Tag Archives: economic outlook 2016

S&P 500 Elliott Wave Technical Analysis – 28th September, 2016

Upwards movement was expected for Wednesday’s session. This is what happened.

Summary: Classic technical analysis suggests more upwards movement tomorrow, but the preferred Elliott wave count requires downwards movement. If price makes a new high above 2,179.58, then expect upwards movement to continue to a target at 2,188. If price makes a new low tomorrow below 2,151.79, then expect downwards movement to continue to a target at 2,134.

Last monthly chart for the main wave count is here.

New updates to this analysis are in bold.

MAIN WAVE COUNT

WEEKLY CHART

S&P 500 weekly 2016
Click chart to enlarge.

Cycle wave V must subdivide as a five wave structure. I have two wave counts for upwards movement of cycle wave V. This main wave count is presented first only because we should assume the trend remains the same until proven otherwise. Assume that downwards movement is a correction within the upwards trend, until proven it is not.

Primary wave 3 is shorter than primary wave 1, but shows stronger momentum and volume as a third wave normally does. Because primary wave 3 is shorter than primary wave 1 this will limit primary wave 5 to no longer than equality in length with primary wave 3, so that the core Elliott wave rule stating a third wave may not be the shortest is met. Primary wave 5 has a limit at 2,302.47.

Primary wave 2 was a shallow 0.40 expanded flat correction. Primary wave 4 may be exhibiting alternation as a more shallow combination.

Primary wave 4 may not move into primary wave 1 price territory below 2,111.05.

It is also possible to move the degree of labelling within cycle wave V all down one degree. It may be only primary wave 1 unfolding. The invalidation point for this idea is at 1,810.10. That chart will not be published at this time in order to keep the number of charts manageable. The probability that this upwards impulse is only primary wave 1 is even with the probability that it is cycle wave V in its entirety.

DAILY CHART

S&P 500 daily 2016
Click chart to enlarge.

Primary wave 4 may be now complete as a double combination.

It is possible now that primary wave 4 could continue further as a triple, but because triples are very rare the probability of this is very low. If it is over here, then the proportion with primary wave 2 looks right. Within primary wave 5, no second wave correction may move beyond the start of its first wave below 2,119.12.

Primary wave 1 lasted 47 days, primary wave 2 was even in duration at 47 days, primary wave 3 lasted 16 days, and primary wave 4 has lasted 37 days. The proportions between these waves are acceptable.

If primary wave 5 has begun here, then at 2,233 it would reach 0.618 the length of primary wave 1.

At this stage, an impulse for primary wave 5 looks unlikely with invalidation of that idea at the hourly chart level. An ending diagonal now looks more likely for primary wave 5. Ending diagonals are choppy overlapping structures. The classic technical analysis equivalent is a rising wedge. They are terminal structures, doomed to full retracement at their end.

If primary wave 5 comes up to touch the upper edge of the maroon channel, it may end there.

HOURLY CHART

S&P 500 hourly 2016
Click chart to enlarge.

If primary wave 5 is subdividing as an ending diagonal, then all sub-waves must subdivide as zigzags. Intermediate wave (1) may be a completed zigzag.

Second and fourth waves within diagonals have a normal depth of from 0.66 to 0.81 the prior wave. This gives a target range for intermediate wave (2) from 2,140 to 2,131.

Intermediate wave (2) must subdivide as a zigzag. It may not move beyond the start of intermediate wave (1) below 2,119.12.

Intermediate wave (1) lasted a Fibonacci eight days.

Intermediate wave (2) may be just over half way through and has so far lasted four days. It may continue for another four if it is even in duration with intermediate wave (1) and exhibits a Fibonacci number of eight days.

Intermediate wave (2) should be expected to be a big obvious three wave structure. So far minor wave B shows at the daily chart level as two green daily candlesticks. Minor wave B may not move beyond the start of minor wave A above 2,179.58.

Minor wave B now looks like a completed zigzag. It is now most likely to be over here, if this hourly wave count is correct. Minute wave c is 1.8 points short of equality in length with minute wave a.

At 2,134 minor wave C would reach equality in length with minor wave A. This target is within the range of 2,140 – 2,131.

SECOND HOURLY CHART

S&P 500 hourly 2016
Click chaIIrt to enlarge.

