Category Archives: US Oil

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

US OIL ANALYSIS

Last analysis expected Oil had made a high. A breach of the channel on the daily chart added confidence to this view. Thereafter, Oil has continued to fall as expected.

Summary: The target is at 13.39. In the short term, look out for a bounce that should not make a new high above 66.65 if the main wave count is correct.

An upcoming bounce may be an opportunity to join a long term downwards trend at a good price.

Always practice good risk management as the most important aspect of trading. Always trade with stops and invest only 1-5% of equity on any one trade. Failure to manage risk is the most common mistake new traders make.

MAIN WAVE COUNT

MONTHLY CHART

US Oil Elliott Wave Chart Monthly 2018
Click chart to enlarge.

Within the bear market, cycle wave b is seen as ending in May 2011. Thereafter, a five wave structure downwards for cycle wave c begins.

Primary wave 1 is a short impulse lasting five months. Primary wave 2 is a very deep 0.94 zigzag lasting 22 months. Primary wave 3 is a complete impulse with no Fibonacci ratio to primary wave 1. It lasted 30 months.

There is alternation in depth with primary wave 2 very deep and primary wave 4 relatively shallow. There is inadequate alternation in structure, both are zigzags. So far primary wave 4 has lasted 23 months. At this stage, there is almost perfect proportion between primary waves 2 and 4.

Primary wave 4 may not move into primary wave 1 price territory above 74.96.

The wider Elliott channel (teal) about this whole movement may offer support to primary wave 5.

Price closed above the teal resistance line, the upper edge of this very wide channel. This wave count expected it would be fairly likely that primary wave 4 should have found resistance there. Because this line is now breached on the daily chart a new alternate is considered below.

WEEKLY CHART

US Oil Elliott Wave Chart Weekly 2018
Click chart to enlarge.

Primary wave 4 subdivides as a zigzag, and within it intermediate wave (C) may now be complete. If primary wave 5 were to only reach equality in length with primary wave 3, it would end with a small truncation. A target for primary wave 5 may best be calculated at intermediate degree. That can only be done when intermediate waves (1) through to (4) within primary wave 5 are complete.

For now a target will be calculated at primary degree using a ratio between primary waves 3 and 5. This target only has a small probability. This target will be recalculated as primary wave 5 nears its end, so it may change.

An Elliott channel is added to this possible zigzag for primary wave 4. A breach of the lower edge of this channel would provide a very strong indication that primary wave 4 should be over and primary wave 5 should be underway. Look out for some support on the way down, perhaps a short term bounce about the lower edge of the channel.

DAILY CHART

US Oil Elliott Wave Chart Daily 2018
Click chart to enlarge.

Intermediate wave (C) may now be complete at all degrees. A breach of the yellow best fit channel on Thursday adds confidence to this view.

A five down labelled minor wave 1 may be incomplete within the new downwards trend. When minor wave 1 is complete, then minor wave 2 may not move beyond the start of minor wave 1 above 66.65.

So far, within minor wave 1, minute waves i through to iii may be complete. If this labelling of short term movement is correct, then an upcoming bounce for minute wave iv may not move into minute wave i price territory above 63.67.

Look for any bounce to find resistance about the lower edge now that the yellow channel has been breached.

ALTERNATE WAVE COUNT

MONTHLY CHART

US Oil Elliott Wave Chart Monthly 2018
Click chart to enlarge.

It is possible that the bear market for Oil is over and a new bull market is in the very early stages.

A huge zigzag down to the last low may be complete and is labelled here Super Cycle wave (II).

Cycle wave b must be seen as complete in August 2013 for this wave count to work. It cannot be seen as complete at the prior major swing high in May 2011.

Cycle wave b is seen as a zigzag, and within it primary wave B is seen as a running contracting triangle. These are fairly common structures, although nine wave triangles are uncommon. All subdivisions fit.

Primary wave C moves beyond the end of primary wave A, so it avoids a truncation. But it does not have to move above the price territory of primary wave B to avoid a truncation, which is an important distinction.

If cycle wave b begins there, then cycle wave c may be seen as a complete five wave impulse.

Super Cycle wave (III) must move beyond the end of Super Cycle wave (I). It must move far enough above that point to allow room for a subsequent Super Cycle wave (IV) to unfold and remain above Super Cycle wave (I) price territory.

WEEKLY CHART

US Oil Elliott Wave Chart Weekly 2018
Click chart to enlarge.

If a new bull market is in the very early stages for Oil, then it may have begun with two overlapping first and second waves at primary then at intermediate degree.

Primary wave 3 may only subdivide as an impulse, and within it intermediate wave (3) may be complete.

Intermediate wave (4) may not move into intermediate wave (1) price territory below 55.24.

TECHNICAL ANALYSIS

MONTHLY CHART

US Oil Chart Monthly 2018
Click chart to enlarge. Chart courtesy of StockCharts.com.

The strongest recent monthly volume is for the downwards month of August 2017. This is bearish.

For the now completed month of January the rise in price had support from volume. This is bullish. MACD and On Balance Volume are also both bullish. Overall, this chart is more bullish than bearish.

RSI indicates there is room for upwards movement to continue.

The month of February is incomplete and so no conclusions may yet be drawn about it.

DAILY CHART

US Oil Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.
Give the bearish signal from On Balance Volume reasonable weight. It supports the main Elliott wave count.

In the short term, long lower wicks on the last two daily candlesticks signal a possible bounce here or very soon. This view is reinforced with Stochastics oversold and exhibiting single bullish divergence.

VOLATILITY INDEX

OVX Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

A sharp increase in volatility and quick reversal creates a very long upper wick. This is bearish for volatility, which may be bullish for Oil price at least for the short term. This supports the view that Oil price may see a bounce early next week.

GOLD ANALYSIS

Last analysis expected support to hold, and it has.

Summary: Price is at support. For the short term, a new high above 1,327.81 and then above the yellow best fit channel would indicate an end to the downwards swing and the start of a new upwards swing.

The target is at 1,286 if the downwards swing continues.

The mid term picture still expects that Gold is within a B wave correction which may continue for several weeks.

Only a new low below 1,236.54 would signal a strong bear market for Gold.

Grand SuperCycle analysis is here.

Last in-depth historic analysis with monthly and several weekly charts is here, video is here.

There are multiple wave counts at this time at the weekly and monthly chart levels. In order to make this analysis manageable and accessible only two will be published on a daily basis, one bullish and one bearish. This does not mean the other possibilities may not be correct, only that publication of them all each day is too much to digest. At this stage, they do not diverge from the two possibilities below.

BULLISH ELLIOTT WAVE COUNT

FIRST WEEKLY CHART

Gold Elliott Wave Chart Weekly 2018
Click chart to enlarge.

Cycle wave b may be a single zigzag. Zigzags subdivide 5-3-5. Primary wave C must subdivide as a five wave structure and may be either an impulse or an ending diagonal. Overlapping at this stage indicates an ending diagonal.

Within an ending diagonal, all sub-waves must subdivide as zigzags. Intermediate wave (4) must overlap into intermediate wave (1) price territory. This diagonal is expanding: intermediate wave (3) is longer than intermediate wave (1) and intermediate wave (4) is longer than intermediate wave (2). Intermediate wave (5) must be longer than intermediate wave (3), so it must end above 1,398.41 where it would reach equality in length with intermediate wave (3).

Within the final zigzag of intermediate wave (5), minor wave B may not move beyond the start of minor wave A below 1,236.54.

Within intermediate wave (1), the correction labelled minor wave B was over within one week. Within intermediate wave (2), the correction labelled minor wave B was too quick to be seen on the weekly chart. Within intermediate wave (3), the correction labelled minor wave B was over in 12 weeks, one short of a Fibonacci 13. Within intermediate wave (4), the correction labelled minor wave B was over in a Fibonacci 8 weeks. As each actionary wave is extending in time as well as price, the correction of minor wave B within intermediate wave (5) may be longer than that within intermediate wave (3). At this early stage, a Fibonacci 13 or possibly even 21 weeks may be expected. This expectation is a rough guideline; flexibility is essential when B waves unfold.

