearish. Overall, the volume profile remains more bearish than bullish, but it is not consistently and fully bearish.
NYSE volume data shows declining volume for rising price during this rally, and increasing volume on falling price during this rally. The short term volume profile for this rally is bearish.
ADX is flat indicating no clear trend. ATR continues to clearly decline, more typical of a correction than a trend.
On Balance Volume is giving a bullish signal with a breach of the technically significant pink trend line. But the breach today is slight. If OBV more clearly breaks above this trend line tomorrow, it would be a substantial bullish signal.
The next line for price to find resistance is at 2,020 and the 200 day moving average.
DOW THEORY
For the bear wave count I am waiting for Dow Theory to confirm a market crash. I am choosing to use the S&P500, Dow Industrials, Dow Transportation, Nasdaq and I’ll add the Russell 2000 index. Major swing lows are noted below. So far the Industrials, Transportation and Russell 2000 have made new major swing lows. None of these indices have made new highs.
I am aware that this approach is extremely conservative. Original Dow Theory has already confirmed a major trend change as both the industrials and transportation indexes have made new major lows.
At this stage, if the S&P500 and Nasdaq also make new major swing lows, then my modified Dow Theory would confirm a major new bear market. At that stage, my only wave count would be the bear wave count.
The lows below are from October 2014. These lows were the last secondary correction within the primary trend which was the bull market from 2009.
These lows must be breached by a daily close below each point. So far the S&P has made a new low below 1,821.61, but it has not closed below 1,821.61.
S&P500: 1,821.61
Nasdaq: 4,117.84
DJT: 7,700.49 – this price point was breached.
DJIA: 15,855.12 – this price point was breached.
Russell 2000: 1,343.51 – this price point was breached.
This analysis is published @ 09:26 p.m. EST.
PnF Charts suggests target is between 1560 and 1365. Lara’s prediction is in the middle so this is corroborated.
Latest Kimble report S&P 500
http://blog.kimblechartingsolutions.com/
Hi Everyone,
Take a look at the Wilshire 5000 Index, the trend line is being reinforced with the latest moves.
http://danericselliottwaves.blogspot.com/
Russell 2K got croaked purty good today, with volume. Spx next?
Yep. I hope Mathius took the money and ran. As I told him yesterday, I’d be revisiting his bullish pronouncements in a day or two…well, here we are! 🙂
It led on the way up, it will lead on the way down…
Wave count shaping up nicely with the news cycle. We will no doubt see the first impulse down wrap up on Thursday just in time to get a bounce, courtesy of Draghi-speak. Have a great evening everyone- see ya in the trenches!
Volume Higher today than yesterday:
649.690 Million 4:06PM Yesterday
694.512 Million 4:06PM Today
Have a great night!
Lara, I trade the S&P e-mini. How does your analysis differ?
This analysis is done of the cash market.
It will be similar to the E-mini, but the price points are slightly different so the wave count is sometimes slightly different.
The larger picture should be the same though.
Sub 1974.08 either by close or more likely overnight!
Bought April QID 35 calls @ 1.13…
Great timing Verne, that’s exactly when market started some acceleration downward… Good luck 🙂
We haven’t had a downward acceleration into the close for a while, since Feb 23rd in fact. Lets see what the market does with today’s engulfing red candle the rest of the week…
The last three small waves down will subdivide as fives on the five minute chart.
The last three upwards movements will not fit as fives but will fit as zigzag or zigzag multiples.
This fits as a series of first and second waves. To see this as a correction unfolding down because so far it subdivides 5-3-5-3-5-3 it would have to be seen as a almost complete double zigzag. But then the first zigzag in the double would have a truncated C wave…. and so this movement meets more guidelines and has a better fit as the start of a larger impulse down.
That’s my conclusion from the five minute chart anyway.
The S&P often forms somewhat slow rounding tops. That may be happening here.
The channel is breached today and on the hourly chart price is finding resistance just below the lower edge. But beware, the S&P doesn’t always behave nicely with its trend lines when it forms rounding tops. After a breach it can make a new high, before the turn. That is why price confirmation is so important for this market.
Thanks for the update. I’ll take a series of 1-2’s forming a round top any day. Sounds like we might be getting a spike up with a reversal sometime in the next day or two… and if we just keep going down from here, I’m just fine with that too 🙂
Thank you very much Lara!
Hello Lara,
Do you expect a bounce only If the price reach 1974.08?
Or the bounce is already happening now?
Thank you!
Peter
There will always be bounces… but the first of any reasonable size may well turn up when price comes to find support at the first of the cyan trend lines I’m copying over to the hourly bear wave count.
Looks like today we had the throwback to the trend line, on the hourly at least.
When the channel about this correction has been properly breached on the daily chart then look for a possible throwback… but I’m slightly concerned that may not happen. Price may just fall once that channel is properly breached.
This is a huge third wave, the middle. Look out for surprises to the downside!
Volume slightly Higher today than yesterday at this time:
297.843 Million 1:30PM Yesterday
310.263 Million 1:30PM Today
Where is Olga???
