Upwards movement has unfolded for Tuesday exactly as expected.
Price is perfectly bouncing up off the support line on the short-term hourly chart. The Elliott wave count remains the same.
Summary: The upwards trend may now resume to new all time highs.
The next target is 3,120. Classic analysis very strongly supports this main wave count.
The biggest picture, Grand Super Cycle analysis, is here.
Monthly charts were last published here, with video here. There are two further alternate monthly charts here, with video here.
ELLIOTT WAVE COUNTS
The two weekly Elliott wave counts below will be labelled First and Second. They may be about of even probability. When the fifth wave currently unfolding on weekly charts may be complete, then these two wave counts will diverge on the severity of the expected following bear market. To see an illustration of this future divergence monthly charts should be viewed.
FIRST WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
The basic Elliott wave structure consists of a five wave structure up followed by a three wave structure down (for a bull market). This wave count sees the bull market beginning in March 2009 as an incomplete five wave impulse and now within the last fifth wave, which is labelled cycle wave V. This impulse is best viewed on monthly charts. The weekly chart focusses on the end of it.
Elliott wave is fractal. This fifth wave labelled cycle wave V may end a larger fifth wave labelled Super Cycle wave (V), which may end a larger first wave labelled Grand Super Cycle wave I.
The teal Elliott channel is drawn using Elliott’s first technique about the impulse of Super Cycle wave (V). Draw the first trend line from the end of cycle wave I (off to the left of the chart, the weekly candlestick beginning 30th November 2014) to the end of cycle wave III, then place a parallel copy on the end of cycle wave II. This channel perfectly shows where cycle wave IV ended at support. The strongest portion of cycle wave III, the end of primary wave 3, overshoots the upper edge of the channel. This is a typical look for a third wave and suggests the channel is drawn correctly and the way the impulse is counted is correct.
Within Super Cycle wave (V), cycle wave III is shorter than cycle wave I. A core Elliott wave rule states that a third wave may never be the shortest. For this rule to be met in this instance, cycle wave V may not be longer in length than cycle wave III. This limit is at 3,477.39.
Cycle wave V may subdivide either as an impulse or an ending diagonal. Impulses are much more common. This main wave count expects that cycle wave V may be unfolding as an impulse.
The daily chart below will now focus on all movement from the end of primary wave 2.
In historic analysis, two further monthly charts have been published that do not have a limit to upwards movement and are more bullish than this wave count. Members are encouraged to consider those possibilities (links below summary) alongside the wave counts presented on a daily and weekly basis.
DAILY CHART
Click chart to enlarge.
Cycle wave V is seen as an impulse for this wave count.
Within cycle wave V, primary waves 1 and 2 may be complete. Primary wave 3 may have begun.
Primary wave 3 may only subdivide as an impulse. Within primary wave 3, intermediate waves (1) and (2) may be complete.
Intermediate wave (3) may have begun. Intermediate wave (3) may only subdivide as an impulse.
Within intermediate wave (3), minor waves 1 and 2 may be complete. Within minor wave 3, minute waves i and ii may be complete. Within minute wave iii, minuette waves (i), (ii) and (iii) may be complete. It is also possible that within minute wave iii, only minuette wave (i) may be nearing completion. For this reason the invalidation point is left at the same point. Within minute wave iii, no second wave correction may move beyond its start below 2,834.97.
All of primary wave 3, intermediate wave (3), minor wave 3 and minute wave iii may only subdivide as impulses.
Intermediate wave (3) must move far enough above the end of intermediate wave (1) to then allow intermediate wave (4) to unfold and remain above intermediate wave (1) price territory.
HOURLY CHART
Click chart to enlarge.
Within minute wave iii, minuette waves (i) through to (iv) may be complete. Minuette wave (iii) is just 0.61 points longer than 2.618 the length of minuette wave (i).
If it continues further, then minuette wave (iv) may not move into minuette wave (i) price territory below 2,898.79. However, it looks very likely to be over at yesterday’s low, finding support at the lower edge of the green Elliott channel.
Minuette wave (ii) was a deep 0.72 zigzag lasting 8 hours. Minuette wave (iv) may be a more shallow zigzag lasting 14 hours and showing up on the daily chart as two candlesticks. There is alternation in depth although both corrections are the same structure: there is alternation between them in that minuette wave (ii) has a long subminuette wave a and a short subminuette wave c while minuette wave (iv) has a short subminuette wave a and a long subminuette wave c.
At 3,054 minuette wave (v) would reach equality in length with minuette wave (i).
SECOND WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
This weekly chart is almost identical to the first weekly chart, with the sole exception being the degree of labelling.
This weekly chart moves the degree of labelling for the impulse beginning in March 2009 all down one degree. This difference is best viewed on monthly charts.
The impulse is still viewed as nearing an end; a fifth wave is still seen as needing to complete higher. This wave count labels it primary wave 5.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
A long lower wick and good support from volume for an upwards week strongly suggests more upwards movement directly ahead.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
There is now a series of higher highs and higher lows since the 5th of August. Strength in 90% up days and back to back 80% up days off lows indicate the lows may be sustainable.