This first weekly chart sees the upwards wave labelled primary wave A as a five wave structure. It must be acknowledged that this upwards wave looks better as a three than it does as a five. The fifth weekly chart below will consider the possibility that it was a three.

FIRST DAILY CHART

Gold Elliott Wave Chart Daily 2018
Click chart to enlarge.

Within the ending diagonal, intermediate wave (5) must sub-divide as a zigzag.

Minor wave B may be a reasonably time consuming consolidation or a quicker sharper pullback within the upwards trend, and it may end about either of the 0.382 or 0.618 Fibonacci ratios (neither may be favoured).

There are more than 23 possible structures that minor wave B may take, and it is impossible until close to or at the end to have confidence which structure has unfolded. When B waves unfold, it is essential that analysis is flexible. B waves are analogous to either range bound consolidations or sharp corrections. As minor wave B unfolds, the labelling on the hourly chart for its sub-waves will change and alternates will be required from time to time.

The yellow arrow outlines the possible pathway for a flat or combination. These corrections are analogous to sideways range bound consolidations. Within both a flat and consolidation, minute wave b or x may make a new high above the start of minute wave a or w at 1,365.68.

Minor wave B may still be a triangle or zigzag. All possibilities must still be considered.

Minor wave B may not move beyond the start of minor wave A below 1,236.54.

BEARISH ELLIOTT WAVE COUNT

FIFTH WEEKLY CHART

Gold Elliott Wave Chart Weekly 2018
Click chart to enlarge.

There were five weekly charts published in the last historic analysis. This fifth weekly chart is the most immediately bearish wave count, so this is published as a bearish possibility.

This fifth weekly chart sees cycle wave b as a flat correction, and within it intermediate wave (B) may be a complete triple zigzag. This would indicate a regular flat as intermediate wave (B) is less than 1.05 the length of intermediate wave (A).

If cycle wave b is a flat correction, then within it primary wave B must retrace a minimum 0.9 length of primary wave A at 1,079.13 or below. The most common length of B waves within flats is from 1 to 1.38 times the length of the A wave. The target calculated would see primary wave B end within this range.

I have only seen two triple zigzags before during my 10 years of daily Elliott wave analysis. If this wave count turns out to be correct, this would be the third. The rarity of this structure is identified on the chart.

TECHNICAL ANALYSIS

WEEKLY CHART

Gold Weekly 2018
Click chart to enlarge. Chart courtesy of StockCharts.com.

Support for price about 1,310 – 1,305 and support for On Balance Volume may halt the fall in price here.

However, RSI and Stochastics indicate there is plenty of room for price to fall further. If support about 1,310 – 1,305 gives way, then next support is about 1,225.

A breakout above 1,375 on a day with strong volume would have to occur for the bullish case to have strong confidence.

DAILY CHART

Gold Daily 2018
Click chart to enlarge. Chart courtesy of StockCharts.com.

Price is at support and On Balance Volume is close to support. With Stochastics oversold and price at support, it is reasonable still to expect an end to the downwards swing about here.

S&P500 ANALYSIS

More downwards movement for Friday was expected.

Summary: A low may now be in place. Some confidence may be had in this view if price breaks above the yellow channel on the hourly chart. A target would then be at 3,020.

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

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

Last historic analysis with monthly charts is here. Video is here.

An historic example of a cycle degree fifth wave is given at the end of the analysis here.

MAIN ELLIOTT WAVE COUNT

MONTHLY CHART

S&P 500 Monthly 2018
Click chart to enlarge.

The large expanded flat labelled Super Cycle wave (IV) completed a 8.5 year correction. Thereafter, the bull market continues for Super Cycle wave (V). The structure of Super Cycle wave (V) is incomplete. At this stage, it is subdividing as an impulse.

There is no Fibonacci ratio between cycle waves I and III within Super Cycle wave (V). This makes it more likely that cycle wave V will exhibit a Fibonacci ratio to either of cycle waves I or III. Cycle wave V has passed equality in length with cycle wave I. The next two Fibonacci ratios in the sequence are used for two possible targets for it to end.

The teal channel is drawn using Elliott’s first technique about an impulse. Draw the first trend line from the ends of cycle waves I to III (from the months of July 2011 to December 2014), then place a parallel copy on the low of cycle wave II. Cycle wave IV has found support very close to the lower edge of this channel, so the channel looks about right. The lower edge should continue to provide support, and the upper edge may provide resistance if price gets up that high.

Copy this large channel over to weekly and daily charts, all on a semi log scale. The lower edge will be important.

Cycle wave II was a shallow 0.41 zigzag lasting three months. Cycle wave IV is now seen as a more shallow 0.28 double combination lasting 14 months. With cycle wave IV nearly five times the duration of cycle wave II, it should be over there.

Cycle wave I lasted 28 months (not a Fibonacci number), cycle wave II lasted a Fibonacci 3 months, cycle wave III lasted 38 months (not a Fibonacci number), and cycle wave IV lasted 14 months (one more than a Fibonacci 13).

Cycle wave V has begun its 24th month. The structure needs several more months to complete. It may last another 10 months to total a Fibonacci 34, which now looks reasonable.

It is also possible that cycle wave V may not exhibit a Fibonacci duration.

Within cycle wave V, the correction for intermediate wave (4) may not move back down into intermediate wave (1) price territory below 2,193.81.

WEEKLY CHART

S&P 500 Weekly 2018
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.

Due to its size intermediate wave (4) looks proportional to intermediate wave (2), even though their durations so far are quite different.

Intermediate wave (4) has breached the Elliott channel drawn using Elliott’s first technique. The channel may be redrawn when it is confirmed as complete using Elliott’s second technique. A best fit channel is used while it may still be incomplete to show where it may find support. Price points are given for this channel, so that members may replicate it on a semi-log scale.

Intermediate wave (4) may not move into intermediate wave (1) price territory below 2,193.81.

DAILY CHART

S&P 500 Daily 2018
Click chart to enlarge.

The S&P has behaved like a commodity to end intermediate wave (3): a relatively strong fifth wave with a steep slope. The high looks a little like a blow off top. This is being followed by a sharp decline, which is typical behaviour for a commodity and not common for the S&P.

There are adequate Fibonacci ratios within this wave count. It is common for the S&P to exhibit a Fibonacci ratio between two of the three actionary waves within an impulse, and uncommon for it to exhibit Fibonacci ratios between all three actionary waves. This means that the lack of Fibonacci ratios for intermediate wave (3), minor wave 3, and minute wave v is not a concern. This is normal.

Friday’s low is only a little above the lower edge of the best fit channel. The very long lower wick on Friday’s candlestick is bullish. It looks like intermediate wave (4) may now have found its low.

ALTERNATE WAVE COUNT

WEEKLY CHART

S&P 500 Weekly 2018
Click chart to enlarge.

This alternate wave count is published with the caveat that at this stage it must be judged to have an extremely low probability for the following reasons:

1. There is no divergence between price and the AD line at the all time high. All bear markets within the last (almost) 100 years began after a minimum of 4 months divergence with the AD line. If this wave count is correct, then this is the first time in almost 100 years when divergence did not occur.

2. There is no divergence between price and RSI on the monthly chart at the last all time high. This is again highly unusual prior to a bear market.

3. The bear market may have begun suddenly without a normal prior increase in market volatility. Normally, corrections unfold prior to the end of a bull market that increase by degree prior to the bull market ending.

However, low probability (even as low as I judge this to be) does not mean no probability. I would rather members are aware of this risk and manage this risk accordingly.