There was support today for upwards movement from volume, and this suggests another green daily candlestick tomorrow. If that happens, then what would the Elliott wave count look like and what is the probability?

It is possible that intermediate wave (1) ended at the high for 22nd of September and did not have a truncated fifth wave. This wave count avoids a truncation (which the first hourly chart has) which slightly increases its probability.

If intermediate wave (2) was over at the last swing low, then it will subdivide as a zigzag, but it does not look like a big obvious three wave structure at the daily chart level because it is too brief and straight. This reduces the probability by a reasonable amount.

Intermediate wave (2) would be just above the normal depth of 0.66 to 0.81 of intermediate wave (1), and it is only 0.63. This is not too far from normal, so it only reduces the probability of this idea by a little.

If the first hourly chart is invalidated tomorrow with a new high above 2,179.58, then this second idea may be considered confirmed. At that stage, intermediate wave (3) may be expected to be underway.

Within intermediate wave (3), at 2,188 minor wave C would reach 1.618 the length of minor wave A. This target would see intermediate wave (3) shorter than intermediate wave (1), so the diagonal would be contracting. Contracting diagonals are more common than expanding.

At 2,202.42 intermediate wave (3) would reach equality in length with intermediate wave (1). It is likely to end before this point because contracting diagonals are more common than expanding diagonals.

Within minor wave C, no second wave correction may move beyond the start of its first wave below 2,151.79.

ALTERNATE WAVE COUNT

WEEKLY CHART

S&P 500 weekly 2016
Click chart to enlarge.

What if an impulse upwards is complete? The implications are important. If this is possible, then primary wave 1 within cycle wave V may be complete.

With downwards movement from the high of primary wave 1 now clearly a three and not a five, the possibility that cycle wave V and Super Cycle wave (V) are over has substantially reduced. This possibility would be eliminated if price can make a new all time high above 2,193.81.

If an impulse upwards is complete, then a second wave correction may be unfolding for primary wave 2. Expectations on how deep primary wave 2 is likely to be are now adjusted. It may be expected now to more likely only reach the 0.382 Fibonacci ratio about 2,038.

At this stage, it looks like price has found strong support at the lilac trend line.

Primary wave 2 may not move beyond the start of primary wave 1 below 1,810.10.

DAILY CHART

S&P 500 daily 2016
Click chart to enlarge.

If an impulse upwards is complete, then how may it subdivide and are proportions good?

Intermediate wave (1) was an impulse lasting 47 days. Intermediate wave (2) was an expanded flat lasting 47 days. Intermediate wave (3) fits as an impulse lasting 16 days, and it is 2.04 points short of 0.618 the length of intermediate wave (1). So far this alternate wave count is identical to the main wave count (with the exception of the degree of labelling, but here it may also be moved up one degree).

Intermediate wave (4) may have been a running contracting triangle lasting 22 days and very shallow at only 0.0027 the depth of intermediate wave (3). At its end it effected only a 0.5 point retracement. There is perfect alternation between the deeper expanded flat of intermediate wave (2) and the very shallow triangle of intermediate wave (4). All subdivisions fit and the proportion is good.

Intermediate wave (5) would be very brief at only 18.29 points. Intermediate wave (5) is 1.43 points longer than 0.056 the length of intermediate wave (1).

At this stage, primary wave 2 now has a completed zigzag downwards that did not reach the 0.236 Fibonacci ratio. It is very unlikely for this wave count that primary wave 2 is over there; the correction is too brief and shallow. Upwards movement labelled intermediate wave (X) is so far less than 0.9 the length of the prior wave down labelled intermediate wave (W). The minimum for a flat correction has not been met. Primary wave 2 may continue lower as a double zigzag. A second zigzag in the double may be required to deepen the correction closer to the 0.382 Fibonacci ratio.

Intermediate wave (W) lasted a Fibonacci 13 sessions. Intermediate wave (X) has now lasted a Fibonacci eight sessions. If intermediate wave (Y) is equal in duration with intermediate wave (W), that would give the wave count a satisfying look.

Primary wave 2 may not move beyond the start of primary wave 1 below 1,810.10. A new low below this point would see the degree of labelling within cycle wave V moved up one degree. At that stage, a trend change at Super Cycle degree would be expected and a new bear market to span several years would be confirmed.

HOURLY CHART

S&P 500 hourly 2016
Click chart to enlarge.

