Upwards movement has continued as expected. The 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.
If price breaks below the adjusted base channel on the main daily chart, then consider the possibility that a deeper pullback may be underway. The first target would be at 2,658. The second target would be at 2,540.
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 above resistance, which was about 2,815, on an upwards day with support from volume. 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. If price breaks below the lower edge of this channel, then the alternate wave count below should be considered.
HOURLY CHART
Click chart to enlarge.
Primary wave 3 may only subdivide as an impulse. Within the impulse, intermediate wave (1) may have been over at today’s high.
It is also possible that intermediate wave (2) is over here or very soon. Intermediate wave (2) may be forced to be relatively shallow and brief due to strong support now about 2,815.
If intermediate wave (2) continues lower, then it should find strong support about the lower edge of the base channel. A breach of this channel by a full hourly candlestick below and not touching the lower edge may be taken as an indication that this main wave count may be wrong and the alternate below may be right.
Assume the trend remains the same. Assume the upwards trend remains intact until proven otherwise.
ALTERNATE WAVE COUNT
DAILY CHART
Click chart to enlarge.
It is possible that primary wave 1 may have been over at today’s high and that primary wave 2 may have begun today.
Two targets are calculated for primary wave 2. If price reaches the first target and the structure of primary wave 2 is incomplete, or if price keeps falling through the first target, then the second target may be used.
Primary wave 2 may not move beyond the start of primary wave 1 below 2,346.58.
HOURLY CHART
Click chart to enlarge.
If primary wave 2 has begun today, then it should begin with a five down on the hourly chart. Within this structure, no second wave correction may move beyond the start of its first wave above 2,852.41.
This alternate wave count does not have good support from classic technical analysis today. It is presented only as an outside possibility.
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. Look for support now about 2,815; this may force any pullbacks here to be again brief and shallow.
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.
Today price moved higher with a higher high and a higher low, but the balance of volume was downwards and the candlestick has closed red. Downwards movement within this last session has a little support from volume, but this will not be read as an overly bearish indication in current market conditions.
There is still some room above before price finds next resistance about 2,875.
Lowry’s data indicates there is currently a lack of selling pressure. This indicates any pullbacks here may continue to be relatively brief and shallow. This supports the main Elliott wave count.
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.
Today price moved higher, but the AD line has moved lower. This divergence is bearish for the short term.
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.
Again, today price has 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 @ 08:12 p.m. EST.
—
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.
Market whipsaws around FEDSPEAK cannot be trusted imho.
We are probably not going to know the real deal of market price action until we see what unfolds in futures….
a baby cobra strike to close the day?
Yes indeed. The initial move after FEDSPEAK should generally be ignored. In fact, trading against that initial reaction will pay you better than 90% of the time, today being no exception….
That is true. Today’s low may have only been Minor A of Intermediate 2.
SPX pinging between 78.6% ‘s. Classic.
how long until we start shouting “triangle”? oops, I just did…
Hourly chart updated:
Intermediate (2) now looks better, a little deeper and more time consuming.
This upwards wave right now does look like it has some strength, as the start of a third wave should look.
I may relabel intermediate (2) as a double zigzag. I haven’t looked very closely on the five minute chart at it yet.
Looks great to me. I had my opportunity to join the long crowd once again. Today’s low was an excellent retest of the recent breakout referred to in your commentary.
In addition, some are calling the pattern from mid- Oct to mid-March an inverse head and shoulders with today’s low as a retest of the neckline. I am not sure I agree with the pattern. But if it is correct, the move off the neckline should be about 450 points (2800-2350) giving a high of about 3250. Just some food for thought.
You have been right on Lara. Thanks much.
You’re welcome Rodney 🙂
/ES hour including overnight data. I often find this view helps give me perspective, and it does now. Looks like a perfectly nominal pullback in an ongoing major uptrend. Current level could turn it, or there’s the overlapped fibos at 2809 (a 1.62 extension of the A wave down, the 38% of the 3/8-19 up move, and 78.6% retrace of the 3/14-19 up move). If it goes deeper, the 2777 62% level would be one to watch carefully. But that’s a ways in the future.
The AD is veeeery slowly improving but still horrible, at 113/387.
Right you are Kevin!
I’m always curious about things like “why did it trade to this level?”
One possibility for why today’s low is today’s low could be that the big support today came from yesterday’s pivot point S3 (support 3) level. Maybe, when they were engineering yesterday’s pullback plan, they decided that trades lower than yesterday’s S3 would signal that something more than a simple retracement was happening. It wouldn’t be a good thing to have trading desks rowing in opposite directions.
(Disclaimer: This is conspiracy theory is chartmonkey approved.)
I agree. No convincing evidence of a trend change imho….
Head fake.
I just don’t buy it.
This is NOT the way a bankster unwind unfolds. I expect another face-ripping whipsaw…these bankaters are tricksy…!
Extended fifth settting up?