This wave count absolutely requires a clear breach of the teal channel on the weekly chart before any confidence at all may be had in it. A breach would be a full weekly candlestick (not just daily) below and not touching the lower teal trend line. This channel is copied over from the monthly chart.

Thereafter, a new low by any amount at any time frame below 2,111.05 would add substantial confidence to this wave count. At that stage, downwards movement could not be a fourth wave correction within an ongoing impulse as it would be back in first wave price territory of primary wave 1.

If this wave count is correct, then a once in multi-generations trend change may have occurred. Grand Super Cycle wave II would be expected to last at least 20 years, and possibly a generation. It would be very likely to end substantially below the end of Super Cycle wave (IV) at 666.79.

I judge the probability of this alternate wave count to have such a low probability that I was hesitant in publishing it. But I am also aware that just because this kind of end to a bull market has not been seen in almost 100 years does not mean it cannot happen.

TECHNICAL ANALYSIS

WEEKLY CHART

S&P 500 weekly 2018
Click chart to enlarge. Chart courtesy of StockCharts.com.

This pullback has now brought RSI well back down into neutral territory. ADX is declining from very extreme. A possible trend change to down is indicated, but as yet no new downwards trend at this time frame.

In the first instance, support should be expected for On Balance Volume at the yellow trend line. A breach below this line by On Balance Volume would be a very strong bearish signal. A bounce up off the line would be a strong bullish signal.

DAILY CHART

S&P 500 daily 2018
Click chart to enlarge. Chart courtesy of StockCharts.com.

Friday’s daily candlestick is not properly a hammer reversal pattern because it has too long an upper wick. However, the lower wick is very long and this is very bullish. Particularly as the low was very close to the 200 day SMA.

This pullback has brought RSI down from very overbought to just oversold. RSI can move back into oversold and remain there for a few days, or it can move back now further into neutral territory.

Overall, it looks like a low may now be in pace.

VOLATILITY – INVERTED VIX CHART

VIX daily 2018
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.

Price moved lower with a lower low and lower high for Friday, but inverted VIX moved higher. This single day divergence is bullish.

BREADTH – AD LINE

AD Line daily 2018
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.

All of small, mid and large caps this week moved lower. The decline has support from wide breadth.

Breadth should be read as a leading indicator.

Price moved lower with a lower low and lower high for Friday, but the AD line moved higher. This single day divergence is bullish.

DOW THEORY

All indices have made new all time highs as recently as three weeks ago, 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 @ 11:22 p.m. EST on 10th February, 2018.

Weekly Elliott Wave and Technical Analysis of S&P500 and US Oil – 2nd February, 2018

GOLD ANALYSIS

Summary: A consolidation looks likely to have begun, and it may be as time consuming as a Fibonacci 13 or even 21 weeks. It is also possible it may be a quicker sharper pullback. When it is complete, the upwards trend may resume.

A new low below 1,236.54 would indicate Gold remains within a huge bear market. At that stage, new lows would be expected below 1,046.27.

Grand SuperCycle analysis is here.

Last in-depth historic analysis with monthly and several weekly charts is here, video is here.

There are multiple wave counts at this time at the weekly and monthly chart levels. In order to make this analysis manageable and accessible only two will be published on a daily basis, one bullish and one bearish. This does not mean the other possibilities may not be correct, only that publication of them all each day is too much to digest. At this stage, they do not diverge from the two possibilities below.

BULLISH ELLIOTT WAVE COUNT

FIRST WEEKLY CHART

Gold Elliott Wave Chart Weekly 2018
Click chart to enlarge.

Cycle wave b may be a single zigzag. Zigzags subdivide 5-3-5. Primary wave C must subdivide as a five structure and may be either an impulse or an ending diagonal. Overlapping at this stage indicates an ending diagonal.

Within an ending diagonal, all sub-waves must subdivide as zigzags. Intermediate wave (4) must overlap into intermediate wave (1) price territory. This diagonal is expanding: intermediate wave (3) is longer than intermediate wave (1) and intermediate wave (4) is longer than intermediate wave (2). Intermediate wave (5) must be longer than intermediate wave (3), so it must end above 1,398.41 where it would reach equality in length with intermediate wave (3).

Within the final zigzag of intermediate wave (5), minor wave B may not move beyond the start of minor wave A below 1,236.54.

Within intermediate wave (1), the correction labelled minor wave B was over within one week. Within intermediate wave (2), the correction labelled minor wave B was too quick to be seen on the weekly chart. Within intermediate wave (3), the correction labelled minor wave B was over in 12 weeks, one short of a Fibonacci 13. Within intermediate wave (4), the correction labelled minor wave B was over in a Fibonacci 8 weeks. As each actionary wave is extending in time as well as price, the correction of minor wave B within intermediate wave (5) may be longer than that within intermediate wave (3). At this early stage, a Fibonacci 13 or possibly even 21 weeks may be expected. This expectation is a rough guideline; flexibility is essential when B waves unfold.

This first weekly chart sees the upwards wave labelled primary wave A as a five wave structure. It must be acknowledged that this upwards wave looks better as a three than it does as a five. The fifth weekly chart below will consider the possibility that it was a three.

FIRST DAILY CHART

Gold Elliott Wave Chart Daily 2018
Click chart to enlarge.

Within the ending diagonal, intermediate wave (5) must sub-divide as a zigzag.

Downwards movement has clearly broken below the yellow best fit channel. This indicates that the upwards wave labelled minor wave A should now be over and the next wave labelled minor wave B may now have begun. Price turned upwards after the breakout to find resistance at the lower edge of the channel, and is now this week moving down and away. This looks like typical behaviour after a breakout.

Minor wave B may be a reasonably time consuming consolidation or a quicker sharper pullback within the upwards trend, and it may end about either of the 0.382 or 0.618 Fibonacci ratios (neither may be favoured).

There are more than 23 possible structures that minor wave B may take, and it is impossible until close to or at the end to have confidence which possibility has unfolded. When B waves unfold, it is essential that analysis is flexible. B waves are analogous to either range bound consolidations or sharp corrections. As minor wave B unfolds, the labelling on the hourly chart for its sub-waves will change and alternates will be required from time to time.

The yellow arrow today outlines one possibility for minor wave B, an expanded flat correction. Members are strongly advised that this outline is only one possibility of many. Expanded flats are very common structures. If minor wave B unfolds as an expanded flat, then minute wave b would make a new high above the start of minute wave a at 1,365.68. Minute wave c downwards may then take price down to about the 0.382 Fibonacci ratio of minor wave A at 1,315.

Minor wave B may also be a triangle, an overlapping sideways movement in an ever decreasing range. At this stage, it may also be a zigzag, a relatively quick and sharp pullback that may end closer to the 0.618 Fibonacci ratio then the 0.382 Fibonacci ratio.

Minor wave B may not move beyond the start of minor wave A below 1,236.54.

BEARISH ELLIOTT WAVE COUNT

FIFTH WEEKLY CHART

Gold Elliott Wave Chart Weekly 2018
Click chart to enlarge.

There were five weekly charts published in the last historic analysis. This fifth weekly chart is the most immediately bearish wave count, so this is published as a bearish possibility.

This fifth weekly chart sees cycle wave b as a flat correction, and within it intermediate wave (B) may be a complete triple zigzag. This would indicate a regular flat as intermediate wave (B) is less than 1.05 the length of intermediate wave (A).

If cycle wave b is a flat correction, then within it primary wave B must retrace a minimum 0.9 length of primary wave A at 1,079.13 or below. The most common length of B waves within flats is from 1 to 1.38 times the length of the A wave. The target calculated would see primary wave B end within this range.

I have only seen two triple zigzags before during my 10 years of daily Elliott wave analysis. If this wave count turns out to be correct, this would be the third. The rarity of this structure is identified on the chart.