This wave count now expects downwards movement for a Fibonacci 13 sessions overall most likely, to end about 2,038.

TECHNICAL ANALYSIS

WEEKLY CHART

S&P 500 weekly 2016
Click chart to enlarge. Chart courtesy of StockCharts.com.

The lilac trend line has provided very strong support whereas previously provided strong resistance. The strength of this line is reinforced. If price turns down from here, it should be again expected to provide support. A break below it would be a strong bearish signal.

Price broke above the long term lilac trend line in July 2016. The low two weeks ago almost perfectly found support at this line, and now price is moving up and away from the line. This looks like a typical breakout followed by a back test for support. It is a reasonable conclusion that price will move further up and away from this line. This view is in alignment with the main Elliott wave count.

On Balance Volume has made a new high above the high for the week of the 6th of August, but price has failed to make a corresponding new high. This divergence is bearish and indicates weakness in price. It does not say that price must turn down from here, only that price is weak. The bull market is unhealthy.

RSI is not extreme. There is room for price to rise further. There is no divergence between RSI and price at the weekly chart level to indicate weakness.

DAILY CHART

S&P 500 daily 2016
Click chart to enlarge. Chart courtesy of StockCharts.com.

Price has moved higher on increasing volume for two days in a row now. Volume for these two upwards days is stronger than the prior two downwards days, so the rise in price is supported by volume. Wednesday’s long lower wick is bullish. This suggests that more upwards movement may follow, so another green daily candlestick would be a reasonable expectation here. This supports the second hourly Elliott wave chart and not the first.

ADX is declining, indicating the market is not trending. ATR is flat to declining, in agreement with ADX. Bollinger Bands have widened but are now remaining steady. This market is not trending. This market is consolidating.

Within this long consolidation, which began back on about 11th of July, it is three downwards days thay have strongest volume. This suggests a downwards breakout is more likely than upwards. This trick may or may not work for the S&P at this time. It is one piece of evidence to weigh up. This consolidation is bounded by resistance at 2,190 and support at 2,120.

On Balance Volume has now come up to touch the upper yellow resistance line. It may be expected to stop here, so this may halt the rise in price. This supports the first hourly Elliott wave chart over the second.

RSI is still close to neutral. There is plenty of room for price to rise or fall.

Stochastics has not yet reached overbought. Overall, a continuation of an upwards swing within this consolidation may be expected until price finds resistance and Stochastics reaches overbought at the same time.

There are three moving averages on this chart: a short term Fibonacci 13 days (gold), a mid term Fibonacci 55 days (purple), and a long term 200 days (lime). Both the mid and long term averages are still pointing up, and the mid term average is above the long term average. The longer term trend should be assumed to be up, until these averages prove it is not. The short term average has come down to kiss the mid term average and today it remains above the mid term average. The short term trend is fluctuating, exactly as expected within a consolidating market.

VOLATILITY – INVERTED VIX CHART

VIX daily 2016
Click chart to enlarge. Chart courtesy of StockCharts.com.

There are a few instances of multi day divergence between price and inverted VIX noted here. Bearish divergence is blue. Bullish divergence is yellow. It appears so far that divergence between inverted VIX and price is again working to indicate short term movements spanning one or two days.

At this stage, no further short term divergence is noted between price and VIX to indicate any weakness either way.

BREADTH – AD LINE

AD Line daily 2016
Click chart to enlarge. Chart courtesy of StockCharts.com.

There is support from market breadth as price is rising.

Short term bullish and bearish divergence is again working between price and the AD line to show the direction for the following one or two days.

No short term divergence between price and the AD line is noted today.

DOW THEORY

Major lows within the old bull market:

DJIA: 15,855.12 (15th October, 2014) – closed below on 25th August, 2015.

DJT: 7,700.49 (12th October, 2014) – closed below on 24th August, 2015.

S&P500: 1,821.61 (15th October, 2014) – has not closed below this point yet.

Nasdaq: 4,117.84 (15th October, 2014) – has not closed below this point yet.

Major highs within the bear market from November 2014:

DJIA: 17,977.85 (4th November, 2015) – closed above on 18th April, 2016.

DJT: 8,358.20 (20th November, 2015) – has not closed above this point yet.

S&P500: 2,116.48 (3rd November, 2015) – closed above this point on 8th June, 2016.

