While the short-term invalidation point on the hourly chart was breached on Friday, the larger picture remains mostly the same and has support from classic technical analysis.
Summary: For the very short term, Monday may see a little more downwards movement. The short-term target is about 2,796. Thereafter, the upwards trend should resume. The mid-term target remains the same at 3,010.
The final target remains the same at 3,045.
Lowry’s data shows rising Buying Power and falling Selling Pressure. The latter is now just a few points of its low for the entire bull market (beginning March 2009). This situation is normally associated with a strong and healthy bull market. Pullbacks are normal and to be expected, and they are more likely to be short term.
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, intermediate wave (2) may not move beyond the start of intermediate wave (1) below 2,722.27.
Intermediate wave (2) may be an almost complete expanded flat correction. Minor wave B within intermediate wave (2) is 1.2 times the length of minor wave A, which is within the most common range for B waves of flats from 1 to 1.38. At 2,796 minor wave C would reach 1.618 times the length of minor wave A. This may be about where intermediate wave (2) may end on Monday.
The lower edge of the adjusted base channel may provide support for pullbacks along the way up. Price has closed below the lower edge of this channel on Friday, but the channel is not properly breached. Price may find support about here. If this channel is breached by a full daily candlestick below and not touching the lower edge, then consider the alternate daily chart below.
HOURLY CHART
Click chart to enlarge.
Intermediate wave (2) may be either complete or almost complete. Minor wave C now subdivides as a completed five wave impulse on the five minute chart.
If minor wave C moves a little lower, then it may reach about 1.618 the length of minor wave A at 2,796.
ALTERNATE WAVE COUNT
DAILY CHART
Click chart to enlarge.
It is also possible that primary wave 2 may continue as an expanded flat correction.
Intermediate wave (B) is 1.51 times the length of intermediate wave (A). This is longer than the common range of 1 to 1.38 but within allowable limits of up to 2.
A target is calculated for intermediate wave (C); it expects to exhibit the most common Fibonacci ratio to intermediate wave (A).
Primary wave 2 may not move beyond the start of primary wave 1 below 2,346.58.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of et=”_blank”>StockCharts.com.
The long upper wick this week is bearish.
Support at 2,800 remains. Price has not closed below this point yet.
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.
Friday’s candlestick engulfs several prior candlesticks. After a clear upwards trend, this is a bearish reversal signal. This supports the alternate Elliott wave count.
Volume is bearish for the short term. ADX no longer indicates an upwards trend.
However, On Balance Volume now exhibits some short-term bullish divergence (after exhibiting some bearish divergence). This pullback may be more shallow than the candlestick suggests.
Lowry’s data shows rising Buying Power and falling Selling Pressure. The latter is now just a few points of its low for the entire bull market (beginning March 2009). This situation is normally associated with a strong and healthy bull market. Pullbacks are normal and to be expected, and they are more likely to be short term.
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 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 the end of July 2019 at this time.
This week both price and the AD line declined. The AD line is not declining any faster than price, there is no short term divergence.
This week mid and large caps have declined but have not made new swing lows below the prior swing low of the 8th of March. Small caps have made a new low below their 8th of March low. There is some weakness in this downwards movement. Large caps remain strongest and the decline is focussed mostly in small caps.
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.
Both price and the AD line moved lower on Friday. 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 has made a new high above the high of the 15th of March, but inverted VIX has not. Upwards movement does not come with a normal corresponding decline in VIX. This divergence is bearish for the short term.
DOW THEORY
Dow Theory confirmed a bear market in December 2018. 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, all of the S&P500, DJIA, DJT and Nasdaq remain above the last swing low of the 8th of March. For the short term, all these markets have shown a series of higher highs and higher lows from the major low in December 2018. All remain currently in an upwards trend.
Published @ 08:58 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.
Down to one of the lower fibo levels before reverting to a bull mode is what I most expect here. Tomorrow. 2780 (61.2%) or 2756 (78.6%).
Without the full report being released I just don’t know how anyone can draw conclusions from it.
Drawing conclusions from incomplete information, is not something I would do in market analysis.
The 4 page letter are the conclusions! No further indictments!
No evidence of a crime! It’s Over!
Those are the facts! It’s over! As far as obstruction Muller punted to the Attorney General and the AG concluded no obstruction as there was no underlying crime to obstruct! A President has the unquestioned constitutional authority to fire anyone in the executive branch!
Everything else today & going forward is the media’s & Dems next attempt to con the public.
The real crimes are coming with a great deal of evidence and those people will be prosecuted so as to restore the creditability of the Justice Department & FBI. Those people will be those who started this entire witch hunt in the 1st place.
This has nothing to do with markets.
Any further discussion about US politics if it does not relate to markets will be deleted. This is not the place for that conversation.