TECHNICAL ANALYSIS

WEEKLY CHART

Gold Weekly 2018
Click chart to enlarge. Chart courtesy of StockCharts.com.

Again, price could not remain above resistance at 1,345 and has closed back below this point. Price remains range bound at this time frame with resistance about 1,378 and support about 1,225. During this consolidation, it is now an upwards week that has strongest volume suggesting an upwards breakout may be more likely than downwards.

Last week’s upwards movement had strong support from volume. This week’s downwards movement does not. The short term volume profile remains bullish.

However, with price at resistance and Stochastics overbought, it would be reasonable to expect an end to the upwards swing here and a downwards swing to support.

DAILY CHART

Gold Daily 2018
Click chart to enlarge. Chart courtesy of StockCharts.com.

It still looks like price so far may be in a consolidation within an upwards trend. The volume profile for this smaller consolidation suggests a downwards breakout.

Look for next support about 1,310 – 1,305.


S&P500 ANALYSIS

Summary: Expect more downwards movement to begin next week. The target is at 2,749.

In the short term, a new high above 2,813.04 would indicate the correction may be over and the upwards trend may have resumed. A new all time high would add significant confidence to that view.

The larger trend remains upwards and corrections still offer an opportunity to join the trend.

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

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

Last historic analysis with monthly charts is here. Video is here.

An historic example of a cycle degree fifth wave is given at the end of the analysis here.

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART

S&P 500 Weekly 2018
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. This target at 2,926 now looks too low. The next most common Fibonacci ratio would be 2.618 the length of cycle wave I at 3,616. This higher target is looking more likely at this stage.

Intermediate wave (3) has passed all of equality in length with intermediate wave (1), and 1.618 and 2.618 the length of intermediate wave (1). It is possible that intermediate wave (3) 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. Minor wave 4 should last about four weeks to be in proportion to minor wave 2. It may last about a Fibonacci three, five or even eight weeks if it is a time consuming sideways correction like a triangle or combination. An Elliott channel may be drawn about the impulse of intermediate wave (3) when minor wave 3 is complete, and minor wave 4 may end about the lower edge of that channel.

At this stage, a widened acceleration channel is drawn now in blue about the impulse of intermediate wave (3). This is drawn in the same way as an Elliott channel using Elliott’s first technique, and then the lower edge is pulled down to contain all this recent upwards movement.

As intermediate wave (3) comes to an end, corrections on the weekly chart should begin to be longer lasting. The first of two or three may have begun this week. It still looks like intermediate wave (3) is incomplete, so this correction may last only about one to maybe about four weeks. It is not expected to be much longer lasting than that.

DAILY CHART

S&P 500 Daily 2018
Click chart to enlarge.

Keep redrawing the acceleration channel as price continues higher: draw the first line from the end of minute wave i to the last high, then place a parallel copy lower down to contain all this upwards movement. When minute wave iii is complete, this would be an adjusted Elliott channel and the lower edge may provide support for minute wave iv.

Minuette wave (ii) subdivides as a combination and lasted only eight sessions, about only one and a half weeks. Minuette wave (iv) may be a zigzag, which tend to be quicker structures than combinations. It is possible that it could be over at Friday’s low, lasting a Fibonacci five days, but it may also continue for another three to total a Fibonacci eight days.

Minuette wave (i) was a long extension. Minuette wave (iii) may have ended at the last high and if so would be shorter than minuette wave (i). This limits minuette wave (v) to no longer than equality in length with minuette wave (iii) so that minuette wave (iii) is not the shortest actionary wave.

Minuette wave (iv) may not move into minuette wave (i) price territory below 2,694.97.

Minute wave iii has passed equality in length with minute wave i, and has passed 1.618 and 2.618 the length of minute wave i. A target for minute wave iii to end must now be calculated at minuette degree. That cannot be done until minuette wave (iv) has ended.

ALTERNATE DAILY CHART

S&P 500 Daily 2018
Click chart to enlarge.

It is possible that minute wave iii was over at the last high. The current correction may be one degree higher for minute wave iv.

Fibonacci ratios for this wave count are fairly good.

The pink best fit channel is the same as the pink acceleration channel on the main wave count.

If the correction is minute wave iv, then it may not move into minute wave i price territory below 2,490.87. But price should first be expected to find support about the lower edge of the best fit channel. If it does break below that channel, then the 0.382 Fibonacci ratio of minute wave iii at 2,690 would be a reasonable target for minute wave iv.

TECHNICAL ANALYSIS

WEEKLY CHART

S&P 500 weekly 2018
Click chart to enlarge. Chart courtesy of StockCharts.com.

This strong bearish weekly candlestick is not technically a bearish engulfing reversal pattern because the open this week gapped lower. However, the close this week well below last week’s open is very bearish. Support from volume is also very bearish.

DAILY CHART

S&P 500 daily 2018
Click chart to enlarge. Chart courtesy of StockCharts.com.

Next support may be at the mid term Fibonacci 55 day moving average.

Volume is bearish. Friday’s candlestick is bearish. On Balance Volume gives a weak bearish signal; weak because the support line was tested only twice before.

If downwards movement continues from here, then it would very likely end if RSI reaches oversold.

VOLATILITY – INVERTED VIX CHART

VIX daily 2018
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.

Volatility still remains much stronger than downwards movement in price suggests. This may be still read as bearish.

There is mid term divergence between price and inverted VIX. This has not been as reliable as short term divergence, but it will still be noted.

BREADTH – AD LINE

AD Line daily 2018
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.

All of small, mid and large caps last week made new all time highs. This market has good support from rising breadth.

Breadth should be read as a leading indicator.

The AD line has made a new low below the prior low of the 29th of December, 2017, but price has not. This divergence is interpreted as bearish.

All of small, mid and large caps this week made reasonable new lows. The fall in price has support from market breadth. This is bearish.

DOW THEORY

All indices have made new all time highs as recently as three weeks ago, 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.


US OIL ANALYSIS

Summary: Assume the upwards trend remains intact while price remains within the yellow channel on the daily chart. Only if that channel is breached by downwards movement should a high be assumed to be in place.

A new high now above 74.96 would provide a strong indication that Oil may be in a long term bull market. The target would be at 80.64, but a large correction for a big fourth wave would be expected prior to the target being reached.

MAIN WAVE COUNT

MONTHLY CHART

US Oil Elliott Wave Chart Monthly 2018
Click chart to enlarge.

Within the bear market, cycle wave b is seen as ending in May 2011. Thereafter, a five wave structure downwards for cycle wave c begins.

Primary wave 1 is a short impulse lasting five months. Primary wave 2 is a very deep 0.94 zigzag lasting 22 months. Primary wave 3 is a complete impulse with no Fibonacci ratio to primary wave 1. It lasted 30 months.

There is alternation in depth with primary wave 2 very deep and primary wave 4 relatively shallow. There is inadequate alternation in structure, both are zigzags. So far primary wave 4 has lasted 23 months. At this stage, there is almost perfect proportion between primary waves 2 and 4.

Primary wave 4 may not move into primary wave 1 price territory above 74.96.

The wider Elliott channel (teal) about this whole movement may offer support to primary wave 5.

Price last week has closed above the teal resistance line, the upper edge of this very wide channel. This wave count expected it would be fairly likely that primary wave 4 should have found resistance there. Because this line is now breached on the daily chart a new alternate is considered below.

WEEKLY CHART

US Oil Elliott Wave Chart Weekly 2018
Click chart to enlarge.

Primary wave 4 subdivides as a zigzag, and within it intermediate wave (C) may now be complete. If primary wave 5 were to only reach equality in length with primary wave 3, it would end with a small truncation. A target for primary wave 5 may best be calculated at intermediate degree. That can only be done when intermediate waves (1) through to (4) within primary wave 5 are complete.

