A new all time high for the S&P500 was expected as likely this week. While price has not managed to make a new all time high, Friday’s high is just 0.59 points short. Strength in upwards movement fits the Elliott wave count.
Summary: Upwards movement may continue here to new all time highs soon. The next target is at 3,120. New all time highs from the AD line this week strongly support a bullish outlook.
For the very short term, a new low below 3,001.94 would indicate a short-term pull back. The target would be about 2,962.
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. This alternate has a very low probability and would be invalidated with a new all time high.
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 intermediate wave (1) within primary wave 3.
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, intermediate wave (2) may not move beyond the start of intermediate wave (1) 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. It is still possible that minor wave 2 may continue lower as a double zigzag. The invalidation point is left the same to allow for this possibility. If price makes a new all time high in coming days, then the invalidation point will be moved upwards to the end of minor wave 2 at 2,855.96.
Minute wave i looks like a completed five wave impulse at the daily chart level.
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.
Minor wave 2 should be over.
There are multiple ways now to label upwards movement from the end of minor wave 2. This main wave count sees minute waves i and ii complete, and the middle of a third wave at multiple degrees just ahead.
Subminuette wave ii may not move beyond the start of subminuette wave i below 3,001.94.
If price makes a new low below 3,001.94 by any amount at any time frame on Monday, then use the alternate below and expect a short-term pullback.
ALTERNATE HOURLY CHART
Click chart to enlarge.
This labelling of upwards movement from the end of minor wave 2 better fits MACD. If minute wave i was over at Friday’s high, then the strongest middle portion of sub-micro wave (3) within micro wave 3 within subminuette wave iii within minuette wave (iii) corresponds with the strongest momentum from MACD.
The channel is drawn as a best fit in the same way on both hourly charts. If minute wave i is complete, then minute wave ii may breach the channel.
Minute wave ii may end about the 0.382 Fibonacci ratio. 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.
Within primary wave 2, intermediate wave (B) may not move beyond the start of intermediate wave (A) above 3.027.98. A new all time high would invalidate this wave count.
This alternate wave count is provided only for those members who wish to follow a more bearish wave count due to their own personal analysis. It is my judgement that this wave count has a very low probability.
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.
There is still a series of higher highs (with the exception of the last high) and higher lows from the low in December 2018. This is the basic definition of an upwards trend. For that view to shift then a lower low below 2,822.12 would need to be seen.
This week looks more clearly bullish with some support from volume. There is strong resistance in this area, which is not yet overcome.
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.
The bullish signal from On Balance Volume is reasonable because the resistance line is clearly breached, had four prior tests and was horizontal. This supports the Elliott wave count.
On Friday price has closed above the upper resistance line, but it has not done so with support from volume. Normally, the upwards breakout would be considered suspicious. However, this market has been rising for years now on light and declining volume at all time frames, including monthly, and a sustainable rise in price in current market conditions does not appear to always require rising volume.
If ADX reaches 15, it would indicate an upwards trend in a very early stage. That would be the strongest signal ADX can give.
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 end February 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.
This week only large caps have made a new high above the prior swing high in mid September. Small and mid caps have not. This current rise is driven mostly by larger caps, which is a feature more typical of an aged bull market.
The new all time high from the AD line this week is again a very bullish signal. This strongly supports 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.
The AD line makes yet another new all time high today. This divergence is bullish and strong. It is given reasonable weight in this analysis.
Another new all time high from the AD line at the daily chart level is very bullish.
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 almost two years 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.
This week both price and inverted VIX have moved higher. Both have made new short-term swing highs. 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.
On Friday both price and inverted VIX have moved higher. Both have made new short and mid-term swing highs. Neither have made new longer term all time 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 @ 11:00 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.
Hi Lara, it’s a pleasure to me.
In order to have a better daily communication about any consult or doubts of the market.
Is it possible to access any direct communication platform?
For example, many analysts have a platform called Disscord.
It has no additional cost.
I think that by this means we could have a more direct communication with you with the other daily subscribers.
Thanks in advance.