Thank you, Lara! Much appreciated.
I agree with Verne that the Treasury Inversion is important. Check this reference from Greg S. at Stockcharts comparing 2000,2007 and 2019
https://stockcharts.com/articles/dont_ignore_this_chart/2019/03/the-macro-view-of-this-inversion-looks-severe.html
Gary
Ordinarily this meandering around 2800 presages a move higher….
It definitely signals no leverage unwind…so far…..
Hourly chart updated:
It looks like a bit of a stretch, but it’s possible that minor wave C could again be over.
The bit that looks odd is the running triangle for minute iv. This all fits nicely on the five minute chart.
O.K. Peter S.
You paying attention? 😉
I am, but I am confusing myself trying to find a count
vix cobra?
Looks like bull flag.
Trying to decide if we have a falling wedge or yet another coil.
Could be either depending on time frame.
Big move ahead either way.
RUT might be the one…
I am more than a bit amused at follk who pooh pooh what is going on in the interest rate arena. I like Ciovaccio but on this one I think he is blowing smoke. For the immediate term I think Treasuries head higher in a flight to safety play. Corporate bond defaults will eventually drive rates up due to fear….but not quite yet…
Anyone looking at buying the banks after this sharp sell off? I am. But they are generally sitting between the 38% and 50% retrace levels, and that doesn’t strike me as a likely bottom (though it is possible, and XLF is right at it’s 38% retrace level). Which in turn informs me that the general market consolidation here may very well not be complete, and indeed, SPX has been scribbling on a 50% today. The 62% at 2775 or 78% at 2752 appear to me to be more likely turn points.
I also note that the fast falling interest rates have now put TLT up against the 78.6% retrace level of the 2017 high to 2018 low move. More falling rates will continue to pressure the banks and without the banks SPX is going nowhere. Maybe the 78% (125.8 in TLT) will turn the bond market though, we’ll see.
We have a genuine breakout above long term resistance in TLT.
We are very likely headed higher after tag of resistence ceiling imho…
Perhaps. The turn down now off the 78.6% at 125.8 is strong, I expect some consolidation under it, at a minimum. If it shoves up to new highs above 126, then it’s on to the upside…it’s into serious blow off conditions, likely headed to 129.6.
Bull flag in TVIX.
Measured move to 40.00
Free money people…and you’re welcome! 🙂
The Mueller investigation resulted in 34 indictments and total so far of 199 charges. And there are at least 3 ongoing investigations spun off to to various state prosecutors.
A vast web of criminality has been brought to justice, with more coming.
Along the way, a key ringleader of the overall set of criminals charged has been found to be a co-conspirator in a violation of campaign funding laws, and is likely to be formally charged in January of 2021.
These are all simple facts.
Now back to the market.
Everyone should read the conclusion for yourself unfiltered:
https://www.scribd.com/document/402973432/AG-March-24-2019-Letter-to-House-and-Senate-Judiciary-Committees#from_embed
Glad to see you back commenting Joe. I was wondering if you still read these forum posts. Thanks for the comment about the yield curve inversion or as you say, ‘so called’. It compliments and reinforces what Ciovacco has said.
Regarding the developments this weekend on the end of the investigation of our Executive Branch and its political campaign, it is good to have it over and finally behind us. I hope our nation can move on and do so in a constructive and positive way. However, I am not holding my breath.
Don’t be absent so long.
I read Lara & some comments almost every day. I’ve had nothing to add on the markets. Have been letting it ride in indexes since near the lows and trading in & out of AG every few months. AG about to break to N52H’s and to touch the 100 MMA soon.
Also, IMO I think the market in general is range bound (-5% from here to near previous all time highs) until the Fed ends Balance Sheet reduction by end of September. Then take off to new highs within 30 or 60 days of that.
I think that will be very healthy and should be tradeable. Basically a long-term consolidation before the next leg up above all time highs! I may exit my indexes at some point between here & near the highs.
I posted this comment very early Sunday morning. But it got stuck awaiting moderation. It did so because I have an internet link in the comment and after posting it, I edited it. Whenever this occurs, comments must await moderation. In any event, I wanted to share what I learned about the yield inversion from the Ciovacco Captial YouTube channel.
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Verne,
I watched the two videos I referenced below regarding inversion of the yield curve, (2 yr vs 10 yr). In the video from 8 months ago, Chris C. examines three periods including the 2000 and 2007 market peaks. My summation is this: the market will peak about 22 months after the yield curve first inverts. If one were to get out of the market at the time of the inversion, large / significant potential long profits would be missed. So it would not be surprising at all to see the SPX top around January 2021 and 35% higher (~3725). In fact, were it to proceed just like this, it would be a repeat of history.
