Category Archives: Public Analysis

Below are analyses that have been published and made available to the general public:

Weekly Elliott Wave and Technical Analysis of S&P500 and Gold and US Oil – 9th March, 2018

March 10, 2018Gold, Lara's Weekly, Public Analysis, US OilLara

Lara’s Weekly is an end of week Elliott Wave and Technical Analysis of the S&P 500, GOLD, and USOIL that focuses on the mid-to-long-term picture. This analysis service is designed for investors and swing traders.

Lara’s Weekly is at this time available to the general public, but in the near future it will be available by subscription only. I will be offering a once only awesome Grandfather rate to the earliest subscribers when Lara’s Weekly is launched as a paid subscription service. To make sure you don’t miss out and not get the Grandfather rate, be notified: click on the Notify Me button below:

To download Lara’s Weekly as a PDF document, click here.

This analysis was previously posted on Elliott Wave Gold.

Weekly Elliott Wave and Technical Analysis of S&P500 and Gold and US Oil – 23rd February, 2018

February 25, 2018Gold, Lara's Weekly, Public Analysis, US OilLara

Lara’s Weekly is an end of week Elliott Wave and Technical Analysis of the S&P 500, GOLD, and USOIL that focuses on the mid-to-long-term picture.

Lara’s Weekly is at this time available to the general public, but in the near future it will be available by subscription only. To be notified via e-mail when subscriptions to Lara’s Weekly will begin click the Notify Me button below:

To download Lara’s Weekly as a PDF document, click here.

This analysis was previously posted on Elliott Wave Gold.

S&P 500 Elliott Wave Technical Analysis – 21st December, 2017

December 21, 2017Public AnalysisLara

A small bounce was expected for the very short term for today’s session. This is exactly what happened.

Summary: A small fourth wave correction may continue for a few more days overall, and may end within the fourth wave of one lesser degree price territory from 2,671.88 to 2,652.01. The target within this zone is now calculated at 2,662.

A new all time high tomorrow would substantially change this view; expect an increase in upwards momentum to the next target at 2,833.

Last monthly and weekly charts are here. Last historic analysis video is here.

The biggest picture, Grand Super Cycle analysis, is here.

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

Cycle wave V must complete as a five structure, which should look clear at the weekly chart level. It may only be an impulse or ending diagonal. At this stage, it is clear it is an impulse.

Within cycle wave V, the third waves at all degrees may only subdivide as impulses.

Within cycle wave V, the corrections for primary wave 2 and intermediate wave (2) both show up clearly, both lasting several weeks. The respective corrections for intermediate wave (4) and primary wave 4 should also last several weeks, so that they show up at weekly and monthly time frames. The right proportions between second and fourth wave corrections give a wave count the right look. This wave count expects to see two large multi week corrections coming up.

Cycle wave V has passed equality in length with cycle wave I, which would be the most common Fibonacci ratio for it to have exhibited. The next most common Fibonacci ratio would be 1.618 the length of cycle wave I.

Intermediate wave (3) has passed equality in length with intermediate wave (1). It has also now passed both 1.618 and 2.618 the length of intermediate wave (1), so it may not exhibit a Fibonacci ratio to intermediate wave (1). The target calculation for intermediate wave (3) to end may have to be done at minor degree; when minor waves 3 and 4 are complete, then a target may be calculated for intermediate wave (3) to end. That cannot be done yet.

When minor wave 3 is complete, then the following multi week correction for minor wave 4 may not move into minor wave 1 price territory below 2,400.98.

DAILY CHART

Click chart to enlarge.

This wave count looks at the possibility that minute wave iii may have ended at the last high and minute wave iv may have just arrived.

There are better Fibonacci ratios in this wave count when compared to the alternate.

Draw an Elliott channel about this impulse. Minute wave iv may find strong support and remain within the channel, if it gets down that low. Minute wave iv may end within the price territory of the fourth wave of one lesser degree; minuette wave (iv) has its territory from 2,671.88 to 2,652.01.