Nasdaq: 5,176.77 (2nd December, 2015) – closed above this point on 1st August, 2016.

Dow Theory Conclusion: Original Dow Theory still sees price in a bear market because the transportations have failed to confirm an end to that bear market. Modified Dow Theory (adding S&P and Nasdaq) has failed still to confirm an end to the old bull market, modified Dow Theory sees price still in a bull market.

This analysis is published @ 09:55 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 – 28th September, 2016

S&P 500 Elliott Wave Technical Analysis – 22nd April, 2016

Price moved lower to breach the short term invalidation point on the first hourly Elliott wave count and provide first confidence for the alternate hourly Elliott wave count.

Continue reading S&P 500 Elliott Wave Technical Analysis – 22nd April, 2016

S&P 500 Elliott Wave Technical Analysis – 6th April, 2016

Upwards movement was expected. This is what happened.

The Elliott wave count remains on track.

Continue reading S&P 500 Elliott Wave Technical Analysis – 6th April, 2016

S&P 500 Elliott Wave Technical Analysis – 17th March, 2016

A new high early in the session above 2,032.59 indicated more upwards movement was expected.

Continue reading S&P 500 Elliott Wave Technical Analysis – 17th March, 2016

S&P 500 Elliott Wave Technical Analysis – 16th March, 2016

A slight new high fits the bull and alternate bear Elliott wave counts best.

The situation short term is slightly clearer. There will only be one bear Elliott wave count now.

Summary: This is still a bear market rally until proven otherwise. The target remains at 2,126. In the short term, a new high tomorrow above 2,032.59 would indicate a fifth wave up is underway. A new low below 2,019.06 is expected and would indicate more sideways movement for a further two days before the short term upwards trend resumes.

To see last published monthly charts click here.

To see how each of the bull and bear wave counts fit within a larger time frame see the Grand Supercycle Analysis.

To see detail of the bull market from 2009 to the all time high on weekly charts, click here.

I have published the bull market wave counts first for a long time, waiting for S&P and Nasdaq to confirm my modified Dow Theory before calling a bear market. Due to a lack of confidence in bull wave counts at this stage, I will stop doing that. The bear wave count will be published first. The bull wave count will continue to be published until it is invalidated by price.

New updates to this analysis are in bold.

BEAR ELLIOTT WAVE COUNT

MONTHLY CHART

S&P 500 monthly bear 2016
Click chart to enlarge.

What if the big flat correction labelled super cycle wave (w) or (a) was only the first three in a larger correction?

This bear wave count fits better than the bull with the even larger picture, super cycle analysis found here. It is also well supported by regular technical analysis at the monthly chart level.

There are two ideas presented in this chart: a huge flat correction or a double flat / double combination. The huge flat is more likely. They more commonly have deep B waves than combinations have deep X waves (in my experience).

A huge flat correction would be labelled super cycle (a)-(b)-(c). It now expects a huge super cycle wave (c) to move substantially below the end of (a) at 666.79. C waves can behave like third waves. This idea expects a devastating bear market, and a huge crash to be much bigger than the last two bear markets on this chart.

The second idea is a combination which would be labelled super cycle (w)-(x)-(y). The second structure for super cycle wave (y) would be a huge sideways repeat of super cycle wave (a) for a double flat, or a quicker zigzag for a double combination. It is also possible (least likely) that price could drift sideways in big movements for over 10 years for a huge triangle for super cycle wave (y).

Importantly, there is no lower invalidation point for this wave count. That means there is no lower limit to this bear market.

WEEKLY CHART

S&P 500 weekly bear 2016
Click chart to enlarge.

Primary wave 1 may be complete and may have lasted 19 weeks, two short of a Fibonacci 21. So far primary wave 2 is in its 23rd week. It looks unlikely to continue for another 11 weeks to total a Fibonacci 34, so it may end in about two to five weeks time. This would still give reasonable proportion between primary waves 1 and 2. Corrections (particularly more time consuming flat corrections) do have a tendency to be longer lasting than impulses.

Primary wave 2 may be unfolding as an expanded or running flat. Within primary wave 2, intermediate wave (A) was a deep zigzag (which will also subdivide as a double zigzag). Intermediate wave (B) fits perfectly as a zigzag and is a 1.21 length of intermediate wave (A). This is within the normal range for a B wave of a flat of 1 to 1.38.