An Elliott channel is added to this possible zigzag for primary wave 4. A breach of the lower edge of this channel would provide a very strong indication that primary wave 4 should be over and primary wave 5 should be underway.

DAILY CHART

US Oil Elliott Wave Chart Daily 2018
Click chart to enlarge.

Intermediate wave (C) may now be complete at all degrees. However, the yellow best fit channel must absolutely be breached by downwards movement before any confidence that a high is in place may be had.

Assume the trend remains the same, upwards, while price remains within the channel. This wave count is at the point now where it requires channel confirmation.

If primary wave 4 continues any higher, it may not move into primary wave 1 price territory above 74.96.

Although the small downwards movement from the high of primary wave 4 this week looks like a three on the daily chart, it will subdivide as either a three or a five on the hourly chart. This wave count remains viable.

ALTERNATE WAVE COUNT

MONTHLY CHART

US Oil Elliott Wave Chart Monthly 2018
Click chart to enlarge.

It is possible that the bear market for Oil is over and a new bull market is in the very early stages.

A huge zigzag down to the last low may be complete and is labelled here Super Cycle wave (II).

Cycle wave b must be seen as complete in August 2013 for this wave count to work. It cannot be seen as complete at the prior major swing high in May 2011.

Cycle wave b is seen as a zigzag, and within it primary wave B is seen as a running contracting triangle. These are fairly common structures, although nine wave triangles are uncommon. All subdivisions fit.

Primary wave C moves beyond the end of primary wave A, so it avoids a truncation. But it does not have to move above the price territory of primary wave B to avoid a truncation, which is an important distinction.

If cycle wave b begins there, then cycle wave c may be seen as a complete five wave impulse.

Super Cycle wave (III) must move beyond the end of Super Cycle wave (I). It must move far enough above that point to allow room for a subsequent Super Cycle wave (IV) to unfold and remain above Super Cycle wave (I) price territory.

WEEKLY CHART

US Oil Elliott Wave Chart Weekly 2018
Click chart to enlarge.

If a new bull market is in the very early stages for Oil, then it may have begun with two overlapping first and second waves at primary then at intermediate degree.

Primary wave 3 may only subdivide as an impulse, and within it intermediate wave (3) may be incomplete. The target assumes the most common Fibonacci ratio to intermediate wave (1).

Intermediate wave (4) may not move into intermediate wave (1) price territory below 55.24.

TECHNICAL ANALYSIS

MONTHLY CHART

US Oil Chart Monthly 2018
Click chart to enlarge. Chart courtesy of StockCharts.com.

The strongest recent monthly volume is for the downwards month of August 2017. This is bearish.

For the now completed month of January the rise in price had support from volume. This is bullish. MACD and On Balance Volume are also both bullish. Overall, this chart is more bullish than bearish.

RSI indicates there is room for upwards movement to continue.

DAILY CHART

US Oil Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

It looks like the upwards trend is being interrupted by a consolidation. However, strong volume for downwards movement within Friday’s session is fairly bearish, at least for the short term.

Watch On Balance Volume carefully next week. A signal here should be given reasonable weight.

VOLATILITY INDEX

OVX Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

Prior short term bearish divergence has now been followed by some small downwards movement. This divergence may now be resolved. There is no new divergence noted this week.

Published @ 10:00 p.m. EST on 3rd February, 2018.

Weekly Elliott Wave and Technical Analysis of S&P500 and US Oil – 26th January, 2018

This week the Gold analysis will be available only to members of Elliott Wave Gold. However, if this weekly offering is to become a regular paid subscription service, then Gold would always be a part of it.

S&P500 ANALYSIS

Summary: The trend is up and strong. Corrections are an opportunity to join the trend. Divergence between price and the AD line for Friday’s high is bearish and suggests a correction may come sooner than expected.

The next target is now at 2,896 for a very short term interruption to the trend (it may be over within a day), and the target after that is at 2,951 for another short term interruption to the trend (it may be over within a week).

This looks like a third wave that is still incomplete. It may have just passed the middle strongest portion, so look for volatility to increase as a series of fourth waves unfold.

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

MAIN ELLIOTT WAVE COUNT

MONTHLY CHART

S&P 500 Monthly 2018
Click chart to enlarge.

The large expanded flat labelled Super Cycle wave (IV) completed a 8.5 year correction. Thereafter, the bull market continues for Super Cycle wave (V). The structure of Super Cycle wave (V) is incomplete. At this stage, it is subdividing as an impulse.

There is no Fibonacci ratio between cycle waves I and III within Super Cycle wave (V). This makes it more likely that cycle wave V will exhibit a Fibonacci ratio to either of cycle waves I or III. Cycle wave V has passed equality in length with cycle wave I. The next two Fibonacci ratios in the sequence are used for two possible targets for it to end.

The teal channel is drawn using Elliott’s first technique about an impulse. Draw the first trend line from the ends of cycle waves I to III (from the months of July 2011 to December 2014), then place a parallel copy on the low of cycle wave II. Cycle wave IV has found support very close to the lower edge of this channel, so the channel looks about right. The lower edge should continue to provide support, and the upper edge may provide resistance if price gets up that high.

Copy this large channel over to weekly and daily charts, all on a semi log scale. The lower edge will be important.

Cycle wave II was a shallow 0.41 zigzag lasting three months. Cycle wave IV is now seen as a more shallow 0.28 double combination lasting 14 months. With cycle wave IV nearly five times the duration of cycle wave II, it should be over there.

Cycle wave I lasted 28 months (not a Fibonacci number), cycle wave II lasted a Fibonacci 3 months, cycle wave III lasted 38 months (not a Fibonacci number), and cycle wave IV lasted 14 months (one more than a Fibonacci 13).

Cycle wave V has begun its 23rd month. The structure needs several more months to complete. It may last another 11 months to total a Fibonacci 34, but that may not be long enough. The next Fibonacci number in the sequence is 55, which would see it continue from now for another 32 months, just under three years. That looks entirely possible.

It is also possible that cycle wave V may not exhibit a Fibonacci duration.

Within cycle wave V, the upcoming correction for intermediate wave (4) may not move back down into intermediate wave (1) price territory below 2,193.81.

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART

S&P 500 Weekly 2018
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. This target at 2,926 now looks too low. The next most common Fibonacci ratio would be 2.618 the length of cycle wave I at 3,616. This higher target is looking more likely at this stage.

Intermediate wave (3) has passed all of equality in length with intermediate wave (1), and 1.618 and 2.618 the length of intermediate wave (1). It is possible that intermediate wave (3) 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. Minor wave 4 should last about four weeks to be in proportion to minor wave 2. It may last about a Fibonacci three, five or even eight weeks if it is a time consuming sideways correction like a triangle or combination. An Elliott channel may be drawn about the impulse of intermediate wave (3) when minor wave 3 is complete, and minor wave 4 may end about the lower edge of that channel.

At this stage, a widened acceleration channel is drawn now in blue about the impulse of intermediate wave (3). This is drawn in the same way as an Elliott channel using Elliott’s first technique.

A third wave up at four degrees may be completing. This should be expected to show some internal strength and extreme indicators, which is exactly what is happening. Members are advised to review the prior example given of a cycle degree fifth wave here. The purpose of publishing this example is to illustrate how indicators may remain extreme and overbought for long periods of time when this market has a strong bullish trend. If the current wave count is correct, then the equivalent point to this historic example would be towards the end of the section delineated by the dates November 1994 to May 1996. In other words, the upwards trend for this fifth wave may only have recently passed half way and there may be a very long way up to go yet.

DAILY CHART

S&P 500 Daily 2018
Click chart to enlarge.