Minute wave ii lasted nine days. For the wave count to have the right look (reasonable proportion), minute wave iv may be expected to most likely last either a Fibonacci five, eight, or possibly even thirteen days.

Minute wave ii was a zigzag. To exhibit alternation minute wave iv may most likely be a flat, combination or triangle. But it may also be a zigzag though because the S&P does not always exhibit perfect alternation and a zigzags is the most common corrective structure.

Minute wave iv may not move into minute wave i price territory below 2,490.87.

HOURLY CHART

Click chart to enlarge.

At this stage, I will leave the degree of labelling open to being reduced. It is possible that minuette wave (a) is complete as labelled, or this may be moved down one degree and only subminuette wave a or i may be complete.

Either way, the last wave down will subdivide as a leading expanding diagonal.

There are more than 23 possible corrective structures that minute wave iv may take. As it unfolds, the labelling within the structure will change. It is impossible at the early stages to tell which structure may unfold, so the focus should be on identifying when it may be complete and not on all the possible small movements within it.

At this stage, it looks most likely incomplete.

Further confidence in this main wave count may be had if price makes a new low below 2,676.11.

The last small wave up now looks best as a completed three at the hourly chart level. This offers a little confidence today to this main wave count.

ALTERNATE DAILY CHART

Click chart to enlarge.

Both daily charts are identical to the high labelled minute wave i, and the low labelled minute wave ii.

The daily chart looks at the middle and end of minor wave 3. There are some excellent Fibonacci ratios within this wave count.

Minor wave 3 may only subdivide as an impulse. Within minor wave 3, minute waves i, ii, iii and iv may all be complete. The final fifth wave of minute wave v then looks incomplete.

Minute wave iii is longer than minute wave i, so minute wave v is not limited. Minute wave iii will meet the core Elliott wave rule stating it may not be the shortest actionary wave.

The target for minor wave 3 expects to see the most common Fibonacci ratio for a third wave.

There is good proportion here between the corrections of minute waves ii and iv: minute wave ii lasted nine days and minute wave iv lasted six days. Both show up at the weekly chart level, and the wave count has the right look.

Within minute wave v, minuette waves (i) and (ii) may be complete. Minuette wave (iii) may be incomplete.

Minuette wave (iii) may only subdivide as an impulse. Within minuette wave (iii), subminuette waves i through to iv may be complete. It is also possible that subminuette wave iii is not complete and is extending.

Within minuette wave (iii), no second wave correction may move beyond the start of its first wave below 2,624.85.

ALTERNATE HOURLY CHART

Click chart to enlarge.

If a new all time high is seen, then this would be again the only wave count.

If subminuette waves iii and iv are complete, then subminuette wave iii was shorter than subminuette wave i by 4.07 points. This would limit subminuette wave v to no longer than equality in length with subminuette wave iii at 2,719.09, so that subminuette wave iii is not the shortest actionary wave and the core Elliott wave rule is met.

Alternatively, subminuette wave iii may be extending and only micro waves 1 and 2 may be complete.

Either way, within either subminuette wave v or micro wave 3, no second wave correction may move beyond the start of the first wave below 2,676.11.

The target for minor wave 3 expects it to exhibit the most common Fibonacci ratio for a third wave.

TECHNICAL ANALYSIS

WEEKLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

There is still no candlestick reversal signal at highs. The trend is now very extreme and overstretched, but this can continue for longer before price is ready to turn.

Overall, at this time frame, this market remains very bullish.

DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

The last gap is now closed. It is now indicated as an exhaustion gap and not a breakaway gap. This is a bearish signal, at least for the short term.

The last few signals from On Balance Volume were bearish. RSI and Stochastics are bearish. But ADX indicates the trend is not yet extreme at this time frame.

There are now two bearish candlestick patterns: a bearish engulfing pattern and now a gravestone doji. Along with the closed gap, this offers some support to the main wave count.