I find her intra-day analysis helpful… but yesterday she said the market was making her feel like she was watching paint dry. I’m guessing she’s taking a break from this market meandering…
Looks like the paint is almost try.
Touch dry?
BTO UVXY this week 35 strike calls contingent on UVXY above 32.67, limit 1.00 per contract…
DJI move down from the last high looks like three. As expected, they are not going to surrender the pivots without a fight. Not a bad idea to keep some dry powder…new SPX low under 1979.50 would lessen the concern…
I count wave 1,2 at 3 degrees now from the high on SPX on 15 min chart.
Hello. Yes, because I believe the DJI might make a slight higher high or double top, while sp500 and NDX100 will not. The NDX100 specially topped already in 02/03 and 04/03 with a double top(truncation 5). I am also short since yesterday and more today… hopefully this time we end red at the close… But anything is possible, however…. 🙂
Alright all..I’m in. I’m in 4/15 expiration SDS Calls $22 strike. Using the throwback to the lower trendline on the hourly chart as my entry. Picked these up at 50 cents a contract, looking for a double.
Good Luck Barry!
P.S. I appreciate that your willing to specify the exact trade that you placed and it’s exact entry point & price.
If I am able to Buy the Leaps that I have been attempting to buy, I will do the same thing. Trying for 6 days so far… they won’t hit my bid.
Just bought Leaps SDS Jan/2018 $20stk.
I was trying for 6 days to buy SPXS Jan/2018 $17stk… gave up.
Good luck…
Volume slightly Higher today than yesterday at this time:
194.533 Million 11:25AM Yesterday
204.636 Million 11:25AM Today
Wynn coming back to earth and puts getting quite plump. It still has a long way to fall. Macau is toast! 🙂
I have set trailing stop on my UVXY shares with a trigger if UVXY trades above 50. We are probably several days away from that but it does not hurt to get set up early.
The S&P bear hourly chart in the article above has an aqua line drawn to 1942 and underneath it says “confirmation 1962.96”. What is the significance of the aqua line drawn to 1942 on the S&P if 1962.96 is the confirmation point? I have added a purple line to where 1962.96 would be to illustrate. Is 1942 a further confirmation? Or just a channel? Or something else?
thx
The cyan lines are copied over from the daily chart.
They have provided some fairly long held resistance and support and so should do so again. When price gets down to them I’d expect a bounce, even if a small one. And after they’ve been breached then a throwback for resistance.
And 1,962.06 is confirmation because that invalidates the alternate.
Once we see a new low, no matter by how much and no matter at what time frame below 1,962.06 then we have price confirmation that the correction is over and a big third wave down is in the early stage.
On the way down look for bounces and throwbacks to those two cyan lines as they offer some support and resistance.
Looks like gold at the end of the first impulse up. Hedging my long positions in the miners with a few NUGT puts.
I have Gold in a multi day correction, which should break out upwards for a fifth wave.
And as its a fifth wave of a commodity it may be very strong.
Thank you Lara!
I was expecting the fifth wave up had started but it looks like not quite yet. Miners have been really out-performing the metal and I am hanging onto my shares for dear life! I think they are going to ignite on the fifth wave up…. 🙂
Hello Vern,
How is the NUGT going? What is your support?
I do not understand this type of ETF. It is crazy sometimes.
I truly appreciate your info!
Peter
Trading these triply leveraged inverse funds can be like trying to pick up a coiled snake! I am slightly above my entry price and plan on holding it for a few days to hedge my Gold miners against the anticipated pull back in Gold. So far so good. Holding the 50.5 puts expiring this week and got them for about .80 per contract.
if I have my trendline drawn on my chart in the correct manner, it appears as though we have broken (ever so slightly) below the lower trendline on the bear hourly.
chart
Lara recommends a full hourly candlestick not touching the underside of the trendline…
I also have the caveat for the S&P that when it forms rounding tops it does not behave well with its trend lines.
It will breach the line and then go on to form another high, breach a new line and form another slightly higher high…. It can do that a few times, before finally beginning then next move down which may begin in a leisurely manner.
Thats why for the S&P price confirmation is so important.
Updated
SPX tends to jump back into those channels so I would keep an eye out…
The banksters are going to keep buying the declines in the hope bulls will stick around until Thursday. We really need the indices to fall steeply away from the pivots to confirm that the crowd will not be interested in buying whatever Draghi plans on selling. The smart money thinks he has backed himself into a corner and is not going to be able to deliver what it’s going to take to keep the animal spirits animated, namely even more negative interest rates IN ADDITION to massive new Q.E. Look for the wrangling around the pivots to continue.
Interesting that all the leap (2018) option prices on the ask went up $3 to $4 per contract across the board this morning when compared to where they were yesterday and the last several days.
There is a message in that occurance!
Very soon the bid ask on those are going to get to be so ridiculous, they will deter all but the most committed bears…
The ask went up by $3 to $4 each… example yesterday on one from $4.30 to $8.00
The bids went down by 0.50 to $1.00… example from $4.00 to $3.00
They know what’s coming. I would not be surprised to see that discrepancy get even worse. I for one will simply exercise my call options if they are playing that game when I am ready to unload. You cannot do that with VIX but you can with UVXY.