Intermediate wave (C) is likely to make at least a slight new high above the end of intermediate wave (A) at 2,116.48 to avoid a truncation and a very rare running flat. However, price may find very strong resistance at the final bear market trend line. This line may hold price down and it may not be able to avoid a truncation. A rare running flat may occur before a very strong third wave down.

Primary wave 2 may not move beyond the start of primary wave 1 above 2,134.72.

Only one bear wave count will be published today. The prior main bear wave count now has a big problem with proportions and no longer has the right look. It is discarded.

DAILY CHART

S&P 500 daily bear 2016
Click chart to enlarge.

Intermediate wave (A) fits nicely as a single or double zigzag.

Intermediate wave (B) fits perfectly as a zigzag. There is no Fibonacci ratio between minor waves A and C.

Intermediate wave (C) must subdivide as a five wave structure. It is not unfolding as an ending diagonal, so it must be unfolding as a more common impulse.

The short / mid term target for minor wave 3 is exactly the same as the short / mid term target for the bull wave count. A-B-C of a zigzag and 1-2-3 of an impulse both subdivide 5-3-5. The labelling within this upwards movement of each subdivision is the same for both wave counts.

Price is approaching the 0.618 Fibonacci ratio at 2,030. It may find some resistance there.

Minor wave 4 downwards may not move into minor wave 1 price territory below 1,930.68.

Intermediate wave (C) does not have to move above the end of intermediate wave (A) at 2,116.48, but it is likely to do so to avoid a truncation. If it is truncated and primary wave 2 is a rare running flat, then the truncation is not likely to be very large. As soon as price is very close to 2,116.48 this wave count looks at the possibility of a trend change.

The next wave down for this wave count would be a strong third wave at primary wave degree.

At 2,126 minor wave 5 would be about equal in length with minor wave 4. This target may be recalculated as minor wave 4 continues sideways, so the target may change. The target is given as an indication only, would see price find resistance at either the cyan or lilac lines, and would see intermediate wave (C) avoid a truncation.

HOURLY CHART

S&P 500 daily bear 2016
Click chart to enlarge.

Minor wave 4 is most likely to continue sideways to last longer and be better in proportion with minor wave 2.

Minor wave 2 lasted a Fibonacci five days and was a shallow 0.329 expanded flat. Given the guideline of alternation, minor wave 4 may be either a combination as labelled or a triangle.

It is likely to be more shallow than minor wave 2, so that it ends within the price territory of the fourth wave of one lesser degree. Minute wave iv has its range from 2,009.13 to 1,969.25. Both the 0.236 and 0.382 Fibonacci ratios of minor wave 3 lie within this range. The 0.146 Fibonacci ratio (not shown, MotiveWave does not have this option) is at 2,000 exactly, also within the range. This is the target for minor wave 4 to end.

Overall more sideways movement in a consolidation would be expected for a further two days most likely, with an upwards breakout when it is done. Confidence may be had in this short term outlook with a new low below 2,019.06. At that stage, the alternate below would be invalidated.

If price keeps rising tomorrow above 2,032.59, then minute wave x would be over twice the length of minute wave w. This would reduce the probability of this main hourly wave count in favour of the alternate below.

ALTERNATE HOURLY CHART

S&P 500 daily bear 2016
Click chart to enlarge.

If minor wave 4 is over already, there is inadequate alternation with minor wave 2. Both would be expanded flat corrections. Minor wave 2 would be deeper at 0.329 and minor wave 4 would be very shallow at 0.107.

Minor wave 2 would have lasted a Fibonacci five days and minor wave 4 would have lasted only one day. The proportions do not look right on the daily chart.

If price rises above 2,032.59 tomorrow, then this alternate may be correct. The main wave count would remain valid but would reduce in probability in favour of this alternate.

Minor wave 5 should then be expected to be fairly likely to be underway.

Within minor wave 5, minute wave iv may not move into minute wave 1 price territory below 2,019.06.

BULL ELLIOTT WAVE COUNT

MONTHLY CHART

S&P 500 monthly 2016
Click chart to enlarge.

This wave count is bullish at Super Cycle degree.

The two big bear markets of 2000 – 2002 and 2007 – 2009 may have been waves A and C within a large flat correction for a Super Cycle wave IV. The bull market since 2009 may be Super Cycle wave V.