VOLATILITY – INVERTED VIX 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.

Normally, volatility should decline as price moves higher and increase as price moves lower. This means that normally inverted VIX should move in the same direction as price.

A bullish divergence noted yesterday between price and VIX has now been followed by an upwards day. This may now be resolved, or it may need another upwards day to resolve it.

BREADTH – AD LINE

Click chart to enlarge. Chart courtesy of StockCharts.com.

There is normally 4-6 months divergence between price and market breadth prior to a full fledged bear market. This has been so for all major bear markets within the last 90 odd years. With no longer term divergence yet at this point, any decline in price should be expected to be a pullback within an ongoing bull market and not necessarily the start of a bear market.

Only large caps made new all time highs last week. There is some weakness with mid and small caps unable to make new all time highs; this is bearish.

Breadth should be read as a leading indicator. At this stage, there is no divergence between price and the AD line to indicate weakness.

DOW THEORY

The S&P500, DJIA and Nasdaq last week all made new all time highs. DJT now also made a new all time high, confirming the ongoing bull market.

The following lows need to be exceeded for Dow Theory to confirm the end of the bull market and a change to a bear market:

DJIA: 17,883.56.

DJT: 7,029.41.

S&P500: 2,083.79.

Nasdaq: 5,034.41.

Charts showing each prior major swing low used for Dow Theory are here.

Published @ 09:02 p.m. EST.

[Note: Analysis is public today for promotional purposes. Specific trading advice and comments will remain private for members only.]

Continue reading S&P 500 Elliott Wave Technical Analysis – 21st December, 2017 →

21st December, 2017 – S&P 500 Elliott Wave Technical Analysis – Video

December 21, 2017Public AnalysisLara

5th December, 2017 – S&P 500 Elliott Wave Technical Analysis – Video

December 5, 2017Public AnalysisLara

S&P 500 Elliott Wave Technical Analysis – 5th December, 2017

December 5, 2017Public AnalysisLara

For the very short term, downwards movement was expected, and this is exactly what has happened for Tuesday’s session.

Only two hourly wave counts will be published today, and they both expect overall the same direction for price next.

Summary: For the short term, look now for a pullback to about 2,624 or 2,599. This may be a second wave correction. Thereafter, look for upwards movement to continue towards the target about 2,773.

If price makes a new low below 2,557.46, that would indicate a multi week (about 10) correction may have arrived.

Always trade with stops and invest only 1-5% of equity on any one trade. All trades should stick with the trend. The trend remains up.

Last monthly and weekly charts are here. Last historic analysis video is here.

The biggest picture, Grand Super Cycle analysis, is here.

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

Cycle wave V must complete as a five structure, which should look clear at the weekly chart level. It may only be an impulse or ending diagonal. At this stage, it is clear it is an impulse.

Intermediate wave (3) may now be nearing completion (the alternate hourly wave count looks at the possibility it could be complete at yesterday’s high). When it is complete, then intermediate wave (4) should unfold and be proportional to intermediate wave (2). Intermediate wave (4) may be very likely to break out of the yellow best fit channel that contains intermediate wave (3). Intermediate wave (4) may not move into intermediate wave (1) price territory below 2,193.81.

The yellow best fit channel is redrawn. Price points are given so that members may replicate this channel. This channel is copied over to the daily chart.

DAILY CHART

Click chart to enlarge.

We should always assume the trend remains the same until proven otherwise. Assume that minor wave 5 is incomplete while price remains above 2,557.45.

The target calculated for minor wave 5 expects it to exhibit the most common Fibonacci ratio for a fifth wave. This target would not expect a Fibonacci ratio for intermediate wave (3) to intermediate wave (1).

Within minor wave 5, no second wave correction may move beyond the start of its first wave below 2,557.45.

HOURLY CHART

Click chart to enlarge.

This first hourly chart follows on from labelling on the daily chart.

