Both wave counts remain valid and technical analysis still supports the main wave count.
Summary: For the very short term, this pullback may end tomorrow or in a very few days about 2,890.
Thereafter, the upwards trend may resume. The next target is at 3,120.
Further confidence that a low is in place and price should make new all time highs very soon would come if either a 90% up day or two back to back 80% up days is seen.
A new low below 2,822.12 would add confidence to an alternate. Expect price at that stage to keep falling to 2,578 – 2,476 to find support at the lower edge of the large teal channel on weekly and daily charts.
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
MAIN 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 focus on 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.
Within cycle wave V, primary waves 1 and 2 may be complete. Within primary wave 3, no second wave correction may move beyond its start below 2,728.81.
MAIN DAILY CHART
Click chart to enlarge.
Primary wave 3 may have begun.
All of primary wave 3, intermediate wave (3) and minor wave 3 may only subdivide as impulses. Within each impulse, its second wave correction may not move beyond the start of its first wave.
Minor wave 2 may not move beyond the start of minor wave 1 below 2,822.12.
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.
It is possible that minor wave 2 could be over.
Minor wave 3 may only subdivide as an impulse. Minute wave ii may continue lower to the target. Minute wave ii may be subdividing as a zigzag. A small channel is drawn about minute wave ii; today, this channel is adjusted.
Within minute wave ii, minuette wave (b) may have moved higher today as an expanded flat.
Minute wave ii may not move beyond the start of minute wave i below 2,855.96.
ALTERNATE WEEKLY CHART
Click chart to enlarge.
Cycle wave V may be subdividing as an ending diagonal. Within ending diagonals, all sub-waves must subdivide as zigzags. Primary wave 1 may be over at the last all time high as a zigzag.
Primary wave 2 must complete lower as a zigzag.
The second and fourth waves within diagonals are usually very deep, commonly between 0.81 to 0.66 the depth of the prior wave. This gives a target zone for primary wave 2.
Primary wave 2 may end if it comes down to find support at the lower edge of the teal channel, which is copied over from monthly and weekly charts. This trend line should provide final support for a deeper pullback.
Primary wave 2 may not move beyond the start of primary wave 1 below 2,346.58.
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.
Primary wave 5 may be subdividing as either an impulse or ending diagonal, in the same way that cycle wave V is seen for the first weekly chart.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
This last weekly candlestick with a very long lower wick and On Balance Volume at support suggest the pullback is over.
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 still be sustainable.
For the short term, downwards days look stronger than upwards days, with stronger volume and greater ATR. For the short term, price may move lower to the support line.
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 three weeks ago, 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 end 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.
Last week both price and the AD line have moved lower. There is no new divergence.
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. The last upwards movement 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.
The last all time high from the AD line in the week beginning 16th September may precede a new all time high from price. This divergence remains and is strongly bullish, supporting the main Elliott wave count.
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.
Short term data from StockCharts which showed the AD line making a new small swing low yesterday has been revised. The AD line did not make a new short term low. There is no bearish divergence.
Today both price and the AD line have moved higher. There is no new 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.
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 eleven 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.
Last week price has moved lower, but inverted VIX has moved higher. This divergence is bullish for the short term.
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. 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 @ 08:55 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.
Thank you Lara for your comments on wave character in response to my question. I greatly appreciate your guidance.
You’re most welcome 🙂
hourly chart updated:
it’s still possible that minute ii is incomplete and upwards movement today was minuette (b) within it, with minuette (c) down still to come
or
it’s possible that minute ii was over at the last low two days ago
if there’s weakness in upwards movement today I’ll go with the first idea, outlined in this chart
but if there’s strength and any bullish signals from the AD line or On Balance Volume, I’ll label minute ii complete
here are my 3 projections for completion of this swing up from the oct 3 low.
One is “as is” (the current high), the second is at 2961 and the third at 2980. These are projected by fitting Fibonacci structures over the swing and looking for reasonable fit of the internal pivots to the levels.
The Fibo structure left on the chart is for the swing being complete now. The fit is what I consider acceptable, but a bit weak. The next 2 up have a bit stronger fits.
Also, while its only partially shown, that’s a significant down trend line cutting across this morning’s high. Break that will be Significant to me.
The move from October 8 low counts as 5 completed waves on the SPX.
Expect a 3 wave retracement in the 1920s before the uptrend resumes.
1920’s???? I assume that’s a typo.
