Price continues to move sideways supporting the alternate Elliott wave count. Both wave counts remain valid.
Summary: The main wave count still expects a deeper pullback here to 2,299 – 2,297, which may be reached in a very few days. An alternate expects sideways movement for possibly up to another 22 sessions. If price remains above 2,327.58, this possibility will remain valid.
New updates to this analysis are in bold.
Last monthly and weekly charts are here. Last historic analysis video is here.
MAIN ELLIOTT WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
The degree of labelling within primary wave 3 is here moved up. It is possible that primary wave 3 may be over.
There is another idea which sees only intermediate wave (3) within primary wave 3 complete (thank you to our new member Peter for emailing me his chart) and intermediate wave (4) now continuing.
At this stage, I will follow these ideas but publish only one, primary wave 4. If the alternate idea of intermediate wave (4) begins to diverge substantially in terms of direction expected, then it will be published.
Primary wave 4 may continue lower.
To exhibit alternation with primary wave 2, primary wave 4 may be most likely a single or multiple zigzag. It may also be a triangle.
Primary wave 2 was a flat correction lasting 47 days (not a Fibonacci number). Primary wave 4 may be unfolding as a double zigzag. A double zigzag would still be incomplete and has now lasted a Fibonacci 34 days. It may now continue to total a Fibonacci 55 days (the next Fibonacci number in the sequence), or it may not exhibit a Fibonacci number.
Primary wave 4 may not move into primary wave 1 price territory below 2,111.05.
DAILY CHART
Click chart to enlarge.
Within double zigzags, the X wave is almost always brief and shallow. There is no rule stating a maximum for X waves, but they should not make a new price extreme beyond the start of the first zigzag in the double.
X waves within combinations may make new price extremes (they may be equivalent to B waves within expanded flats), but in this instance primary wave 4 would be unlikely to be a combination as it would exhibit poor alternation with the flat correction of primary wave 2.
For this wave count intermediate wave (X) may now be complete.
If a new high above 2,400.98 is seen, then this wave count would be discarded.
The correction for primary wave 4 should be a multi week pullback, and it may not move into primary wave 1 price territory below 2,111.05.
A target is calculated for primary wave 4 to end based upon primary and intermediate degrees. This target would see primary wave 4 end just short of the fourth wave of one lesser degree price territory, that of intermediate wave (4) which has its range from 2,277.53 to 2,233.62. If the target at 2,299 – 2,297 is wrong, then it may not be low enough.
HOURLY CHART
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The second zigzag in the double is labelled intermediate wave (Y) and minor waves A and B may be complete within it.
Minor wave C may be underway, unfolding as an impulse; the structure looks incomplete. The strongest portion of minor wave C may yet be ahead.
With upwards movement during this last session breaking well above the upper edge of the Elliott channel, this first wave count has reduced in probability. The alternate may now actually have a higher probability.
Minor wave C must complete as a five wave structure. It may find support about the lower edge of the Elliott channel.
When minuette wave (iii) is complete, then the following correction for minuette wave (iv) may not move into minuette wave (i) price territory above 2,341.18.
ALTERNATE ELLIOTT WAVE COUNT
DAILY CHART
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This wave count looks at the possibility that a large regular contracting triangle may be completing for a fourth wave. This may be primary wave 4, but it may also be intermediate wave (4) within primary wave 3. Both ideas would have subdivisions labelled the same way and both ideas would see the triangle incomplete.
This idea is now supported by MACD hovering about the zero line as the triangle unfolds.
There would still be adequate alternation between the shallow 0.40 expanded flat of primary wave 2 and the more shallow triangle.
Primary wave 2 lasted 47 days. Triangles are some of the longest lasting corrective structures. So far this one may have lasted 34 days. It may end in a total Fibonacci 55 days.
A contracting triangle may not have intermediate wave (D) move beyond the end of intermediate wave (B) at 2,378.36.
A barrier triangle may have intermediate wave (D) end about the same level as intermediate wave (B) at 2,378.36; as long as the (B)-(D) trend line remains essentially flat the triangle would remain valid. In practice, this means that intermediate wave (D) can move a little above 2,378.36. This is the only Elliott wave rule which is not black and white.