Today a close near the high for the session with price back above 3,000 is bullish for the 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.
Bear markets from the Great Depression and onwards have been preceded by an average minimum of 4 months divergence between price and the AD line with only two exceptions in 1946 and 1976. With the AD line making new all time highs again this week, the end of this bull market and the start of a new bear market is very likely a minimum of 4 months away, which is mid January 2020.
In all bear markets in the last 90 years there is some positive correlation (0.6022) between the length of bearish divergence and the depth of the following bear market. No to little divergence is correlated with more shallow bear markets. Longer divergence is correlated with deeper bear markets.
If a bear market does develop here, it comes after no bearish divergence. It would therefore more likely be shallow.
Again, last week both price and the AD line have moved higher.
The AD line makes a new all time high. This is a very bullish signal and very strongly supports the Elliott wave count.
Small caps have made a new swing high above the prior high of the end of July, but mid and large caps have not yet done so. This upwards movement of the last three weeks appears to be led by small caps. Because small caps are usually the first to exhibit deterioration in the later stages of a bull market, some strength in small caps at this stage indicates a healthy bull market with further to 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 the AD line has made a new short-term and long-term high, but price has not. Bullish divergence is strong and persistent. This indicates a high probability of new all time highs from price soon.
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.
The all time high for inverted VIX (which is the same as the low for VIX) was on 30th October 2017. There is now nearly one year and ten months of bearish divergence between price and inverted VIX.
The rise in price is not coming with a normal corresponding decline in VIX; VIX remains elevated. This long-term divergence is bearish and may yet develop further as the bull market matures.
This divergence may be an early warning, a part of the process of a top developing that may take years. It may not be useful in timing a trend change.
Again, last week both price and inverted VIX have moved higher. There is no new divergence.
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 both price and inverted VIX have moved higher. Neither have made new short-term swing highs. There is no new short-term divergence.
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 having moved higher following a Dow Theory bear market confirmation, Dow Theory would confirm a bull market if the following highs are made:
DJIA: 26,951.81 – a close above this point has been made on the 3rd of July 2019.
DJT: 11,623.58 – to date DJT has failed to confirm an ongoing bull market.
S&P500: 2,940.91 – a close above this point was made on the 29th of April 2019.
Nasdaq: 8,133.30 – a close above this point was made on the 26th of April 2019.
Published @ 09:55 p.m. EST.
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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.
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New updates to this analysis are in bold.
Looks like a cup and handle forming in RUT/IWM… this market has to go much higher to catch up to others. I think what happened last week will likely continue: RUT outperforming SPX
Nice!
I went long via UWM 20 minutes ago, on the larger side.
hourly chart updated:
although IMO it doesn’t have such a good fit in terms of the little subdivisions on the hourly chart, I’m moving the degree of labelling for this correction up one to minute.
it looks like a larger degree because it breached the channel which was drawn in the analysis above.
the channel is redrawn. the invalidation point is moved up.
Boy I’m a-thinking the iv down is over right here, with that long-tailed hourly bar. I’ve started to reload long a bit…
yea, that puts a whole bunch of the hourly bars on the 61.8% of the way down mark, nice fit. I might suggest buying on triggers of your choice. Manage risk always. It’s a volatile market still.
although a slop-fest through to the close of Friday is possible. Probably lots of hedging force driving a close right at 3k, though there’s never a guarantee that will win the day.
love the daily candle
Looks like a bullish hammer to me. The Intermediate and Primary trends are still upwards. We should continue to expect surprises to be bullish / upwards too.
Factors that I use are:
Wilshire 5000 to GDP very good indicator.
Case Shiller P/E index
The Q ratio which is also extremely high.
New homes vs Stock Market
The S & P 500 Linear regression model.
Every model right now that I’m looking at doesn’t paint a very good picture.
In my humble opinion Even if Lara is right that would be implying at 3400’s ish mark only a 12 – 15% upside in this maket!
I still think the downside potential outweighs the reward by 3 – 1
All thoughts are pleased and welcomed.
Thank You
My view: the release of uncertainty today, and that release being bullish for the market, enables our main count to play out here with even higher probability. It reinforces Lara’s call. The strong intraday reversal we’ve seen adds strong supporting evidence too. Despite the economic indicators. Which aren’t yet flashing recession, only suggesting it in some sectors.
I completely understand your concerns… I had to retrain my thinking process to turn bullish. But this bull market has been climbing a wall of worry since it started in 2009. The way I see it, with all its faults the US markets are still the safest and strongest in the world. Money will still be pouring in as the SPX dividend yield still close to long term bond yields.
For a detailed analysis on why the market can be bullish at least for another 2-3 months I refer you to Ciovacco Capital’s weekly market videos for long term outlook. And for shorter term technical analysis I refer you to the Maket Scholars daily market videos called “market outlook”. They’re both on YouTube and are free
The other models that i look at are:
The New housing market compared to the us stock market.
