S&P 500

The first two Elliott wave counts expect more upwards movement, which has continued to end the week.

Summary: There is an upwards trend in place. The final target is either for it to end prior to 3,432.15 (second wave count) or 3,640 (first wave count). A new all time high would add confidence in either of the first two wave counts.

Bearish wave counts remain valid while price remains below the all time high.

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

Last monthly charts are here. Video is here.

ELLIOTT WAVE COUNTS

FIRST WAVE COUNT

WEEKLY CHART

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Confidence in this wave count may be had if price makes a new all time high above 3,393.52.

Cycle wave V may last from one to several years.

Cycle wave V may be underway and would most likely subdivide as an impulse. But if overlapping develops, then an ending diagonal should be considered. This chart considers the more common impulse.

Primary wave 1 may be nearing completion. Primary wave 2 may not move beyond the start of primary wave 1 below 2,191.86.

DAILY CHART

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The target for the end of this bull market is provisional. It would best be calculated at primary degree, but that cannot be done until all of primary waves 1 through to 4 are complete. At that stage, the target will be recalculated and will very likely change.

Cycle wave V must subdivide as a five wave motive structure, most likely an impulse. Primary wave 1 within cycle wave V may be nearing completion.

Within primary wave 1: intermediate waves (1) through to (4) may be complete.

The channel drawn about primary wave 1 is a best fit. While intermediate wave (5) continues higher, along the way smaller corrections may find support about the lower edge of this channel. A breach of this channel at this stage may indicate an end to primary wave 1.

Intermediate wave (3) within primary wave 1 is shorter than intermediate wave (1). Because intermediate wave (3) may not be the shortest actionary wave, intermediate wave (5) is limited to no longer than equality in length with intermediate wave (3) at 3,432.15.

When primary wave 1 may be a complete five wave structure, then primary wave 2 should then unfold as a multi-week pullback and may not move beyond the start of primary wave 1 below 2,191.86.

SECOND WAVE COUNT

DAILY CHART

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This wave count is the same as the first wave count with the exception of the degree of labelling within cycle wave V. If the degree of labelling is moved up one degree, then it is possible that cycle wave V to end Super cycle wave (V) to end Grand Super Cycle wave I is very close to completion.

Primary waves 1 through to 4 within cycle wave V may be complete. Primary wave 5 may end within another one to few months.

Cycle wave V has moved above the end of cycle wave I at 2,940.91, avoiding a truncation.

Intermediate wave (4) may not move into intermediate wave (1) price territory below 3,235.32.

THIRD WAVE COUNT

WEEKLY CHART

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The probability of this wave count is reduced with closure of the gap created on the 24th of February.

Cycle wave II would most likely subdivide as a zigzag; thus far that looks like what is unfolding. Primary wave B may be now very close to completion. It may end next week. When primary wave B may again be complete, then a second target would again be calculated for primary wave C to end cycle wave II.

Cycle wave II may not move beyond the start of cycle wave I below 666.79.

DAILY CHART

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Cycle wave II may subdivide as any Elliott wave corrective structure except a triangle. It would most likely be a zigzag (zigzags subdivide 5-3-5).

Minor wave A may have ended on the 13th of July with an ending contracting diagonal for minor wave 5, followed by a running contracting triangle for intermediate wave (B).

Primary wave B may now be an incomplete single zigzag.

If primary wave A is correctly labelled as a five wave impulse, then primary wave B may not move beyond the start of primary wave A above 3,393.52.

FOURTH WAVE COUNT

WEEKLY CHART

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By simply moving the degree of labelling in the bull market beginning March 2009 up one degree, it is possible that a Grand Super Cycle trend change occurred on February 19, 2020. The bull market from March 2009 to February 2020 may have been a complete fifth wave labelled Super Cycle wave (V).

A bear market at Grand Super Cycle degree may be expected to last at least a decade, possibly longer. Corrections for this market tend to be much quicker than bullish moves, and so a fair amount of flexibility is required in expectations for duration of the different degrees.

Grand Super Cycle II would most likely subdivide as a zigzag, although it may be any corrective structure except a triangle. It should begin with a five down at the weekly chart time frame, which would be incomplete.