Keep redrawing the acceleration channel as price continues higher: draw the first line from the end of minute wave i to the last high, then place a parallel copy lower down to contain all this upwards movement. When minute wave iii is complete, this would be an adjusted Elliott channel and the lower edge may provide support for minute wave iv.

The focus for the short term will be on identifying the next multi week interruption to the upwards trend.

A target for minuette wave (iii) fits only with the second higher target on the weekly chart.

Minuette wave (ii) subdivides as a combination and lasted only eight sessions, about only one and a half weeks. Minuette wave (iv) may be a zigzag, which tend to be quicker structures than combinations; a Fibonacci five days will be the first expectation, but it may be over within less than one week.

Because minuette wave (i) was a long extension, minuette wave (iii) may be shorter or only about equal in length. If minuette wave (iii) is about equal in length with minuette wave (i), then they would both be long extensions. Only two actionary waves within an impulse may be extended. If both minuette waves (i) and (iii) are extended, then minuette wave (v) may not extend.

Minuette wave (iv), when it arrives, may not move into minuette wave (i) price territory below 2,694.97.

TECHNICAL ANALYSIS

WEEKLY CHART

S&P 500 weekly 2018
Click chart to enlarge. Chart courtesy of StockCharts.com.

This upwards trend is extreme and stretched, but there is still no evidence of weakness at the weekly time frame.

There is no divergence to indicate any weakness yet between price and RSI.

As a third wave at multiple degrees comes to an end, it would be reasonable to see indicators at extreme levels.

A correction will come, but it looks like it may not be here yet.

DAILY CHART

S&P 500 daily 2018
Click chart to enlarge. Chart courtesy of StockCharts.com.

There is still no reasonable divergence to indicate weakness. This trend is extreme and overbought, but that can remain for long periods of time when this market has a strong bullish trend.

VOLATILITY – INVERTED VIX CHART

VIX daily 2018
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.

There is still strong short term divergence between price and inverted VIX. The new high in price has not come with a normal corresponding decline in market volatility. This is bearish.

However, this bearish divergence so far of late has failed to result in any reasonable downwards movement from price. It may be an early warning sign, but it does not appear at this time to be a useful timing tool.

BREADTH – AD LINE

AD Line daily 2018
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.

All of small, mid and large caps last week made new all time highs. This market has good support from rising breadth.

Breadth should be read as a leading indicator.

The new high in price on Friday is not matched by a new corresponding new high in market breadth. This divergence is bearish and indicates weakness in price, but it is not very strong.

DOW THEORY

The S&P500, DJIA and Nasdaq this week made new all time highs. Only DJT did not make a new all time high and has moved lower. This divergence is slightly bearish; DJT may be leading by beginning a correction first.

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.

US OIL ANALYSIS

Summary: Assume the upwards trend remains intact while price remains within the yellow channel on the daily chart. Only if that channel is breached by downwards movement should a high be assumed to be in place.

A new high now above 74.96 would provide a strong indication that Oil may be in a long term bull market. The target would be at 80.64, but a large correction for a big fourth wave would be expected prior to the target being reached.

MONTHLY ELLIOTT WAVE COUNT

US Oil Elliott Wave Chart Monthly 2017
Click chart to enlarge.

Within the bear market, cycle wave b is seen as ending in May 2011. Thereafter, a five wave structure downwards for cycle wave c begins.

Primary wave 1 is a short impulse lasting five months. Primary wave 2 is a very deep 0.94 zigzag lasting 22 months. Primary wave 3 is a complete impulse with no Fibonacci ratio to primary wave 1. It lasted 30 months.

There is alternation in depth with primary wave 2 very deep and primary wave 4 relatively shallow. There is inadequate alternation in structure, both are zigzags. So far primary wave 4 has lasted 23 months. At this stage, there is almost perfect proportion between primary waves 2 and 4.

Primary wave 4 may not move into primary wave 1 price territory above 74.96.

Price this week has closed above the teal resistance line, the upper edge of this very wide channel. This wave count expected it would be fairly likely that primary wave 4 should have found resistance there. Because this line is now breached on the daily chart a new alternate is considered below.

WEEKLY ELLIOTT WAVE COUNT

US Oil Elliott Wave Chart Weekly 2017
Click chart to enlarge.

Primary wave 4 subdivides as a zigzag, and within it intermediate wave (C) may now be complete. A new target is calculated for primary wave 5 to exhibit the most common Fibonacci ratio to primary wave 1.

An Elliott channel is added to this possible zigzag for primary wave 4. A breach of the lower edge of this channel would provide a very strong indication that primary wave 4 should be over and primary wave 5 should be underway.

DAILY ELLIOTT WAVE COUNT

US Oil Elliott Wave Chart Daily 2017
Click chart to enlarge.

Intermediate wave (C) may now be complete at all degrees. However, the yellow best fit channel must absolutely be breached by downwards movement before any confidence that a high is in place may be had.

Assume the trend remains the same, upwards, while price remains within the channel. This wave count is at the point now where it requires channel confirmation.

If primary wave 4 continues any higher, it may not move into primary wave 1 price territory above 74.96.

ALTERNATE WAVE COUNT

MONTHLY CHART

US Oil Elliott Wave Chart Monthly 2018
Click chart to enlarge.

This alternate is new.

It is possible that the bear market for Oil is over and a new bull market is in the very early stages.

A huge zigzag down to the last low may be complete and is labelled here Super Cycle wave (II).

Cycle wave b must be seen as complete in August 2013 for this wave count to work. It cannot be seen as complete at the prior major swing high in May 2011.

Cycle wave b is seen as a zigzag, and within it primary wave B is seen as a running contracting triangle. These are fairly common structures.

Primary wave C moves beyond the end of primary wave A, so it avoids a truncation. But it does not have to move above the price territory of primary wave B to avoid a truncation, which is an important distinction.

If cycle wave b begins there, then cycle wave c may be seen as a complete five wave impulse.

Super Cycle wave (III) must move beyond the end of Super Cycle wave (I). It must move far enough above that point to allow room for a subsequent Super Cycle wave (IV) to unfold and remain above Super Cycle wave (I) price territory.

WEEKLY CHART

US Oil Elliott Wave Chart Weekly 2018
Click chart to enlarge.

If a new bull market is in the very early stages for Oil, then it may have begun with two overlapping first and second waves at primary then at intermediate degree.

Primary wave 3 may only subdivide as an impulse, and within it intermediate wave (3) may be incomplete. The target assumes the most common Fibonacci ratio to intermediate wave (1).

Intermediate wave (4) may not move into intermediate wave (1) price territory below 55.24.

TECHNICAL ANALYSIS

MONTHLY CHART

US Oil Chart Monthly 2018
Click chart to enlarge. Chart courtesy of StockCharts.com.

The strongest recent monthly volume is for the downwards month of August 2017. This is bearish.

Price is currently rising on declining volume at this time frame. However, the incomplete month of January is now stronger than the month prior. Volume now offers some support to rising price at least for the short term.

RSI indicates there is room for upwards movement to continue.

DAILY CHART

US Oil Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

Friday’s session moved price lower with a lower low and a lower high, but the candlestick closed green and the balance of volume during the session was upwards. Volume shows a decline, and so the very short term volume profile is interpreted as bearish.

There is not enough divergence with price and RSI to indicate an end to this trend here. Bullish trends may remain extreme for reasonable periods of time, particularly for commodities. This chart remains bullish.

VOLATILITY INDEX

OVX Chart Daily 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

Price moved higher for three sessions in a row to the last high, but this did not come with a normal corresponding decline in volatility. Volatility has increased for those three sessions. This divergence is interpreted as bearish.

Published @ 11:27 p.m. EST on 27th January, 2018.

Weekly Elliott Wave and Technical Analysis of Gold and S&P500 and US Oil – 21st January, 2018

GOLD ANALYSIS

Summary: The main wave count expects a trend change to a new bear market to last one to several years, and the target is 470. A new low below 1,324.93 now offers further confidence in this view.