For both contracting and barrier triangles, intermediate wave (E) may not move beyond the end of intermediate wave (C) below 2,327.58.
HOURLY CHART
Click chart to enlarge.
The subdivisions of most recent movement are mostly the same.
If a triangle is unfolding, then intermediate wave (C) should be over now. To try and see it move any lower would mean the (A)-(C) trend line would not have sufficient slope for the right look.
A new low below 2,327.58 would invalidate this triangle idea in favour of the main wave count.
If price continues sideways, then this triangle would increase in probability.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Although a strong downwards week has lighter volume, because last week was a short week this should not be read as bullish.
The signal from On Balance Volume should be given weight; it supports the main Elliott wave count. In conjunction with MACD, this is overall a fairly bearish weekly chart.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
The S&P is range bound with resistance about 2,370 and support about 2,325. It is a downwards day which has strongest volume during this consolidation, suggesting a downwards breakout is more likely than upwards. This technique often works, but not always.
The last two downwards days have relatively strong and increasing volume. This supports the main Elliott wave count. On Balance Volume is very bearish and also supports the main Elliott wave count. MACD also supports the main count.
ADX, ATR and Bollinger Bands support the alternate Elliott wave count. If this is a downwards trend, it lacks range and volatility. This weakness points to a larger consolidation.
VOLATILITY – INVERTED VIX CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Normally, volatility should decline as price moves higher and increase as price moves lower. This means that normally inverted VIX should move in the same direction as price.
It is noted that there are now six multi day instances of bullish divergence between price and inverted VIX, and all have been followed so far by at least one upwards day if not more. This signal seems to again be working more often than not. It will again be given some weight in analysis.
There is no new divergence today noted between price and VIX.
BREADTH – AD LINE
Click chart to enlarge. Chart courtesy of StockCharts.com.
The rise in price has support from a rise in market breadth. Lowry’s measures of market breadth do not at this stage warn of an impending end to this bull market. They show an internally healthy bull market that should continue for at least 4-6 months.
There is no new reasonable divergence noted today between price and the AD line.
DOW THEORY
The DJIA, DJT, S&P500 and Nasdaq continue to make new all time highs. This confirms a bull market continues.
The following lows need to be exceeded for Dow Theory to confirm the end of the bull market and a change to a bear market:
DJIA: 17,883.56.
DJT: 7,029.41.
S&P500: 2,083.79.
Nasdaq: 5,034.41.
Charts showing each prior major swing low used for Dow Theory are here.
This analysis is published @ 08:38 p.m. EST.
The double zigzag is invalidated, the triangle has confidence.
That’s what this now looks like, a big triangle. And it’s not done.
These really don’t present the best trading opportunities. This is a giant consolidation, best left to the experts to try and make $$ from. Pretty sure Verne is onto it there 🙂
I’m going to label intermediate (D) differently; specifically I won’t have a running flat for minor B within it. This chart is just a quick update before the close, that bit is going to change after I look at the 5 minute chart.
Yes indeed. I got smacked with a small loss on my measly ten contracts today but I wholly agree with the triangle. Hopefully we get a completion of the D wave tomorrow and a chance for quick downside scalp to end the week with a smile! I got a bit over-confident as DJI made a new low and invalidated the triangle count for that index; Just goes to show that they can sometimes move independently and failure of SPX to confirm is usually bullish…Duh! Have a great evening all and thanks for the update Lara. Good to have some company today as it was very lonely! 🙂
Sorry for the loneliness Verve, client meetings and such for me today. Luckily, My algos absolutely crushed it today. Thank God they don’t trade how I think!!! Or feel for that matter!!!
Hiya! Great to hear of the success. I have never used them, although a guy from a company called Gensys of something similar tried to sell me a fib algo for the measly sum of 16K a few years back. 🙂
I designed the multi-strat genetic algos myself and we have our own custom software, and trading applications. We run a modest private fund. I’m very familiar with Genesis/Trade Navigator, used to code/backtest all the time on their platform and use their virtual servers. Good firm.
I am impressed! 🙂
Thanks
Furious assault by the bulls on the 50 day SMA. Let’s see how it closes…
We must REALLY be getting close to a top. Harry Dent, notorious for his persistent calls for a market crash for the past five years, is now sending me e-mails telling my how he has now changed his mind and it is now time to BUY! Yes Siree!! 🙂
In all fairness, I happen to agree that we do have final fith wave ahead so he has finally gotten it right!
