Now that price has broken above resistance more upwards movement was expected. The Elliott wave target remains the same.

Summary: A close above resistance at 2,815 (November 2018 highs) on an upwards day with support from volume is a classic upwards breakout.

A third wave up may now gather strength. A new mid term target is at 3,010. The final target remains the same at 3,045.

New updates to this analysis are in bold.

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

Last published monthly charts are here. Video is here.

ELLIOTT WAVE COUNTS

WEEKLY CHART

Click chart to enlarge.

This weekly chart shows all of cycle waves III, IV and V so far.

Cycle wave II fits as a time consuming double combination: flat – X – zigzag. Combinations tend to be more time consuming corrective structures than zigzags. Cycle wave IV has completed as a multiple zigzag that should be expected to be more brief than cycle wave II.

Cycle wave IV may have ended at the lower edge of the Elliott channel.

Within cycle wave V, no second wave correction may move beyond the start of its first wave below 2,346.58.

Although both cycle waves II and IV are labelled W-X-Y, they are different corrective structures. There are two broad groups of Elliott wave corrective structures: the zigzag family, which are sharp corrections, and all the rest, which are sideways corrections. Multiple zigzags belong to the zigzag family and combinations belong to the sideways family. There is perfect alternation between the possible double zigzag of cycle wave IV and the combination of cycle wave II.

Although there is gross disproportion between the duration of cycle waves II and IV, the size of cycle wave IV in terms of price makes these two corrections look like they should be labelled at the same degree. Proportion is a function of either or both of price and time.

Draw the Elliott channel about Super Cycle wave (V) with the first trend line from the end of cycle wave I (at 2,079.46 on the week beginning 30th November 2014) to the high of cycle wave III, then place a parallel copy on the low of cycle wave II. Cycle wave V may find resistance about the upper edge.

It is possible that cycle wave V may end in October 2019. If it does not end there, or if the AD line makes new all time highs during or after June 2019, then the expectation for cycle wave V to end would be pushed out to March 2020 as the next possibility. Thereafter, the next possibility may be October 2020. March and October are considered as likely months for a bull market to end as in the past they have been popular. That does not mean though that this bull market may not end during any other month.

MAIN WAVE COUNT

DAILY CHART

Click chart to enlarge.

The daily chart will focus on the structure of cycle wave V.

Within Super Cycle wave (V), cycle wave III may not be the shortest actionary wave. Because cycle wave III is shorter than cycle wave I, this limits cycle wave V to no longer than equality in length with cycle wave III at 3,477.39. A target is calculated for cycle wave V to end prior to this point.

Cycle wave V must subdivide as a five wave motive structure, either an impulse or an ending diagonal. An impulse is much more common and that will be how it is labelled. A diagonal would be considered if overlapping suggests it.

Price has closed at 2,822.48 on an upwards day with support from volume. This close is above the recovery swing high within cycle wave IV on November 2018 at 2,815.15. This classic upwards breakout above resistance indicates underlying strength. This may be the early stage of a third wave. Primary waves 1 and 2 may both be over. Primary wave 2 may have been a very brief and shallow expanded flat correction.

Primary wave 3 may now exhibit an increase in upwards momentum. A target is calculated that fits with the higher target for cycle wave V to end.

Within primary wave 3, no second wave correction may move beyond the start of its first wave below 2,722.27.

The lower edge of the adjusted base channel may provide support for pullbacks along the way up.

HOURLY CHART

Click chart to enlarge.

Primary wave 3 may only subdivide as an impulse. Within the impulse, intermediate waves (1) and (2) may now both be complete.

Intermediate wave (3) within primary wave 3 should exhibit strong momentum.

Intermediate wave (2) may be over. Now that resistance at 2,815 has been broken this area may provide support and force intermediate wave (2) to be very brief.

If it does continue further, then intermediate wave (2) may not move beyond the start of intermediate wave (1) below 2,722.27.

Within intermediate wave (3), minor waves 1 and 2 may now also be over. There may now be a third wave up at three degrees beginning. This wave count expects to see an increase in upwards momentum.

It is also possible that intermediate wave (2) may not be over and may continue sideways and lower as an expanded flat correction, in the same way as minor wave 2 is labelled on the alternate hourly chart below. This idea works for both wave counts.

ALTERNATE WAVE COUNT

DAILY CHART

Click chart to enlarge.