Full confidence may be had in the new bear market if price can make a new low below 1,236.54 in the next few weeks.

An alternate expects overall upwards movement from here. It would be confirmed if price makes a new high reasonably above 1,357.09.

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART

Gold Elliott Wave Chart Weekly 2018
Click chart to enlarge.

All main wave counts expect that Gold completed a large five down from the all time high in November 2011 to the low of December 2015, which is seen on the left hand side of weekly charts.

If this analysis is correct, then the five down may not be the completion of the correction. Corrective waves do not subdivide as fives; they subdivide as threes. The five down is seen as cycle wave a within Super Cycle wave (a).

Cycle wave b began in December 2015.

This wave count looks at cycle wave b to be most likely a regular contracting triangle.

All sub-waves must subdivide as threes within an Elliott wave triangle, and four of the five sub-waves must be zigzags or multiple zigzags, and the most common sub-wave to be a multiple is wave C. Only one sub-wave may be a more complicated multiple. This triangle meets all these rules and guidelines; all subdivisions fit perfectly at all time frames. It is the main wave count for these reasons, and thus is judged to have the highest probability.

The triangle trend lines have a normal looking convergence.

While primary wave E should also most likely look like an obvious three wave structure at the weekly and daily chart levels, it does not have to do this. It is possible that primary wave E could be over, falling reasonably short of the A-C trend line and being relatively quick. E waves of triangles can be the quickest of all triangle waves.

DAILY CHART

Gold Elliott Wave Chart Daily 2018
Click chart to enlarge.

This first daily chart follows on directly from the weekly chart above. The triangle for cycle wave b may have just recently completed.

Primary wave E fits as a completed zigzag and falls reasonably short of the A-C trend line, the most common point for E waves of Elliott triangles to end.

If this wave count is correct, then price needs to move strongly lower next week. Within the new trend, no second wave correction may move beyond the start of its first wave above 1,343.97.

The target for cycle wave c to end assumes the most common Fibonacci ratio to cycle wave a.

A new low below 1,236.54 would invalidate weekly alternate wave counts and provide a high level of confidence in this main wave count.

SECOND WAVE COUNT

WEEKLY CHART

Gold Elliott Wave Chart Weekly 2018
Click chart to enlarge.

If cycle wave b is a single zigzag, then the upwards wave labelled here primary wave A must be seen as a five wave structure. But this is problematic because (within primary wave A) intermediate wave (4) lasted 12 weeks whereas intermediate wave (2) only lasted 2 weeks. While disproportion between corrective waves does not violate any Elliott wave rules, it does give a wave count the wrong look.

Gold is typical of commodities in that it often exhibits swift strong fifth waves, leading to blowoff tops in bull markets and selling climaxes in bear markets. This tendency is most often seen in Gold’s third waves. When this happens the strong fifth wave forces the fourth wave correction that comes before it to be more brief and shallow than good proportion to its counterpart second wave would suggest. When this happens the impulse has a curved three wave look to it at higher time frames.

It is acceptable for a wave count for a commodity to see a curved impulse which has a more time consuming second wave correction within it than the fourth wave correction.

The impulse has a more time consuming fourth wave than the second in this case though, giving the wave the look of a zigzag. This is unusual, and so the probability of this wave count is low.

Low probability does not mean no probability, so this wave count is possible; when low probability outcomes do occur, they are never what was expected as most likely.

Primary wave C must subdivide as a five wave structure, either an impulse or an ending diagonal. Because the upwards wave of intermediate wave (1) fits as a zigzag and will not fit as an impulse, an ending diagonal is considered.

Ending diagonals require all sub-waves to subdivide as zigzags.

Within intermediate wave (1), to see this wave as a zigzag, minor wave B is seen as a double flat correction. In my experience double flats are extremely rare structures, even rarer than running flats. The rarity of this structure further reduces the probability of this wave count.

Intermediate wave (3) must move beyond the end of intermediate wave (1) above 1,357.09.

Intermediate wave (3) must subdivide as a zigzag. Within the zigzag, minor wave B may not move beyond the start of minor wave A below 1,236.54. At this stage, the last three days of sideways movement look like a correction within an ongoing upwards trend which would favour this alternate wave count. Minor wave B may last from just a few days to a few weeks.

THIRD WAVE COUNT

WEEKLY CHART

Gold Elliott Wave Chart Weekly 2018
Click chart to enlarge.

Cycle wave a is still seen as a completed five wave structure. This third wave count looks at cycle wave b as a possible double zigzag.

A triangle may be completing as an X wave within a double zigzag for cycle wave b.

Now the upwards wave labelled here primary wave W is seen as a zigzag. This has a better fit than the first alternate.

Within the triangle for primary wave X, intermediate waves (A) through to (C) may be complete. Intermediate wave (D) may also be complete, but there is room for it to still move higher. If the triangle for primary wave X is a regular contracting triangle, then intermediate wave (D) may not move beyond the end of intermediate wave (B) above 1,357.09. If the triangle is a barrier triangle, then intermediate wave (D) should end about the same level as intermediate wave (B), so that the (B)-(D) trend line remains essentially flat. In practice, this means that intermediate wave (D) may end slightly above 1,357.09 and this wave count would remain valid.

This is why a new high reasonably above 1,357.09 only would invalidate this wave count. This invalidation point is not black and white.

The final sub-wave of intermediate wave (E) may have now begun. Intermediate wave (E) may not move beyond the end of intermediate wave (C) below 1,236.54. This invalidation point is black and white. A new low by any amount at any time frame would invalidate this wave count.

TECHNICAL ANALYSIS

WEEKLY CHART

Gold Weekly 2018
Click chart to enlarge. Chart courtesy of StockCharts.com.

Price found resistance this week, at about 1,345.

The small spinning top candlestick and decline in volume suggest a pause within an upwards trend, or a weak end to the upwards trend.

Stochastics may move further into overbought territory before price turns.

DAILY CHART

Gold Daily 2018
Click chart to enlarge. Chart courtesy of StockCharts.com.

Three doji in a row and three sessions on declining volume all suggest a consolidation here within an upwards trend. This favours the second weekly wave count at this stage.

Upwards movement continued for Friday to another new all time high as the main Elliott wave count expected.

S&P500 ANALYSIS

Summary: Assume the upwards trend may remain intact and the next target for an interruption is at 2,821.

An alternate looks at a correction or pullback underway to last one to two weeks. Some confidence may be had in this view if price makes a new low below 2,792.56. This view has support still from bearish signals in VIX and the AD line.

MAIN ELLIOTT WAVE COUNT

MONTHLY CHART

S&P 500 Monthly 2018
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The large expanded flat labelled Super Cycle wave (IV) completed a 8.5 year correction. Thereafter, the bull market continues for Super Cycle wave (V). The structure of Super Cycle wave (V) is incomplete. At this stage, it is subdividing as an impulse.

There is no Fibonacci ratio between cycle waves I and III within Super Cycle wave (V). This makes it more likely that cycle wave V will exhibit a Fibonacci ratio to either of cycle waves I or III. Cycle wave V has passed equality in length with cycle wave I. The next two Fibonacci ratios in the sequence are used for two possible targets for it to end.

The teal channel is drawn using Elliott’s first technique about an impulse. Draw the first trend line from the ends of cycle waves I to III (from the months of July 2011 to December 2014), then place a parallel copy on the low of cycle wave II. Cycle wave IV has found support very close to the lower edge of this channel, so the channel looks about right. The lower edge should continue to provide support, and the upper edge may provide resistance if price gets up that high.

Copy this large channel over to weekly and daily charts, all on a semi log scale. The lower edge will be important.