2920s 🙂
What’s 1000 points among friends
Well C waves are 5 wave
It’s also 2*A, so good relation at today’s high… so think it’s completed a expanded flat minor B and now we are in C down of minor 2… targets around to 2885-2887
I’m counting from the low of October 8. If this was a C (for move from beginning of October?), it would need to go beyond last week’s high, or it would be truncated, which is never a first choice. Is that what you are counting?
I see little correction finished now, new high soon, new ATH soon as well
I see a highly muddled mess.
That said, SPX monthly is in a DOWN TREND (and about 6 months of volatility squeeze as well; at some point, it’s going to blow!).
SPX weekly is in a DOWN TREND.
SPX daily is in a DOWN TREND.
SPX hourly is in a UP TREND.
SPX 5 minute is instantly in a strong down trend, but give it 30 minutes and that’s as likely to change as not.
So as I say, a muddled mess. But the higher tf trends are currently DOWN, DOWN, and DOWN. So be careful to the long side.
ps: I measure trend using MVTI which uses ADX, DI+, DI-, and CCI in combination to assess what I can “quantitative trend” (pure price movement, ignoring all structural features).
Well it’s the corrective structure from the 2960 highs, sorry can’t post the chart as on mobile…
So A was 2960 to 2897
A of B was 2897 to 2925
B of B was 2926 to 2892
C of B completed today 2892 to 2948 so 56 points 2*A
Now we are in C of minor 2..
That’s what I meant & Hopefully helps,
it does kinda look like a five… but when I put labels on it where it looks like I should, then four overlaps one and three is the shortest
it doesn’t actually fit well as a completed five
It looks to me like the opening gap on the morning of the 8th has been closed. The upwards movement from that morning to today, looks corrective. So I am persuaded that we have at least one more low to make as per the main hourly count. But, as Verne points out, there continues to be a lot of downside risk to the market. Just my opinion of course.
RUT broke the neckline off good bottom turn structure and I took a 1/3rd size long via UWM. Popped up immediately and I’ve got a break even stop on that perhaps hits later but better safe in highly uncertain times. RUT’s internal strong today (A-D at 3-1), SPX’s weaker at 2-1.
That didn’t last long, lol!! I love b.e. trades though, they make me strangely happy.
In the ‘old days’ it was a broker’s favorite. He made a nice commission and the client who remained intact with no loss would be coming back for more. Sometimes I marvel at the fact that I paid $30 per trade or more and I had to do it all over the phone directly with a live broker. How did we ever trade in the 70’s? Wild to see ‘No Commission’ trades available today.
yea, high commissions don’t exactly enable short term or highly defensive trading.
Took profits, And shorted the gap fill….
this short didnt last long either
yea, it’s pretty choppy. but with an upside bias and AD is still running 3 -1.
Three live H.O. on the clock.
A historical first. Be careful out there…!
It looks to me that wave 2 finished overnight on ES, which is now in 3 up (i of 3 done, we are in ii of 3, waiting for more: iii this morning?)
You can call me ‘First, or you can call me ‘Worst’. But don’t ever call me late for supper!
You can call it up or you can call it down, I say this market is going ROUND and ROUND. Like tonight. /ES down from 2919 to 2882 and back up now to 2915. And that’s just “so far”. Goodness.
I follow “John Galt” ‘s fundamental economic report analysis at theotrade. The title of yesterday’s post is “Possibilities of a US China Trade Deal Appear Grim”. And he backs it up with citations of recent actual actions by each side. We’ll see.
Hard to believe “no progress” is fully priced in, if that’s the result.
I keep looking at the weekly with that crazy candle. I look at the past and try to find such candles in similar positions. I can. Always in the middle of yet more extremely volatile sideways/down price action. Nowhere at a point that launches a significant new price swing upward; not “from the middle” of broader consolidating price action like that. I strongly suspect we get the same here, but I’m very often wrong-o as can be. A time to be very neutral, objective, and just let the price action be the guide. And be nimble; the ride might get quite aggressively “bumpy” over the next several days.
Right at the LH corner of the weekly chart there are two examples of similar weekly candlesticks, and they’re at the end of cycle wave II and the very start of cycle wave III.
The next one I can see is the end of Primary 4 within cycle III.
Then another halfway down of cycle wave IV.
So it could be a small bounce to follow it, and more downwards movement, or it could be a major low. There is precedent on that chart.