Now, I recommend everyone watch the video for themselves. But the potential long term bullish scenario I present below, is not negated because the yield curve has just inverted. Rather, it is supported by previous equity market action after the yield curve has inverted.
This is the link to the Ciovacco video from 8 months ago
https://www.youtube.com/watch?v=G-xZeE2oXDs&t=932s
PS – Verne, like you stated, it sure would be nice to hear Joseph chime in on this one.
Banksters are once again buying the 2800 futures shelf. Chances are we see another leveraged PPT ramo to the upside as DJIA joins the other indices in making a new high. RUT and TRAN have a lot of ground to cover and may not make it. It will be interesting to see how the cash session trades around 2800.
Not on this forum please!
This is a follow-up comment from a long ago thread… so yes on this forum to finally set the record straight! This is now Proven FACT and needed to stated on this forum!
You haven’t been here long enough to comment so don’t!
Doesn’t matter how long I am here. I believe this is a investment/trading focused platform, and I pay for the service for that reason. Let’s keep it that way.
Well I don’t care and I will comment whenever and where ever I feel like it.
Intolerance for for, and disrepect of the first amendment is one thing that will manifest increasingly as we approach a 500 year cycle top. It is really fascinating to see how commonplace this is becoming!
Seems to be from San Francisco… understandable.
Real classy dude! Real classy!
Yes… Classy using old school definition! Not this new world crap!
Classy indeed! What next? Publish my server address, and ask Russia to hack me?
Don’t use your full name if you don’t want anyone to do a simple Google search. I have no inside accesses to information. It pops up #1 in results. It was actually a Bing search. I try not to use Google.
OK, I get it! I guess its a standard practice to look up people, typecast or stereotype them based on where they live for not wanting to have a political discussion on a private investment focused forum! Cheers!
There was no need to comment further on your part when I stated “This is a follow-up comment from a long ago thread”
So anything after this specific post is all on you.
We should then agree to disagree and move on… Okay.
Have a great day and I would be interested in your technical comments. So please post them.
You disappoint me, Verne. I know you’re smarter than this.
Regrettable Curtis. There is more history here than you may be aware of.
The intelligent (and smart) thing to do about a comment you disagree with is to ignore it if you don’t want to engage the other person in an adult conversation, not try to silence free expression. As long as a person is not being overtly offensive and/or abusive, what right does any of us have to tell them what opinion to have? We live in a free country, I hope. We need to grow up for heaven’s sake!!
Well Said!
The opening comment (“how does it feel to…”) was disrespectful, rude, condescending, and biased. Not what I call “adult conversation”. In my personal opinion. I respect and support the request to not engage in this subject generally (it’s far off topic and it’s a polarizing issue), and certainly not in such an offensive manner. We can have “free speech” and still be polite and respectful of each other.
Wow…. I have no further comment to add!
Back to hibernation for me! Bye all!
The 1st amendment applies to public speech, in the US, for US citizens.
This is a private commercial forum operating under private commercial terms hosted outside of the US, and the owner/provider has the right to impose any restrictions on speech they choose, just as I as a US land owner could have you removed from my property for any reason whatsoever, including speech on my property I find unacceptable. Just to clarify. The 1st amendment doesn’t hold here, for multiple reasons. You know that Verne.
It is a Violation of Free Speech because everything now days is communicated on a so called private commercial forums and platforms operating under private commercial terms! When everything can be controlled it is a Violation of Free Speech and other Freedoms!
We in the USA chose NOT to be enslaved by these digital police!!!
The 2nd amendment insures that all other constitutional rights will survive these times!
Doing a little week in review. As you may have noticed, I preach the gospel of Heikin-Ashi. I am aware that I approach the current market with a bullish bias. So, as objectively as I can get, without letting my bias cloud my thinking, here is what I see from the ES charts.
The weekly chart shows the up trend continuing. This past week we saw 3 highers. Higher low, higher close, and higher high.
The daily chart shows 3 days of treading water, but no sell signal. The range on Friday was about 60 handles. The lower wick is one point longer than the upper wick.
The daily chart, that shows what Lara has identified as the most reasonable EW channel, shows lower channel support. The lower channel line was approached but was not touched.
Here is the weekly chart.
Here is the daily chart
And here is the EW channel
Here is the daily chart
EW channel
Verne,
I watched the two videos I referenced below regarding inversion of the yield curve, (2 yr vs 10 yr). In the video from 8 months ago, Chris C. examines three periods including the 2000 and 2007 market peaks. My summation is this: the market will peak about 22 months after the yield curve first inverts. If one were to get out of the market at the time of the inversion, large / significant potential long profits would be missed. So it would not be surprising at all to see the SPX top around January 2021 and 35% higher (~3725). In fact, were it to proceed just like this, it would be a repeat of history.