Another bearish rising wedge, they all end the same way folks…
Of course SPX has not yet invalidated its own possible E wave of a triangle so although it seems far fetched, theoretically could diverge from DJI…
The final two nails in the coffin of the Eurozone failed experiment will be the French elections, and wrath of Erdo-Wee, Erdo-Woo, Erdogan (some of you will recognize that joke) in the form of a few million more refugees flooding into Europe. The Northern members like Poland and Hungary are not going to put up with the bullying of the Eurozone kleptocrats and slammed the door shut to more refugees. It would seem unlike places like Sweden and Germany, they are not afflicted with the suicidal mania exhibited by the leaders of those countries. It is an absolute wonder that the people of Europe would abide by the rotting detritus that comprise the cabal of Eurozone low-life so called ministers lording it over their lives, absolutely amazing!
Looking for SPX gap closure below 2337.05. If trading mirrors yesterday’s gap open should come in the next hour…
Adding to DIA 205 puts at 0.80…target 1.50
The bounce in FEZ today is nothing but a bankster pipe dream. Europe is FINIS! Period!
April 28 35 puts should garner an easy double. The spread is not great(40/55) but a midway fill would still be reasonable.
Buying DIA 205 puts expiring tomorrow for for 0.75
Stop at 0.50. will add to position over 1.00
Buying USO April 28 11.00 strike puts for 0.38, target 0.75 per contract…
Look for a green VIX print to signal the attempted ramp has filed and the downtrend resumes immediately…
The market makers were not happy about the new DJI low yesterday as they are now on the hook for DIA 204 puts expiring tomorrow. Look for an attempt to ramp it back above 20,4000.00. We could finish the current move down with another bounce into options expiration tmorrow.
It is remarkable to note how the pair trade of selling volatility and buying the market remains alive. Don’t let the recent 40% pop in volatility fool you. The trade is going full steam ahead. DJI fired a shot across the bow at the decline into the close yesterday and here we are this morning with VIX down almost 5%. Are the masses really that stupid??!! Who is relentlessly executing these trades? And how on earth do the intend to eventually unwind these positions, having built them up for the last ten months or more?!
That is the million dollar question imho…if you get my drift…..
It is absolutely fascinating to think about the psychology of the wave structure, and how triangles at this degree paint a vivid picture of an epic struggle between bulls and bears. Curious how they always resolve themselves after five waves, and since this one is typically the fourth wave of an upward impulse, it means a sharp, and probably short five up to complete the wave structure. This has interesting implications for the market for as penultimate waves, triangles signal that the end is near. I don’t know how many people noticed but DJI seems to be dancing to the tune of a different piper and with a new low during today’s session eliminated the triangle count. I am still thinking that if we expect the Fall to be the time of you-know-what, it would have to be a third wave down, not just a top. We need time for the first wave down, a second wave up to re-ignite bullish passions, then the hammer. If the SPX also invalidates the triangle, I think we will see a speedy conclusion to wave four so we can get our final wave up, the initial wave one down of the bear market, and then the second wave up to set up the fall in the… well…Fall! Interesting times we are living in… 🙂
BTW….Foist!
It looks like that’s the case.
With the last ATH in March 2017, if primary 5 ends in October that would give 7 months of possible divergence with the AD line and RSI. That would fit what Lowry’s say they have seen happen at the end of almost every bull market in almost 100 years.
I’ll be watching for deterioration in Small Caps first, then Mid Caps… if that shows for a few months as primary 5 unfolds then that would be a net fit too.
Let’s see….
There is another option Verne, that this is only intermediate wave (3) of primary wave 3. It may be time to publish this idea soon now, I’ll do it at the end of week so I’ll explain in the video.
That is indeed a possibility. If primary three is not over we will probably not see that big move down in this year ending in seven as we expect. Good to keep an open mind and let price tell us what is unfolding.
One thing is certain is that we will get an excellent long trade at the end of the triangle with a sharp upside move when it is over. We also know price cannot go below the C low so we should have an excellent entry point with a very tight stop-loss… 🙂