Cycle waves I, II and III are complete within Super Cycle wave V. Cycle wave II was a relatively shallow 0.41 zigzag lasting 12 weeks. Cycle wave III is 55.97 points short of 1.618 the length of cycle wave I. This is a reasonable difference, but as it is less than 10% the length of cycle wave III (it is 5.2%) I consider this an acceptable Fibonacci ratio.

Draw a best fit channel about this bull market as shown. Cycle wave IV may have ended just short of support at the lower edge.

If it continues any further, cycle wave IV may not move into cycle wave I price territory below 1,370.58. If this bull wave count is invalidated by downwards movement, then the bear wave count shall be fully confirmed.

Cycle wave III shows an increase in upwards momentum beyond cycle wave I.

Cycle wave II was a shallow 0.41 zigzag lasting three months. Cycle wave IV may be a complete shallow 0.19 regular flat correction, exhibiting some alternation with cycle wave II.

At 2,500 cycle wave V would reach equality in length with cycle wave I.

WEEKLY CHART

S&P 500 weekly 2016
Click chart to enlarge.

Cycle wave II was a shallow 0.41 zigzag lasting three months. Cycle wave IV may be a complete shallow 0.19 regular flat correction, exhibiting some alternation with cycle wave II.

At 2,500 cycle wave V would reach equality in length with cycle wave I.

Price remains below the final bear market trend line. This line is drawn from the all time high at 2,134.72 to the swing high labelled primary wave B at 2,116.48 on November 2015. This line is drawn using the approach outlined by Magee in the classic “Technical Analysis of Stock Trends”. To use it correctly we should assume that a bear market remains intact until this line is breached by a close of 3% or more of market value. In practice, that price point would be a new all time high which would invalidate any bear wave count.

This wave count requires price confirmation with a new all time high above 2,134.72.

While price has not made a new high, while it remains below the final bear market trend line and while technical indicators point to weakness in upwards movement, this very bullish wave count comes with a strong caveat. I do not have confidence in it.

DAILY CHART

S&P 500 daily 2016
Click chart to enlarge.

Upwards movement cannot now be a fourth wave correction for intermediate wave (4) as price is now back up in intermediate wave (1) territory above 2,019.39. This has provided some clarity.

For the bullish wave count, it means that primary wave C must be over as a complete five wave impulse.

Intermediate wave (2) is seen as an atypical double zigzag. It is atypical in that it moves sideways. Double zigzags should have a clear slope against the prior trend to have the right look. Within a double zigzag, the second zigzag exists to deepen the correction when the first zigzag does not move price deep enough. Not only does this second zigzag not deepen the correction, it fails to move at all beyond the end of the first zigzag. This structure technically meets rules, but it looks completely wrong. This gives the wave count a low probability.

If the bull market has resumed, it must begin with a five wave structure upwards at the daily and weekly chart level. So far that is incomplete.

At 2,088 minor wave 3 would reach 1.618 the length of minor wave 1. Within minor wave 3, at 2,086 minute wave v would reach 1.618 the length of minute wave iii. This gives a two point target zone calculated at two wave degrees which should have a reasonable probability.

Minor wave 4 may not move into minor wave 1 price territory below 1,930.68.

TECHNICAL ANALYSIS

MONTHLY CHART

S&P 500 monthly 2016
Click chart to enlarge. Chart courtesy of StockCharts.com.

The long trend line on price is drawn from the low of March 2009, at 666.79 to the low in October 2011. This trend line was repeatedly tested, breached, and then provided resistance in August 2015. Price has closed well over 3% of market value below it. Trend lines like this one which are reasonably shallow, long held and repeatedly tested are highly technically significant. The breach tells us the market has switched from bull to bear. This supports the bear wave count over the bull.

Volume has overall declined during the bull market spanning over 6 years. The rise in price was not supported by volume at the monthly chart level. This also supports the bear wave count over the bull.

RSI shows double negative divergence with price as the final highs were made. Finally, a failure swing on RSI completes a pattern which was last seen in September 2000. This pattern indicates a bear market may begin from here and supports the bear wave count over the bull.

On Balance Volume also shows divergence with price (pink line) as the final highs were made. On Balance Volume has breached a very long held trend line (brown). This is further support for the bear wave count over the bull.