Now, I recommend everyone watch the video for themselves. But the potential long term bullish scenario I present below, is not negated because the yield curve has just inverted. Rather, it is supported by previous equity market action after the yield curve has inverted.
This is the link to the Ciovacco video from 8 months ago
https://www.youtube.com/watch?v=G-xZeE2oXDs&t=932s
PS – Verne, like you stated, it sure would be nice to hear Joseph chime in on this one.
Failed breakouts tend to be quite bearish, and the violent retreat on Friday after the initial surge above resistance would appear to meet the criterion of a false breakout. Coming as it did under overbought conditions and negative divergences it certainly was not really a complete surprise. Having said that, DJIA’s Golden Cross is undeniably bullish. If SPX rebounds and follows suit, that would be quite noteworthy. The defense of 2800 may have tipped the hand of Mr. Market, signaling just such a rebound next week. A break of 2800 in futures Sunday evening would in my opinion bring 2700 firmly into play. Prices in several indices rose to a confluence of several important trend-lines so next week will be telling. Either way, a big move appears to be on deck! Hope all are enjoying a restful and relaxing week-end!
In trying to identify the long term trend (weekly) I think the two most important and telling indicators are on-balance volume, and the A-D line. Both have made new all time highs on the weekly charts. This is very significant and virtually guarantees price will follow with a new ATH. Thus the weekly and overall trend which has been up for some time remains so today.
To the best of my knowledge, all indicators have failure points. But I do not know of any time these two indicators have given complimentary signals and then failed. The probability that we see new a ATH in the SPX is extremely high. My money is on this high probability outcome.
Furthermore, I have stated on this forum a couple of times, I believe the Alternate Monthly count will prove to be accurate. It requires a move above SPX 3477+ to confirm this count. I am alone on this call. I do not know of any other technician, Elliott Wave analyst, or other market prognosticator who is making such a call. It is okay that I am alone because I am not making a recommendations or investment advice to anyone except myself.
One reason I think this Alternate Monthly will prove to be correct is the power of the move off the 2347 low in late December. We have a 500 point rally (+20%) in the matter of 12 weeks. This is one of the strongest up moves, if not the strongest, in the entire bull market since 2009. One explanation for this from an Elliott Wave perspective is that from the low of 2347 the market began a Primary 3 wave of Cycle Wave III as indicated on the Alternate Monthly.
Another reason I think the Alternate Monthly will prove right is that we had a rare Zwieg Breadth Thrust just off the December low and Ciovacco Capital has shown three or four other rare bullish signals having taken place since the Deember low.
Finally, in the year 2000 the US equity markets entered a long term correction. It is considered a correction until it breaks out of its pattern. This was accomplished in 2013 with a break above SPX 1600. The rule of thumb is that the longer a market goes sideways the longer the move when it breaks out. We are only six years out from that breakout of a 13 year correction. In addition, if you draw this period on a logarithmic scale, the classic TA breakout of a rectangle projects a move to 3750. A chart below shows this.
Well, in any event, I am extremely bullish on the US equity markets long term. Like Warren Buffet has said several times, “I am bullish on America.” Does that mean I will blindly buy and hold no matter what the market shows us? Of course not. I just means I think this is where we are headed.
Have a great weekend and week ahead.
Hi Rod.
Any thoughts on the recent yield curve inversion?
If Joe is still a member I would really like to hear what he thinks of that recent development….
Yes. Last night while sort of listening to some business news the commentator noted another time the yield curve inverted. He said it was two years until a recession occurred. Ciovacco Capital has done several videos on this matter. The last one was 3 months ago with another 8 months ago. Without listening to them again, if I recall properly Chris C. indicated it is not the bearish signal many believe.
But you do make a good point. I am going to listen to Ciovacco’s videos this weekend. If I find anything worth reporting, I’ll let you know.
Bottom line, my musings above may be blown out of the water before summer. We have to stay vigilant all the time and take the clues as the market gives us having a flexible and open mind. Right now, I think we are on our way to SPX 3000+ .
Hi Rodney: I don’t view this as a true inversion so I am not concerned about it.
An old school inversion is when the entire yield curve up to an including the 7 year is higher than the 10 Year and the 10 year higher or approx. flat with the 30 Year. This in my mind is a real inversion that is sending a very strong signal.
I don’t buy into this modern day so called inversion!
Hi Verne… I see that my previous post should have been directed to you. Sorry.
Glad to take the #1 position.
I hope all the EWSM members have a safe and wonderful weekend.
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Traders on this forum tend to be focused on the hourly and daily trends. But for those taking a longer term perspective with their trades / investments, such as weeks and months, Ciovacco Capital has put together another outstanding video. It was posted late yesterday.