The first wave down on the daily chart is labelled cycle wave I. If this degree of labelling is wrong, it may be too high; it may need to be moved down one degree.

Following cycle wave I, cycle wave II may be an incomplete single zigzag.

If it continues any higher, then cycle wave II may not move beyond the start of cycle wave I above 3,393.52.

TECHNICAL ANALYSIS

WEEKLY CHART

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A close near highs for the week is bullish. There is still no reversal pattern. 

RSI is not overbought; there is room for upwards movement to continue.

DAILY CHART

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The breakaway gap of 24th February has its upper edge at 3,328.45. This gap is now closed. A more bullish analysis expecting new all time highs has now increased in probability.

Last week completed an upwards breakout from a small flag pattern that has support from volume. A target from the flag pole would be at 3,405. This supports the first Elliott wave count.

Double bearish divergence between price and RSI has weakened to only now single bearish divergence.

Volume is light, but this has long been a characteristic of this market since 2009; price has been able to rise on light and declining volume for many years now. RSI and ADX are not extreme; there is room for upwards movement to continue.

BREADTH – AD LINE

WEEKLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com. So that colour blind members are included, bearish signals will be noted with blue and bullish signals with yellow.

Breadth should be read as a leading indicator.

This week the NYSE all issues AD line has made another new all time high, although Lowry’s Operating Companies Only AD line still has not. This divergence is bullish and noted on this chart, but failure of the OCO AD line to confirm this divergence reduces the strength of the signal.

Large caps all time high: 3,393.52 on 19th February 2020.

Mid caps all time high: 2,109.43 on 20th February 2020.

Small caps all time high: 1,100.58 on 27th August 2018.

It is still only large caps that have made new swing highs above the prior high of the 8th of June. Small and mid caps have not. The rise over the last several weeks is led by large caps, so it lacks breadth. This is normal of an aged bullish move and supports the third or fourth Elliott wave counts.

DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com. So that colour blind members are included, bearish signals will be noted with blue and bullish signals with yellow.

To end the week both price and the AD line have moved higher. There is no new short-term divergence.

VOLATILITY – INVERTED VIX CHART

WEEKLY CHART

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Inverted VIX remains well below all time highs. There remains over two years of strong bearish divergence between price and inverted VIX.

This week both price and inverted VIX have moved higher. There is no new divergence.

Comparing VIX and VVIX: From weeks beginning 1st June to this last week, VIX has made new lows as price has made new highs, but VVIX has failed to make corresponding new lows with VIX. VVIX remains slightly elevated. This divergence is not strong, but it is bearish for price.

DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com. So that colour blind members are included, bearish signals will be noted with blue and bullish signals with yellow.

Today both price and inverted VIX have made new short-term highs. There is no new divergence.

Comparing VIX and VVIX at the daily chart level: From the 8th of June to the 7th of August, price has made new highs while both VIX and VVIX have made new lows. The rise in price has support from a normal corresponding decline in VIX and VVIX. However, for the last session of 7th of August VIX has moved lower but VVIX has increased. This may indicate very short-term bearish divergence for price.

DOW THEORY

Dow Theory has confirmed a bear market with the following lows made on a closing basis:

DJIA: 21,712.53 – a close below this point has been made on the March 12, 2020.

DJT: 8,636.79 – a close below this point has been made on March 9, 2020.

Adding in the S&P and Nasdaq for an extended Dow Theory, a bear market has now been confirmed:

S&P500: 2,346.58 – a close below this point has now been made on March 20, 2020.

Nasdaq: 7,292.22 – a close below this point was made on the March 12, 2020.

At this time, to shift Dow Theory from viewing a bear market to confirmation of a new bull market would require new highs made on a closing basis:

DJIA – 29,568.57

DJT – 11,623.58

Adding in the S&P and Nasdaq for an extended Dow Theory:

S&P500 – 3,393.52

Nasdaq – 9,838.37 – closed above on June 8, 2020.

All of Nasdaq, S&P500 and now DJT have made new swing highs above prior highs of the 8th of June, but DJIA has not.