A five up from the low of minor wave 4 is complete. This wave count fits with MACD: the strongest momentum within this five up is the end of the third wave of minuette wave (iii), and within the third wave the strongest portion of the histogram is its middle, subminuette wave iii. At the end of the five up, there is some divergence with price and momentum for the fifth wave of minuette wave (v).

With a five up now compete, a three down should follow. If minor wave 5 is incomplete, then only minute wave i may be over at today’s high. Now minute wave ii may take a few days to complete. The most likely point for it to end may be the 0.618 Fibonacci ratio about 2,599, but the 0.382 Fibonacci ratio about 2,624 is also a reasonable target.

There is a five down complete at the hourly chart level. If my analysis of this wave down is correct, then it should be followed by a small bounce for minuette wave (b). Before this happens though, it is entirely possible that minuette wave (a) may continue lower. Use the yellow best fit channel as a guide as to when minuette wave (a) is complete and minuette wave (b) has arrived. When price breaks above the upper edge of this channel, then assume that minuette wave (b) has begun.

Minuette wave (b) may not move beyond the start of minuette wave (a) above 2,665.19.

Minute wave ii looks like it may now end closer to the 0.618 Fibonacci ratio than the 0.382 Fibonacci ratio. It may be subdividing as a simple zigzag.

ALTERNATE HOURLY CHART

Click chart to enlarge.

Because we should always assume the trend remains the same until proven otherwise, this wave count should be considered an alternate while price has not confirmed it.

By simply moving the degree of labelling within the five up from the end of minor wave 4 all up one degree, it is possible to see that intermediate wave (3) could be over.

If this wave count is confirmed with a new low below 2,557.46, then it would expect a multi week pullback or consolidation for intermediate wave (4) to last about ten weeks or so. If it is a complicated combination or a triangle, then it may be longer lasting, possibly a Fibonacci thirteen or even twenty-one weeks.

At this early stage, the 0.382 Fibonacci ratio of intermediate wave (3) would be a reasonable target.

For the short term (the next week or so), a trend change at intermediate degree should see a larger five down develop at the hourly chart level. So far only a first wave within that five down may be complete.

Minute wave ii may not move beyond the start of minute wave i above 2,665.19.

Both wave counts expect overall the same direction next.

TECHNICAL ANALYSIS

WEEKLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

This last week completed the strongest volume for a year, which for an upwards week is very bullish.

The problem with divergence, and one reason why it is hopeless as a timing tool, is that sometimes it just disappears. That is what has happened between divergence with price and RSI. Still, the failure of On Balance Volume to make new all time highs with price is bearish especially if On Balance Volume is a leading indicator.

This trend is extreme, but it could still continue for a while longer. Look for a candlestick reversal pattern or a bearish signal from On Balance Volume.

DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

The target using the measured rule from the last flag pattern was about 2,633. It was met and well passed. Price is now turning downwards.

RSI, Stochastics and On Balance Volume are all bearish.

This analysis gives weight to the bearish signal from On Balance Volume. This is exactly the kind of signal which turns up at trend changes of reasonable magnitude. Today, it is looking a little more like a trend change of a reasonable magnitude, and this supports the alternate hourly Elliott wave count.

VOLATILITY – INVERTED VIX 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.

Normally, volatility should decline as price moves higher and increase as price moves lower. This means that normally inverted VIX should move in the same direction as price.

Another bearish signal noted yesterday between price and inverted VIX has now been followed by a downwards day. This bearishness may now be resolved, or it may require another downwards day to resolve it.

Price has moved lower today, but inverted VIX has moved higher. Downwards movement did not come with a normal increase in volatility. Volatility declined, which indicates weakness within price today and is interpreted as bullish.

BREADTH – AD LINE

Click chart to enlarge. Chart courtesy of StockCharts.com.

All of large, mid and small caps last week have made new all time highs. The rise in price has support from market breadth.

The fall in price today comes with a corresponding normal decline in market breadth. The fall in price is supported by a fall in breadth, which is bearish.