This is a once a day analysis service. I do not want to become tied to my computer and so I have no plans to offer something like this.
I do read comments more than once a day, and I’m almost always here prior to NY close to answer questions and update hourly charts.
There is a gap up today, it will be labelled a breakaway gap as it breaks above a long term consolidation that goes back to January 2018 (see the monthly chart below).
If this is correct then the breakaway gap may remain open. Support may be at the lower edge of the gap at 3,027.39.
If newer members haven’t already discovered it, there are a bunch of short articles over at Elliott Wave Gold in the “education” category, all are public. There are three on gaps you may find useful and now may be an opportune time to read them.
An article outlining how to trade with gaps is here.
An article outlining the 4 different kinds of gaps and what they mean is here.
Introductory, addressing the common myth that all gaps must be closed is here.
What I’m talking about re: the monthly squeeze termination in SPX.
The gray boxes show the run ups after that last 2 times this has happened. How big will this box be?
here’s another way to look at the same thing…
this monthly chart shows the entire bull market from its inception in March 2009
there are three boxes of consolidation
the first box was 359.67 points “high”, and was followed by a run up that was 764.14 points (from the breakout point to the high of the next, middle, box)
the second box was 317.58 points “high” and was followed by a run up that was 898.11 points
the third box which has just today seen a breakout above it is the tallest at 594.33 points
but then the EW count has that limit at 3,477.39 which means if that count is right the run up which may have just begun today is limited to 449.41 points
Hourly chart updated
And finally, the new ATH we’ve been waiting for.
this alternate remains valid
BUT
it needs some confirmation with a breach of the best fit channel by downwards movement (not sideways)
if this does unfold then it would be offering a gift, an opportunity to join the trend at a better price that may be back within intermediate (1) price territory
because once intermediate (3) has moved past its middle and nears its end, price shouldn’t get back down below 3,027.98 because intermediate (4) may not overlap intermediate (1) price territory
Thanks for the input. It’s much appreciated.
Please, some guidance from those more experienced. The thirds I have seen would simply dig in and go. It would be difficult finding an entry point once they launched…they would basically gap and go. However, this entire third has just ground its way up with a gap open settle, gap open settle character. Am I putting too much emphasis on the character of this move? Is there a point when one just has to buy into the move, even when it is not selling itself?
No. You do not have to buy it if you aren’t comfortable with it. I personally don’t see anything “wrong” with it, it appears that momentum is now accelerating, there’s a gap and go above the ATH…pretty bullish by the nominal measures. And other indicators are suggesting “could roar” to the upside. Are the large swings seen through most of 2019 over, or is there another down swing coming soon? That’s impossible to say, but I continue to always try to assume that the immediate future is more likely to be similar to the immediate past, until it isn’t. So some care re: a reversal and a month of downward price movement is appropriate. Waiting for that to occur before taking a position…that’s a difficult call! I dodge the issue a bit by selling deep out of the money put spreads, giving me a lot of downside room in case exactly that happens. This morning soon after open I sold a SPX 2900/2885. So a 140 point fall is needed to get me to a loser, by Nov 15. I hate to lose…lol!!! Of course the “price” of this strategy is if I do lose, I lose quite large relative to my win size, if I allow it to go to max loss.
My 3 cents is to never (or at least very rarely) chase a move. If you think this is a 3rd and you missed it, too bad, but just wait for a 4th wave retracement and go long.
You are always better off entering a trend on a 2nd or 4th wave retracement, since you have better stop levels.
I don’t view entry long here as chasing. Price is just breaking up off the Elliott channel on the hourly. It’s just confirmed that the prior ii is over by breaking above the top of the ii price action. It’s very “early” in what should be high momentum price action for a fairly long overall period of time if this w.c. is correct. I could argue that right now is the ‘go day’ for intermediate and long term trades. It’s a breakout that could/should be similar to November 2016.
I think there is always a better (less risky) trade than catching a falling knife or flying bullet.