GOLD

A strong Bearish Engulfing candlestick at the end of the week suggests a third wave may have completed.

Summary: A consolidation or pullback may have begun at Friday’s high, which may last about one to two weeks. It may find support about 1,977 or 1,919. Thereafter, the upwards trend may resume.

The next longer-term target is at 2,250 or 2,306.

Grand SuperCycle analysis is here.

Last analysis of monthly charts is here with video here.

BEARISH ELLIOTT WAVE COUNT

WEEKLY CHART

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The bigger picture for this main bearish Elliott wave count sees Gold as still within a bear market, in a three steps back pattern that is labelled Grand Super Cycle wave IV on monthly charts. The common range for Super Cycle wave (b) is from 1 to 1.38 times the length of Super cycle wave (a), giving a range from 1,920.18 to 2,252.27. The target would see Super Cycle wave (b) end within this most common range.

Super Cycle wave (b) within Grand Super Cycle wave IV may be an incomplete double zigzag. When Super Cycle wave (b) may be complete, then this wave count expects Super Cycle wave (c) to begin and to move price below the end of Super Cycle wave (a) at 1,046.27.

The first zigzag in the double is labelled cycle wave w. The double is joined by a three in the opposite direction, a combination labelled cycle wave x. The second zigzag in the double is labelled cycle wave y.

The purpose of the second zigzag in a double is to deepen the correction. Cycle wave y has achieved this purpose.

Primary wave C within cycle wave y may be subdividing as an impulse. Intermediate waves (1) and (2) within primary wave C may be complete. Intermediate wave (3) may be continuing higher. Intermediate wave (4) may not move into intermediate wave (1) price territory below 1,764.12.

We should always assume the trend remains the same until proven otherwise. At this stage, Gold is in a bull market.

DAILY CHART

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The daily chart shows detail of primary wave C as an incomplete impulse.

Intermediate waves (1) through to (3) within primary wave C may be complete.

Intermediate wave (4) may not move into intermediate wave (1) price territory below 1,764.12.

Draw an Elliott channel: draw a first trend line from the end of intermediate wave (1) to the end of intermediate wave (3), then place a parallel copy on the end of intermediate wave (2). Intermediate wave (4) may find support about the lower edge.

Intermediate wave (2) was a shallow double zigzag, lasting 15 sessions. Intermediate wave (4) may exhibit alternation as a flat, combination or triangle; it may last about one to two weeks.

Within all of a flat, combination or triangle, a new high above 2,070.48 may develop if intermediate wave (4) unfolds as an expanded flat, running triangle or combination. There is no short-term upper invalidation point for this reason; a new high above 2,070.48 does not necessarily indicate intermediate wave (4) as over.

ALTERNATE BULLISH ELLIOTT WAVE COUNT

WEEKLY CHART

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This wave count sees the the bear market complete at the last major low for Gold on 3 December 2015.

If Gold is in a new bull market, then it should begin with a five wave structure upwards on the weekly chart.

Cycle wave I fits as a five wave impulse with reasonably proportionate corrections for primary waves 2 and 4.

Cycle wave II fits as a double flat. However, within the first flat correction labelled primary wave W, this wave count needs to ignore what looks like an obvious triangle from July to September 2016 (this can be seen labelled as a triangle on the bear wave count above). This movement must be labelled as a series of overlapping first and second waves. Ignoring this triangle reduces the probability of this wave count in Elliott wave terms.

Within the first flat correction labelled primary wave W of the double flat of cycle wave II, intermediate wave (B) is 1.69 the length of intermediate wave (A). This is longer than the common range of up to 1.38, but within an allowable guideline of up to 2. The length of intermediate wave (B) reduces the probability of this wave count.

Cycle wave III may be incomplete. Cycle wave IV may not move into cycle wave I price territory below 1,303.51.

DAILY CHART

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Cycle wave III may be continuing higher. The daily chart focusses on the end of primary wave 5 within cycle wave III.

Draw an Elliott channel about intermediate wave (3): draw the first trend line from the end of minor wave 1 to the end of minor wave 3, then place a parallel copy on the end of minor wave 2. Minor wave 4 may find support about the lower edge of the channel.