DOW THEORY

The DJIA, DJT, S&P500 and Nasdaq have last week made new all time highs. This provides confirmation of the ongoing bull market.

The following lows need to be exceeded for Dow Theory to confirm the end of the bull market and a change to a bear market:

DJIA: 17,883.56.

DJT: 7,029.41.

S&P500: 2,083.79.

Nasdaq: 5,034.41.

Charts showing each prior major swing low used for Dow Theory are here.

Published @ 08:24 p.m. EST.

[Note: Analysis is public today for promotional purposes. Member comments and discussion will remain private.]

Continue reading S&P 500 Elliott Wave Technical Analysis – 5th December, 2017 →

3rd November, 2017 – S&P 500 Elliott Wave Technical Analysis – Video

November 3, 2017Public AnalysisLara

S&P 500 Elliott Wave Technical Analysis – 3rd November, 2017

November 3, 2017Public AnalysisLara

Upwards movement continues exactly as the main Elliott wave count and classic technical analysis expected.

On Balance Volume continues to be very bullish. The targets remain the same.

Summary: The Elliott wave target is at 2,616 and a target from a small pennant pattern is 2,617. The upwards trend has support from very bullish On Balance Volume.

However, assume the trend remains the same until proven otherwise. The trend is up.

Weakness at the end of this week in market breadth points to the alternate hourly Elliott wave count possibly being correct. If price breaks below the green Elliott channel on the hourly charts, then expect a multi day pullback or consolidation is underway.

Pullbacks and consolidations at their conclusions offer opportunities to join the upwards trend.

Always trade with stops and invest only 1-5% of equity on any one trade.

Last monthly and weekly charts are here. Last historic analysis video is here.

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

This wave count has strong support from another bullish signal from On Balance Volume at the weekly chart level. While classic analysis is still very bullish for the short term, there will be corrections along the way up. Indicators are extreme and there is considerable risk to the downside still.

As a Grand Super Cycle wave comes to an end, weakness may develop and persist for very long periods of time (up to three years is warned as possible by Lowry’s for the end of a bull market), so weakness in volume may be viewed in that larger context.

When minor wave 3 is complete, then minor wave 4 should find support about the lower edge of the best fit channel. Minor wave 4 may not move into minor wave 1 price territory below 2,299.55.

The next reasonable correction should be for intermediate wave (4). When it arrives, it should last over two months in duration. The correction may be relatively shallow, a choppy overlapping consolidation, at the weekly chart level.

DAILY CHART

Click chart to enlarge.

Minute wave v is completing as an impulse. The final fifth wave of minuette wave (v) is underway.

The target for minor wave 3 expects to see the most common Fibonacci ratio to minor wave 1.

Within minuette wave (v), no second wave correction may move beyond the start of the first wave below 2,544.00.

HOURLY CHART

Click chart to enlarge.

Assume the trend remains the same until proven otherwise. Assume the trend remains up while price remains within the green channel and above 2,544.

Minuette wave (v) must subdivide as a five wave structure. It may be an impulse with subminuette waves i and ii complete. Subminuette wave ii now looks like a completed three wave zigzag.

This wave count expects to see a further increase in upwards momentum as a small third wave up unfolds.

Within subminuette wave iii, no second wave correction may move beyond its start below 2,566.17.

A breach of the green channel by downwards movement would be the earliest indication that this first wave count may not be correct. If that happens, then seriously consider the alternate hourly wave count below.

ALTERNATE HOURLY CHART

Click chart to enlarge.

This alternate simply moves the degree of labelling within the last five up all up one degree. It is possible again that minor wave 3 could be over.

Minor wave 2 was a quick shallow 0.16 zigzag lasting just three days. Minor wave 4 should also show up at the daily chart level. It may be a sideways consolidation, subdividing as a flat, combination or triangle, to exhibit alternation with the zigzag of minor wave 2. These structures are often more time consuming than zigzags. So far minor wave 4 may have lasted five days and the structure would be incomplete. It may end in a total Fibonacci eight or possibly even thirteen days.