We are above a 2 threshold that would mark the 6th time in history that we are above the 2 each and every time the stock market falls between 50 – 88%!
# 2 —- If the S & P 500 where to go above 3080 for September or 3091 for October that would put us at 123.7% Above the regression line.
Which would mark 3 Standard deviations which only happens .003% of the time it’s a very rare to happen the only other time was in 2000 when it hit 130% above the line.
Im referring to the S & P 500 Linear Regression Model that goes all the way back to 1871!
Since January of Last year every time that we hit 116 – 119.7% over that line the market corrects!
Anything above the 3080 – 3090 Number would be the second best time to Short the Stock Market Since 1871.
Caveat Emptor that the regression line moves up about 5 points every month so time will be a big factor in this.
If we hold up to the summer of next year then 3180 would mark 3 standard deviations.
Hi everyone!
I have noticed when lara’s chart are only pointing up with NO alternative down scenario then the opposite happens.
I have notice when lara’s has all of her chart’s pointing down the opposite happens.
Maybe I’m wrong but according to the Gann theory and the 90 year market cycle that has occurred like clockwork since the 1700’s has the market topping out from this September to no later then early November.
It would be a rare occasion that we topped out in July the only other data point that I can compare to would be the July of 1990 right before we went into that mini recession where the markets only went down by 20%- 24%.
But that would kind of fall with the expanding triangle theory that we are currently seeing the market since January of 2018.
So if the other elliott wave is right then we correct like last year about the same % and then we go through a final 5 wave series of this bull market.
Either we complete the cycle this year or next year.
Option 2 we complete this year and i would expect a Minimum of a 50% correction to the downside.
“I have noticed when lara’s chart are only pointing up with NO alternative down scenario then the opposite happens.
I have notice when lara’s has all of her chart’s pointing down the opposite happens.”
You appear to have little confidence in my work, and so I’m wondering, why exactly you are subscribing to it?
I put a lot of weight into Lowry’s data. Their measures of market strength in Buying Power and Selling Pressure shows underlying health. Their Operating Companies Only AD line shows underlying health.
So if I’m wrong in expecting new all time highs shortly, and expecting the bull market to run for another year or so, then Lowry’s are wrong too.
I’m not saying that your wrong I’m just saying from the metrics I use are suggesting that even If your right. Then downside risk outweighs the reward.
I use your site because the other 2 sites I use are more contrian to your’s and It’s good to have both sides of the equation.
I hope your right for my business sake!
I short the market to bet against my business for a hedge!
If the market goes higher then my business is ok and i loose some money on my hedge.
If the market where to go down then I have some protection over my business.
Awesome! It takes many viewpoints to make the market!
It’s not about being right. It’s about having an edge. It’s all probabilistic. The future’s unwritten. I find Lara’s roadmaps of tremendous value all the time. It’s significant when her models are so strongly in one direction that the other direction isn’t even mentioned. When surprises happen, and they do, the main isn’t wrong: probabilistic models cannot turn out to be “right” all the time. It’s not about right or wrong. It’s about guidance. And yes it’s guidance free of all those economic data points. Her new trends publication sure covers that, though! Very nice.
My $0.02
The problem I have with that though is the fact that price has been making higher highs and higher lows, the basic definition of an upwards trend, since December 2018.
The metrics you use are sounding strong warnings, but none of them are going to be accurate in trying to time an end to this bull market. There is nothing that I am aware of that can do that.
It would be safest to assume that the trend remains the same, until proven otherwise. Proven otherwise would be a new major swing low. So it would take some time for that to happen.
I know the market is very extreme, I expect it to get more extreme before it turns. Extreme conditions can be reached and can persist for longer than anyone expects.
As a trader, going short here, in a bull market, would be trying to pick a high and trading against the trend. Risk management guidelines suggest that is not a good idea.
However, as a hedge for your business it may be good business practice, and because that is outside the purpose of this analysis I make no further comment on that.
The fireworks show has been canceled, this station will now return to regularly scheduled programming…
Here’s RUT hourly. My MarketState model for it is now “down trend”. Specifically, initiating an impulsive move down, which itself is part of a correction overall.
A Fibonacci fitted projection puts RUT completing this overall price swing down at 1548.
thanks for the charts! Interesting how different the SPX and RUT are trading
it didn’t last long! nice reversal bottom
What time do the fireworks start today?
2pm EDT I do believe.
RUT very much in the latter stages of topping/turning action here. No rate cut, and RUT sells off hard. RUT extremely sensitive to interest rates.
This is a very good economic calendar:
https://tradingeconomics.com/united-states/calendar
The press conference should be interesting, and the market will want to see if the Fed believes the oil shock is inflationary (higher rates) or a drag on demand (lower rates).
#1. Yes!
Dang nab it!
Two for the show…