Minor wave 4 may not move into minor wave 1 price territory below 1,764.12.

TECHNICAL ANALYSIS

WEEKLY CHART

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The trend is very extreme and RSI is deeply overbought. The Shooting Star candlestick this week is a bearish reversal pattern that should be given weight in these conditions.

DAILY CHART

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ADX is very extreme and RSI has reached deeply overbought. The Bearish Engulfing candlestick pattern is strong and should be given weight in these circumstances.

GDX WEEKLY CHART

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A Shooting Star is a bearish reversal pattern. With RSI reaching overbought, this may indicate a trend change. A trend change may be either a 180° change or a change to a sideways consolidation.

GDX DAILY CHART

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Price is at support. A breach of support here would be bearish.

US OIL

Two short-term wave counts are published this week.

Summary: Oil may have found a major sustainable low.

A slow rounded top may still be forming. 

If the pullback begins to develop strength next week, then it may end about 27.59. It is possible the pullback may be deeper than this though; the first major correction within a new trend for Oil tends to be very deep.

When this pullback may be complete, then an upwards trend should resume with increased strength.

ELLIOTT WAVE COUNT

MONTHLY CHART

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The basic Elliott wave structure is five steps forward and three steps back. This Elliott wave count expects that US Oil has completed a three steps back pattern, which began in July 2008. The Elliott wave count expects that the bear market for US Oil may now be over.

A channel is drawn about Super Cycle wave (II): draw the first trend line from the start of cycle wave w to the end of cycle wave x, then place a parallel copy on the end of cycle wave w. Price has bounced up off the channel. This trend line is breached, which is a typical look for the end of a movement for a commodity.

The upper edge of the channel may provide resistance.

Following five waves up and three steps back should be another five steps up; this is labelled Super Cycle wave (III), which may only have just begun. Super Cycle wave (III) may last a generation and must make a new high above the end of Super Cycle wave (I) at 146.73.

Super Cycle wave (III) may only subdivide as a five wave impulse. New trends for Oil usually start out very slowly with short first waves and deep time consuming second wave corrections. Basing action over a few years may now have begun.

WEEKLY CHART

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Super Cycle wave (III) must subdivide as an impulse. Cycle wave I within the impulse may now be unfolding higher. Cycle wave II may not move beyond the start of cycle wave I below 10.24.

FIRST DAILY CHART

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Primary wave 1 within an impulse for cycle wave I may now be complete.

Primary wave 2 may be unfolding as an expanded flat correction. Intermediate wave (A) within the flat may be a complete zigzag. Intermediate wave (B) may have continued higher this week as a double zigzag. It would now be 1.50 times the length of intermediate wave (A), which is a little beyond the common range for intermediate wave (B) within a flat from 1 to 1.38 times the length of intermediate wave (A), but within an allowable limit of 2. This reduces the probability of this wave count to about even with the second.

Intermediate wave (C) may only subdivide as a five wave motive structure, most likely an impulse. If the target is wrong, then it may not be low enough.

A target is calculated for primary wave 2 that expects a common Fibonacci ratio between intermediate waves (A) and (C).

Primary wave 2 may not move beyond the start of primary wave 1 below 10.24.

SECOND DAILY CHART

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It is  possible that primary wave 1 is continuing higher. 

Intermediate wave (5) may be an ending contracting diagonal. Within the diagonal: minor wave 3 is shorter than minor wave 1, minor wave 4 is shorter than minor wave 2, and minor wave 5 must be shorter than minor wave 3 (it must end before the limit  at 45.85).

Minor wave 4 within the diagonal may not move beyond the end of minor wave 2 below 38.72.

TECHNICAL ANALYSIS

WEEKLY CHART

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Resistance about 42 so far is holding. A pullback about here would still be a reasonable expectation.

DAILY CHART

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There is now double bearish divergence between price and RSI. The probability of a multi-week pullback remains high.

If On Balance Volume remains above support, then expect price may continue higher as per the second wave count. If On Balance Volume breaks below support, then look for a pullback as per the first wave count.

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