A new correction at minor degree should begin with a five down at the hourly chart level. This has not happened, a three down only is complete. The probability of this wave count is reduced.

It is possible that minor wave 4 is beginning with a flat correction for minute wave a. Within the flat, minuette wave (b) has passed the minimum 0.9 length of minuette wave (a). Minuette wave (b) may continue higher above the start of minuette wave (a) at 2,588.40 as in an expanded flat.

Upwards movement during Thursday’s session has some reasonable support from volume. This reduces the probability of this alternate wave count; B waves should exhibit weakness, not strength.

TECHNICAL ANALYSIS

WEEKLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

The Hanging Man candlestick requires bearish confirmation because the long lower wick has a strong bullish implication. This week has not given bearish confirmation, so the Hanging Man candlestick should not be read as a reversal signal.

Indicators are now extreme, but at this stage there is not enough weakness in price to indicate an end to the upward trend here. Extreme conditions for ADX and RSI may persist for several weeks while price continues higher.

DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

Pennants are one of the most reliable continuation patterns. The measured rule calculates a target about 2,617. Because this is only one point off the Elliott wave target, this area may offer strong resistance.

On Balance Volume remains very bullish. Volume today shows some decline, but this can persist for reasonable periods of time in current market conditions while price may continue to rise. On its own, this decline in volume signals a warning of weakness, but it will not be useful in timing an end to this upwards movement.

There is less weakness evident today as double divergence between price and RSI now becomes only single divergence. This divergence indicates some weakness here in price, but again it will not be useful as a timing tool to show when price has found a high.

On Balance Volume will be given the most weight in this analysis because it remains one of the most reliable indicators in current market conditions.

VOLATILITY – INVERTED VIX CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

Normally, volatility should decline as price moves higher and increase as price moves lower. This means that normally inverted VIX should move in the same direction as price.

Bullish divergence noted in last analysis has now been followed by an upwards day to a new all time high for price. This divergence may now be resolved or it may need one more upwards day to resolve it.

There is no new divergence today. Both price and inverted VIX have made new all time highs. The rise in price today has come with a normal corresponding decline in volatility. This is bullish.

BREADTH – AD LINE

Click chart to enlarge. Chart courtesy of StockCharts.com.

There is new bearish divergence today between price and the AD line: price has moved higher to make a new all time high, but the AD line has moved lower for the session. The rise in price did not have support from rising market breadth, so this divergence is bearish and points to a red daily candlestick for Monday and / or Tuesday.

Small caps have moved lower during this week failing to make new all time highs. Mid caps made their last all time high on Wednesday and have failed to make a new all time high for Friday. There is some very short term weakness within this market developing.

DOW THEORY

At the end of this week, only DJT has failed to make a new all time high. The S&P500, DJIA and Nasdaq have made new all time highs. DJT has failed so far to confirm an ongoing bull market.

Failure to confirm an ongoing bull market should absolutely not be read as the end of a bull market. For that, Dow Theory would have to confirm new lows.

The following lows need to be exceeded for Dow Theory to confirm the end of the bull market and a change to a bear market:

DJIA: 17,883.56.

DJT: 7,029.41.

S&P500: 2,083.79.

Nasdaq: 5,034.41.

Charts showing each prior major swing low used for Dow Theory are here.

Published @ 06:12 p.m. EST.

[Note: Analysis is public today for promotional purposes. Member comments and discussion will remain private.]

Continue reading S&P 500 Elliott Wave Technical Analysis – 3rd November, 2017 →

What Signals A Crash? A Look at 3 Historic Examples | 26th October, 2017 – Video

October 27, 2017EW Education, Public AnalysisLara

What Signals A Crash? A Look at 3 Historic Examples | 26th October, 2017

October 27, 2017EW Education, Public AnalysisLara

Could the indicators and classic technical analysis used here at Elliott Wave Stock Market have warned of the last three major crashes of 1987, 2000 and 2007?