Following Lara’s analysis in this comment section, if I wanted to enter long, I would wait for a retracement of wave i (orange). Maybe in the low 3020s.
anybody in bitcoin? I have a very small GBTC position…I’m not greedy, I’m only looking for a 50% trade, lo!!! Up to over 16 and I’ll ring the bell. But I’m unwilling to risk more; it’s a nutty crazy risky market. But technically, “now is the time” (well, Friday was the perfect time but it’s still early in what could be a major run up, per Lara’s assessment that it could be starting a high time frame 3 wave up).
I’m in like Maz Quinn 🙂
I bought the actual bitcoin and will hold it in a cold storage device for a few years.
Well, now I can exclaim, “Ding, Ding, Ding, Ding!” There is a new ATH (intraday) in the SPX. Did you ever see such a thing of beauty as the first bar on the 5-minute chart for today’s opening. It appears there is no gap to worry about either. It looks like the squeezes Kevin mentions below are resolving. Hooray!
A nice way to start the new week. Well, I guess if you are a bull. But then again, if you follow Lara’s analysis, how can you not be a bull at this point?
Have a great day all.
I stand corrected as my data feed is somewhat delayed and gets updated a few minutes later. It appears there is a gap on the 5 minute chart. All else stands fine.
You can get free real time for SPX on Tradingview.com (and free real time for everything on Thinkorswim)
Thanks
In fact, at least for the time being, the monthly SPX squeeze has indeed “turned off” for October. So far the weekly time frame is still showing a squeeze state for this week just started. But yet, it appears the pent up energy may start coming out here in strong bullish price action. Suffice to say “I’m long”….
I have to say that the DJIA action isn’t very supportive of a breakout scenario next week. I also see the VIX approaching July pivot lows in the 11.80 – 12.10 range. So arguable VIX is set up to pivot back to up here. And of course SPX has just reached the top of it’s range arguably gasping: very sluggish sideways action on low volume for days.
Very often the start of a month is significant pivot time. That’s this Friday. I’m very suspicious we see one more retreat here and a V bottom on Friday (on Fed day on Wed or Thurs) then a break out sometime in the first half of November.
A daily bar fully above the ATH is the first step in changing my mind.
Sounds good to me.
A break of price upward could resolve the two weekly candles of squeeze…and that resolving should resolve the eight months of squeeze…and price may go ballistic to the upside. Last time a monthly squeeze resolved, 2017 happened. I could work with some strong and consistent upward price action for a change (back to “normal”?).
1 is the lonliest number
But 2 is the saddest experience you’ll ever know.
The All Blacks lost the Rugby World Cup last night. My country is currently in mourning. I’m actually serious.
We’ll be fighting for third or fourth place.
It’s a really sad day for NZ. Rugby is important to a great many of us. I’m fine, it’s just a game. But there are a lot of somber Kiwis about today.
Out thought, out coached and out played.
Had it not been for a concentration lapse in the line out, its doubtful that AB would have even troubled the scorer.
From the response to the Haka through the first try, and throughout the ABs really weren’t allowed to play. Underwood turned undertaker! And Farrell couldn’t even kick.
AB are a great team, but they more than met there match yesterday. I’m sure the ABs will come back stronger in years to come.
Yep. England’s defense wouldn’t let the ABs play the game. It was like the ABs sent their second reserve team onto the field.
England did play a very impressive game, that’s for sure.
Oh well. They got the last two world cups. Can’t get them all I guess.
I’ll be cheering England in their next game. But for tonight, I’ll cheer South Africa while most everyone else in this house will cheer for Wales. Should make for an…. interesting… evening (I can be quite the troublemaker sometimes)
Agreed. I hope SA win.
If the Welsh win, and beat England in the final, their fans will be insufferable . Given a choice I’d rather SA beat England.!!
A lot of people here are saying Eddie Jones should be enticed back to Australia.
For a start Rugby Australia couldn’t afford him, given the perilous state of their finances. And secondly there’s a lot more wrong than just the coach. As one of the journalists wrote… “it would be like putting Lewis Hamilton into a clapped out Toyota Corolla and expecting him to win the Formula 1”.
Go England!