BTW, this is the kind of skulduggery they tend to engage in when they absolutely do not want anybody even looking at those contracts. The fact is though you can still get filled at far better than they are advertising, both on the bid and ask side, if you are patient and understand what’s going on.
I have been trying for 6 days now, bidding anywhere from 1 to 1.60 over the shown bids… no takers yet. I haven’t moved my bid off of where I had it yesterday and I don’t plan to.
Looking for any mispricing that I can take advantage of in addition to what I have a bid in for.
In case of a crash or break below 1810… I placed a GTC Sell at a crazy price on that dumb short-term option position I bought two weeks ago. Never again… I broke my rules when I bought those.
On the short term options you have to trade them on momentum and get out quickly when they pop, preferably getting in at support during a pull back in an uptrend. The short term trades are murder when the momentum is not in your favor as the options are notorious for being a wasting asset, even more so than regular options. This is what makes the reversion to the mean trade at market bottoms so powerful.
That’s why I will only buy leaps…
I did buy at resistance and it failed… Therefore they are worthless at the moment.
Now it’s the crash trade and soon or another mistake using options.
Never again… I don’t know how your do it!
You can never hit a bid or ask as they never reflect the true value.
It does tend to occasionally throw a curve ball and I have had my share of loosing trades. I tend to keep positions on the short term trades small, five or fewer contracts. The last few weeks saw support move down from around 40 to the 28 area and I also ended up with a couple of under water positions some of which expired worthless. The last few days buying under 29 has been good for several quick 10 – 20 % scalping trades. It does take a while to tame this beast. I have been at it for quite some time and still occasionally get bitten so don’t feel in any way bad my friend…
The reason why there is such furious price action around round number pivots is that banksters understand the role that psychology plays in influencing market participants. Their intervention is successful only to the degree that they can influence crowd sentiment. It is still an amazing thing to recognize that the vast majority of market participants make decisions based on instinct and emotion, and NOT intellect. Why else would we be trading at these levels? I assure you, that will change… 🙂
Vern,
It makes sense for them to keep the pumping game going. Based on some comments here, it is clear that folks have bought into this uptrend while others have bailed out on the short trading positions (partially if not completely). Market will prove the majority wrong as that is the only way for the selected few to maintain their privilegde status 🙂
On another note, I looked up the rise in Crude Oil price since second week of Feb.10 (recall intraday low at $26.70ish) to yesterday’s(Mar. 07) intraday high (approx. $38). That represents close to 40% rise in span of 3 weeks, I think we are close to a top onoil (if not already in place) and prices should start to move lower into early 20s soon. What do you think?
I think you are right. In fact, we saw a bit of a spike in the oil price this morning but the market ignored it. The individuals arguing for a resumption of the uptrend does indeed prove the point of how we sometime confuse feelings with facts. Folk cautious about short positions in the immediate term are probably prudent despite a long term bearish view. The key is to preserve capital. I got tired of fighting the banksters over the short and medium term and just loaded up on leaps. This is where Lara’s EW counts prove invaluable. 🙂
Don’t jump the gun. The Chinese came in with a massive cash dump at the close to keep Shanghai in the green. They never learn. US banksters are doing the same thing and they may be able to prop up US indices for a day or two longer despite the declining futures. While they may prolong the arrival of the next leg down, all they are doing is intensifying it. I am convinced that while they cannot ultimately deter the EW wave forms, they can distort them, hence this remarkably protracted possible minute two correction. Wait for a conclusive surrender of the round number pivots. It should happen today. If it does not, keep your powder dry.
Vern,
Checkout the BBC documentary on China’s growing debt and how they have leverged to build new infrastructure (not being used) while the manufacturing plants are closing (never reported in main stream). The debit is growing at $2.5-$3.0 trillion a year. The recent plan for making London, UK the hub for all China related busines including currency is drawing some concern as well as it exposes the UK economy to unknowns associated with China and its economic state.
What is going on over there is completely nuts! I don’t know how long they can keep this thing going. They are borrowing 8 yuan of each one yuan of growth and their debt to GDP ration is already astronomical. They have decided to double down and try to keep fueling the growth with even more debt. They may not have a choice as this is the pact they made with the masses. Give us total control, we will give you economic growth. They cannot afford the masses to become restless and so will do whatever they deem necessary to maintain some semblance of stability. Meanwhile, North Korea is about to implode and magnify their problems by an order of magnitude! Those empty cities are absolutely spooky!!
I think the main hourly bear chart has not been updated from end of Friday March 4th?
You’re right.
My apologies for that. I had not updated my code.
Fixed now.
He he. No first place takers?? This has gotta mean a top is close! 🙂
Maybe I cashed in my chips a little too soon!
Social Mood!
Rats!!!! 🙂
for sure,,, Olga being first will mark a major top. This will go down in history
Woz awaitin 10min dudez! 🙂