1987

WEEKLY CHART

Click chart to enlarge.

A candlestick pattern at the high offered the first warning of a trend change.

Moving averages are lagging indicators. They offered no warning at the high. They only caught up with the crash after the low; in November 1987 they were full bore bearish.

ADX gave no warning.

RSI offered a strong warning with double bearish divergence while overbought.

Stochastics offered a weak warning.

MACD was fully bullish at the high.

Volume data is unavailable for this time period from StockCharts.

DAILY CHART

Click chart to enlarge.

Moving averages were fully bullish at the high. This changed on the 13th of October to a mid term pullback, and finally on the 28th of October they were fully bearish.

ADX at the daily chart level did offer an early warning of an extreme upwards trend susceptible to a pullback.

RSI offered a reasonable warning of a high in place, as did Stochastics.

MACD gave a bearish crossover on the 27th of August, and was fully bearish by 15th of September.

AD LINE

Click chart to enlarge.

The AD line did offer a strong warning, with over 4 months of clear bearish divergence. Double divergence developed just before the high.

2000

WEEKLY CHART

Click chart to enlarge.

For later data, volume data is also available.

A strong bearish candlestick reversal pattern was seen at the high.

Volume offered no warning. The first bearish signal from On Balance Volume came in mid March.

At the high, in March 2000, moving averages were fully bullish.

ADX offered no warning. ATR offered no warning.

Not only did RSI not offer any warning, it indicated there was room for price to rise.

Stochastics did offer a warning with bearish divergence.

MACD was fully bullish at the high.

DAILY CHART

Click chart to enlarge.

A candlestick reversal pattern was given at the daily chart level as well as the weekly.

The first bearish signal from On Balance Volume came on the 12th of April.

ADX and ATR offered no warning. RSI showed very weak bearish divergence and was not overbought at the high.

Stochastics offered no warning. MACD was fully bullish.

By the 13th of April, bearish signals came from: On Balance Volume, MACD, ADX and rising volume with falling price.

AD LINE

Click chart to enlarge.

Of all three examples looked at in this article, the strong and persistent divergence between price and the AD line in March 2000 is the most striking. This would have been a very strong warning that something big to the downside may be brewing.

2007

WEEKLY CHART

Click chart to enlarge.

A very strong Bearish Engulfing pattern at the high offered some warning.

Volume offered a small warning as it declined up to the high in October 2007. On Balance Volume offered no warning; its first bearish signal came at the end of December 2007.

ADX offered some reasonable warning as it had been extreme for a long time prior to the high, and then had declined as price moved higher.

RSI offered a warning with long term bearish divergence.

Stochastics also offered a warning with single bearish divergence.

MACD was fully bullish at the high and only became fully bearish at the end of December 2007.

DAILY CHART

Click chart to enlarge.

Moving averages offered no warning. Volume did offer some warning as it declined towards the final high.

On Balance Volume did not offer a warning prior to the high, but it did give a bearish signal very soon after on the 15th of October, 2007. This was followed by two more bearish signals shortly after, noted on the chart.

ADX offered no warning.

ATR offered some warning as it declined towards the final high.

RSI offered no warning. Stochastics offered only a weak bearish warning.

MACD was fully bullish.

AD LINE

Click chart to enlarge.

The AD line again offered a very strong warning, with clear and strong divergence over 4 months.

CONCLUSION

Markets do not repeat, but they do rhyme.

In each of these examples of price approaching a final high prior to a large bear market, only the AD line was consistent in offering a warning each time. That does not mean it must do so prior to a future bear market, only that the probability of it doing so again for at least 4 months is high.

The other indicator which appears to more consistently offer a warning shortly after a high is On Balance Volume.

The current bull market today has no divergence with the AD line, and no bearish signals at all from any of the indicators studied here. That points to a very low probability of a bear market developing in the next few months.

Published @ 3:26 a.m. EST on 27th October, 2017.