It remains possible that primary wave 2 has not yet arrived.

Primary wave 1 may be a very long extended impulse. Within primary wave 1, there is no adequate Fibonacci ratio between intermediate waves (1) and (3). Intermediate wave (5) would more likely exhibit a Fibonacci ratio to intermediate ave (1), and the most common ratio is equality.

A channel is drawn about primary wave 1 using Elliott’s first technique. If the lower edge of the channel is breached by a full daily candlestick below and not touching the lower edge, that may indicate primary wave 1 may be over and primary wave 2 may have begun.

Primary wave 2 may not move beyond the start of primary wave 1 below 2,346.58.

HOURLY CHART

Click chart to enlarge.

Within intermediate wave (5), minor wave 1 looks likely to be over.

Minor wave 2 for this alternate wave count is today labelled as possibly incomplete. Minor wave 2 may be unfolding as an expanded flat.

If minor wave 2 continues further, then minute wave c would be most likely to make at least a slight new low below the end of minute wave a at 2,818.26 to avoid a truncation and a very rare running flat.

This wave count does not have a good probability. There is strength in the upwards movement of the 15th of March; this does not look like part of a B wave.

Minor wave 2 may not move beyond the start of minor wave 1 below 2,722.27.

TECHNICAL ANALYSIS

WEEKLY CHART

Click chart to enlarge. Chart courtesy of et=”_blank”>StockCharts.com.

Last week has seen a sharp reversal in price. A very strong bullish candlestick has support from volume, and closes above prior resistance at 2,815. This area may now offer support.

Next resistance is 2,875 and then at 2,940.

DAILY CHART

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

The December 2018 low is expected to remain intact. The two 90% upwards days on 26th December 2018 and 6th January 2019 indicate this upwards trend has internal strength.

A close above resistance at 2,815 on an upwards day, which has support from volume, is significant.

Bearish divergence between price and both of On Balance Volume and RSI remains; however, the divergence between price and RSI is now very weak and has almost disappeared.

Stochastics may remain extreme for long periods of time when markets trend strongly. Stochastics overbought here does not indicate upwards movement should end.

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.

Every single bear market from the Great Depression and onwards has been preceded by a minimum of 4-6 months divergence between price and the AD line. With the AD line making a new all time high again last week, the end of this bull market and the start of a new bear market must be a minimum of 4 months away, which is mid to end June 2019 at this time.

The AD line makes a new all time high last week. Upwards movement has support from rising market breadth, and breath is rising faster than price. This is longer-term bullish divergence.

Only large caps have made new highs last week above the prior high of the 25th of February. Mid and small caps have not. This indicates some weakness in market breadth. The upwards rise may becoming selective. This would be normal towards the end of a bull market run.

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.

Breadth should be read as a leading indicator.

Upwards movement has support from rising market breadth. There is no short-term divergence.

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 has made a new short-term high and a mid-term high along with price. Upwards movement comes with a decline in VIX. There is no short nor mid-term divergence.

Longer-term divergence between price and inverted VIX at the last all time high in September 2018 remains.

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 price moved higher, but inverted VIX has moved lower. This divergence is bearish for the short term.

DOW THEORY

Dow Theory confirms a bear market. This does not necessarily mean a bear market at Grand Super Cycle degree though; Dow Theory makes no comment on Elliott wave counts. On the 25th of August 2015 Dow Theory also confirmed a bear market. The Elliott wave count sees that as part of cycle wave II. After Dow Theory confirmation of a bear market in August 2015, price went on to make new all time highs and the bull market continued.

DJIA: 23,344.52 – a close on the 19th of December at 23,284.97 confirms a bear market.

DJT: 9,806.79 – price has closed below this point on the 13th of December.

S&P500: 2,532.69 – a close on the 19th of December at 2,506.96 provides support to a bear market conclusion.

Nasdaq: 6,630.67 – a close on the 19th of December at 6,618.86 provides support to a bear market conclusion.

With all the indices moving now higher, Dow Theory would confirm a bull market if the following highs are made:

DJIA: 26,951.81

DJT: 11,623.58

S&P500: 2,940.91

Nasdaq: 8,133.30.

For the short term, only the S&P500 and Nasdaq have made new highs above the February 25th highs. DJIA and DJT remain lower. There is some divergence: the rise in price for the S&P500 is not mirrored across the indices.

Published @ 10:38 p.m. EST.

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