Since the all time high in May 2015, downwards movement is coming with an increase in volume at the monthly chart level. This further supports the bear wave count over the bull.

Not only is there nothing bullish about this picture at the monthly chart level, it is very bearish indeed. It indicates that recent downwards movement is more likely to be the start of a large bear market than it is to be another correction within a continuing bull market.

DAILY CHART

S&P 500 daily 2016
Click chart to enlarge. Chart courtesy of StockCharts.com.

Volume data on StockCharts is different to that given from NYSE, the home of this index. Comments on volume will be based on NYSE volume data when it differs from StockCharts.

A close above resistance about 2,025 on a day with increased volume indicates a possible upwards breakout may be underway. If price keeps moving higher tomorrow and shows a further increase in volume, then the current short term upwards trend may be expected to be continuing.

Price has closed above the 200 day Moving Average. This has happened before and yet all gains were fully retraced thereafter. This close does not mean the bull market is back; this is still more likely a bear market rally.

The 200 day MA is still pointing down.

ADX is increasing indicating the market is trending. The trend is up.

ATR still disagrees indicating that there is something wrong with this possible trend. If it is a bear market rally, this makes more sense.

On Balance Volume found support at the pink trend line, so the strength of that line is reinforced. This line may assist to hold price up from moving too much lower for any continuation of a consolidation.

Neither RSI nor Stochastics are yet overbought. There is room yet for price to rise further.

DOW THEORY

I am choosing to use the S&P500, Dow Industrials, Dow Transportation, Nasdaq and the Russell 2000 index. Major swing lows are noted below. So far the Industrials, Transportation and Russell 2000 have made new major swing lows. None of these indices have made new highs.

I am aware that this approach is extremely conservative. Original Dow Theory has already confirmed a major trend change as both the industrials and transportation indexes have made new major lows.

At this stage, if the S&P500 and Nasdaq also make new major swing lows, then my modified Dow Theory would confirm a major new bear market. At that stage, my only wave count would be the bear wave count.

The lows below are from October 2014. These lows were the last secondary correction within the primary trend which was the bull market from 2009.

These lows must be breached by a daily close below each point.

S&P500

S&P 500 daily 2016
Click chart to enlarge.

The S&P has not yet closed below 1,821.61. Price remains below the bear market trend line. Price has not made a major swing high. The 200 day moving average remains pointing down.

NASDAQ

Nasdaq daily 2016
Click chart to enlarge.

Nasdaq has not yet closed below 4,117.84. Price remains below the 200 day moving average which remains pointing down. Price is below the bear market trend line. Price has not made a major new swing high.

DOW INDUSTRIAL AVERAGE

DJIA daily 2016
Click chart to enlarge.

Dow Industrials closed below the last major swing low of the last bull market at 15,855.12 on 20th January. That daily close was 15,766.74. Price is now above the 200 day moving average. The average remains pointing down. Price is below the bear market trend line. Price has not made a major new swing high.

DOW TRANSPORTATION

DJT daily 2016
Click chart to enlarge.

The transportation index has confirmed a new bear market with the industrials. Price closed below the major swing low within the last bear market which was made in October 2014, at 7,700.49. The close was on 24th August, 2015, at 7,595.08. Price is below the 200 day Moving Average. The average is still pointing down. Price is below the bear market trend line. Price has not made a major new swing high.

RUSSELL 2000

Russell 2000 daily 2016
Click chart to enlarge.

The Russell 2000 closed below the last major swing low of the last bull market which was on Ocober 2014, at 1,343.51 with the close of 1,330.81 on 25th August, 2015. Price is below the 200 day Moving Average. The Average is still pointing down. Price is below the bear market trend line. Price has not made a major new swing high.

This analysis is published @ 10:33 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 – 16th March, 2016

S&P 500 Elliott Wave Technical Analysis – 20th January, 2016

Price moved lower as the preferred hourly Elliott wave count expected.

Continue reading S&P 500 Elliott Wave Technical Analysis – 20th January, 2016

S&P 500 Elliott Wave Technical Analysis – 19th January, 2016

Sideways movement fits both Elliott wave hourly wave counts and does not provide clarity.

The upper price point to differentiate the two ideas may be moved lower.

Continue reading S&P 500 Elliott Wave Technical Analysis – 19th January, 2016