That had better be the case or they are scamming us…! 🙂
2800 MUST fall, and do so on increasing volume. Movement above these pivots is accomplished via cabal leverage. Any failure to decisively move back below in my mind raises uncertainty about a true unwind. If the banksters are buying, you don’t want to be shorting this market…plain and simple folk…
Now that 2822 (SPX) is cracked, 2814 is a 78.6%….
And if you don’t think the square roots of .618 (.786) and 1.618 (1.27) are important, note that the high yesterday was a very close hit on a 1.27% extension of the February upswing. Classic.
Meanwhile, RUT hourly is now in a strong down trend, and is just busting a major 38% retrace level. RUT is leading the markets down today so far.
If we get a fifth wave impulse that takes out 2800 I’m all in…! 🙂
See what I mean about the short cohort??!!
Didja just see that?? 🙂
For you star-gazers, we are staring down a Supermoon, Equinox duo, last seen a very memorable 19 years ago….! 🙂
Just my humble strategy but I think that was wave 1 down finishing this morning looking for a wave 2 up here to sell into. Stops set at a breach of yesterdays highs.
That would be loverly…!
Looking for VIX gap higher to confirm….the short cohort remains bellicose…lol!
My own suspicion is that the first impulse down would have decisively taken out 2800…I could be wrong on that score as the banksters are masters at muddying the waters and could be in stealth mode…
Hmmm. All I know is that I don’t buy this current bounce back up, not when the AD ratio for SP500 is at 98-404!!
Took my small short profits in RUT when it hit a 50% fibo (1537) and sure enough that’s the current turn spot, but I don’t expect it to hold for too long.
Exhaustion gaps no longer mean what they used to.
This move down lacks the vigor of unwinding leverage so I have my doubts as to whether we have an interim top. An intra-day gap down, rare as they are, would be convincing. There are oodles of open gaps below and the bears are going to have to start filling them in a hurry to be taken seriously…
SP500 AD is running 94 to 409 at the instant…surprising to be holding up as well as it is, but that may not last.
Hourly SPX. Looking for the low of this pullback/consolidation. Lots of opportunities for that below.
At the bottom of the last decline there were perfectly good reasons to expect a final wave down. It never came. Now there are equally good reasons to expect price to move a bit higher.
Subterfuge is their trade and craft…!
… to what end? Profit at the expense of the greedy or naive? Long term it’s not healthy for the majority and just consolidates power among the few…
Nothing new, under the Sun… 🙂
And there’s always the possibility that I’m wrong. If the ES trade gets above 2878.50 and then above 2880, I would become very nervous …
We are getting close to my ES 2872 target, so I’ll start putting this out here.
The model was created to find the target that the Prime Algo uses. The 2872 target was derived around the middle of January. The whole point of the model is to figure out what the Prime Algo is going to do. It won’t create a target that we think is “a good reversal level” or where the market “should” turn.
What the Prime Algo has done at other targets is get within 4 or 5 points and then fade before moving to the target. Once the target is hit, the Prime Algo will overshoot by around 3 points. It does this to obfuscate the actual target level. Once the target is hit, the trade becomes //*distribute long positions # *accumulate short positions .
Looking at where the fade-before-target level might be and where the top-of-the-range trade might occur. These are not that critical to know. The big number is ES 2872.
Also, only once in the last year has a target not been hit. That time, the turn happened Âľ of a point lower than the target.
fade-before-target level might be this fib extension level of ES 2868.25 which is 3 and three quarter points before the target
It looks like they are using this fib set
You nailed the 2860 push brother
That was a call made when markets were way lower
So large kudos
I hope you profited greatly .. and thanks for sharing your input
Things are getting choppy…at these levels
That feels like distribution..
Shorts have been squeezed from all levels and are treading lightly…
So when there is nothing left to squeeze and you need to unload…
It can get a little bumpy
At least for now…
Thanks Bro,
My ES 2860 target was for the old March futures contract. The target for the current June contract is 2872. Same exact modeling criteria but target developed using the June futures data.
Here is a target for a possible fade-before-target level.
Point C is at ES 2817.25 … Point C plus 50 more points = ES 2867.25
I wouldn’t be surprised if this runup gets to 2867.25 and backs off for a bit before continuing to target level 2872. This is 4 and three quarter points prior to target. And that fits their pattern.
The top of the range might be ES 2876.50
The boxed in area is a perfect bullish signal. What interests me is the exact 100 point range from the low of the June contract trade to the high of the bullish signal. If the move is an exact 150 points, that would take us to ES 2876.50 which is 4 and a half points past the target. Perfectly acceptable.
Very Impressive CM!
Glad other traders are onto this…
And what is the “Prime Algo”?
Fib distortion machines…among other things…
Prime Algo is the one that causes the market to do everything it does. There is an 800 pound gorilla that controls the Market and that is the Prime Algorithm.
Just so I can say I was first that time…