Cycle wave II was a shallow 0.41 zigzag lasting three months. Cycle wave IV is now seen as a more shallow 0.28 double combination lasting 14 months. With cycle wave IV nearly five times the duration of cycle wave II, it should be over there.

Cycle wave I lasted 28 months (not a Fibonacci number), cycle wave II lasted a Fibonacci 3 months, cycle wave III lasted 38 months (not a Fibonacci number), and cycle wave IV lasted 14 months (one more than a Fibonacci 13).

Cycle wave V has begun its 23rd month. The structure needs several more months to complete. It may last another 11 months to total a Fibonacci 34, but that may not be long enough. The next Fibonacci number in the sequence is 55, which would see it continue from now for another 32 months, just under three years. That looks entirely possible.

It is also possible that cycle wave V may not exhibit a Fibonacci duration.

Within cycle wave V, the upcoming correction for intermediate wave (4) may not move back down into intermediate wave (1) price territory below 2,193.81.

WEEKLY CHART

S&P 500 Weekly 2018
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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. Minor wave 4 should last about four weeks to be in proportion to minor wave 2. It may last about a Fibonacci three, five or even eight weeks if it is a time consuming sideways correction like a triangle or combination. It may now find support about the mid line of the yellow best fit channel. If it does find support there, it may be very shallow. Next support would be about the lower edge of the channel.

A third wave up at four degrees may be completing. This should be expected to show some internal strength and extreme indicators, which is exactly what is happening.

DAILY CHART

S&P 500 Daily 2018
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Keep redrawing the acceleration channel as price continues higher: draw the first line from the end of minute wave i to the last high, then place a parallel copy on the end of minute wave ii. When minute wave iii is complete, this would be an Elliott channel and the lower edge may provide support for minute wave iv.

Minute wave iii has passed 1.618 the length of minute wave i. The next Fibonacci ratio in the sequence is used to calculate a target for it to end.

Minute wave iii may only subdivide as an impulse, and within it minuette wave (i) only may have recently ended as a long extension. This main wave count fits with MACD: upwards momentum is showing an increase as a third wave continues upwards.

Within the impulse of minute wave iii, the upcoming correction for minuette wave (iv) may not move back into minuette wave (i) price territory below 2,694.97.

Because minuette wave (i) with this wave count is a long extension, it is reasonable to expect minuette wave (iii) may only reach equality in length with minuette wave (i). This target fits with the higher target for minute wave iii one degree higher.

ALTERNATE DAILY CHART

S&P 500 Daily 2018
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It is possible that minute wave iii is over. Some confidence in this wave count may be had if the main hourly wave count above is invalidated with a new low below 2,768.64.

If minute wave iv is underway, then it may be expected to be reasonably in proportion to its counterpart minute wave ii correction. Minute wave ii lasted nine days, so expect minute wave iv to last a Fibonacci eight or thirteen days.

Minute wave iv may be unfolding as an expanded flat correction. These are very common structures.

Minute wave ii was a zigzag, so minute wave iv may exhibit alternation as a flat, combination or triangle. These corrections are all sideways and usually more time consuming than zigzags.

Minute wave iv may end when it finds support about the lower edge of the pink Elliott channel. If it does not end there and if it overshoots the channel, then minute wave iv may end within the price territory of the fourth wave of one lesser degree. Minuette wave (iv) has its territory from 2,694.97 to 2,673.61.

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

TECHNICAL ANALYSIS

WEEKLY CHART

S&P 500 weekly 2018
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This upwards trend is extreme and stretched, but there is still no evidence of weakness at the weekly time frame.

As a third wave at multiple degrees comes to an end, it would be reasonable to see indicators at extreme levels.

A correction will come, but it looks like it may not be here yet.

DAILY CHART

S&P 500 daily 2018
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On Balance Volume has not yet broken out of its small range. This should happen on Monday.

The trend is stretched and extreme at daily and weekly chart levels, and close to extreme at the monthly chart level.

Divergence with price and RSI is too slight to indicate reasonable weakness.

This trend may still continue for longer.

VOLATILITY – INVERTED VIX CHART

VIX daily 2018
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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.

Bearish signals from VIX have not been followed by any downwards movement. They may have all failed, or it could be that these signals are early.

There is strong short term divergence between price and inverted VIX. The new high in price has not come with a normal corresponding decline in market volatility. This is bearish.

BREADTH – AD LINE

AD Line daily 2018
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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.

All of small, mid and large caps last week made new all time highs. This market has good support from rising breadth.

Breadth should be read as a leading indicator.

The last bearish signal from the AD line has not been followed by any downwards movement. It may have failed, or it may be an early warning.

There is now divergence with the new high in price failing to be matched by a new high in market breadth. The rise in price does not have support from a rising AD line. This is bearish.

DOW THEORY

The S&P500, DJIA, DJT and Nasdaq last week all made new all time highs. The ongoing bull market is confirmed.

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.

US OIL ANALYSIS

Summary: The bottom line for Oil is that while price remains within the yellow channel on the daily chart no confidence in a trend change may be had. If price breaks below the lower edge of this channel then have confidence a high is in place and the target is at 24.67.

MONTHLY ELLIOTT WAVE COUNT

US Oil Elliott Wave Chart Monthly 2017
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Within the bear market, cycle wave b is seen as ending in May 2011. Thereafter, a five wave structure downwards for cycle wave c begins.

Primary wave 1 is a short impulse lasting five months. Primary wave 2 is a very deep 0.94 zigzag lasting 22 months. Primary wave 3 is a complete impulse with no Fibonacci ratio to primary wave 1. It lasted 30 months.

There is alternation in depth with primary wave 2 very deep and primary wave 4 relatively shallow. There is inadequate alternation in structure, both are zigzags. So far primary wave 4 has lasted 23 months. At this stage, there is almost perfect proportion between primary waves 2 and 4.

Primary wave 4 may not move into primary wave 1 price territory above 74.96.

WEEKLY ELLIOTT WAVE COUNT

US Oil Elliott Wave Chart Weekly 2017
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Intermediate wave (C) must subdivide as a five wave structure, either an impulse or an ending diagonal. Intermediate wave (C) may now be a complete structure.

A trend change is now expected. The target for primary wave 5 assumes the most common Fibonacci ratio to primary wave 1.

Price is finding resistance about the upper edge of the teal channel which is copied over from the monthly chart.

An Elliott channel is added to this possible zigzag for primary wave 4. A breach of the lower edge of this channel would provide a very strong indication that primary wave 4 should be over and primary wave 5 should be underway.

DAILY ELLIOTT WAVE COUNT

US Oil Elliott Wave Chart Daily 2017
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The structure for intermediate wave (C) is now complete at all degrees. Price has found resistance almost perfectly at the upper edge of the teal channel which is drawn on all charts on a semi-log scale.

There are some excellent Fibonacci ratios within this wave count.

However, the bottom line remains that only when price has breached the channel may confidence be had in this wave count.

TECHNICAL ANALYSIS

MONTHLY CHART

US Oil Chart Monthly 2017
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The strongest recent monthly volume is for the downwards month of August 2017. This is bearish.

Price is currently rising on declining volume at this time frame. While that could change, at this time it looks unsustainable.

RSI indicates there is room for upwards movement to continue.

DAILY CHART

US Oil Chart Daily 2017
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With RSI and Stochastics both reaching overbought while ADX reached extreme, the upwards trend was stretched and extreme. There was reasonable divergence between price and Stochastics to indicate some reasonable weakness.

Now volume supports downwards movement it looks like Oil may have seen a trend change. This chart supports the Elliott wave count this week.

VOLATILITY INDEX

OVX Chart Daily 2017
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For Friday’s session price moved lower but volatility has not shown a normal corresponding increase. The decline in volatility for Friday’s session is interpreted as bullish. This does not support the Elliott wave count.

Published @ 12:22 a.m. EST.