S&P 500

Another downwards day fits expectations for the main and first alternate Elliott wave counts. The third alternate Elliott wave count will be used to eliminate a bullish possibility.

Summary: For the short term, look for a bounce to begin next week. The bounce may find resistance at the lower edge of the black channel on the main daily Elliott wave chart, or it may end about 3,144.

For the long term, a sustainable high may now be in place on June 8th. The main wave count has two targets at 2,031 and 1,708. The daily alternate wave count has a target at 1,289 for a third wave down.

A new low below 2,954.86 would invalidate the third alternate wave count and provide confidence in downwards targets.

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

Last monthly charts are here. Video is here.

ELLIOTT WAVE COUNTS

MAIN WEEKLY CHART

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This main Elliott wave count expects that the bull market beginning in March 2009 was cycle wave I of Super Cycle wave (V). The trend change in February 2020 may have been only at cycle degree. Cycle wave II may last from one to a few years.

Cycle wave II would most likely subdivide as a zigzag; thus far that looks like what is unfolding. Primary waves A and B may both be complete. A second target is calculated at primary degree.

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

MAIN DAILY CHART

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Draw the wide maroon trend channel carefully: draw the first trend line from the end of primary wave 1 at 2,093.55 (December 26, 2014), to the end of primary wave 3 at 2,940.91 (September 21, 2018), then place a parallel copy on the end of primary wave 2 at 1,810.10 (February 11, 2016). The channel is fully breached indicating a trend change from the multi-year bull trend to a new bear trend. Resistance at the lower edge has been overcome; price has closed above this trend line.

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). It may now be complete.

Draw a channel about primary wave B using Elliott’s technique for a correction. Draw the first trend line from the start of intermediate wave A to the end of intermediate wave B, then place a parallel copy on the end of intermediate wave A. Intermediate wave C may have ended mid way within the channel. A breach of the channel with a full daily candlestick below that does not touch the lower edge may be an indication that the bounce labelled primary wave B may be over and primary wave C downwards may have begun.

The invalidation point may be moved lower. Intermediate wave (2) within primary wave C may not move beyond the start of intermediate wave (1) above 3,233.13.

Two targets are calculated now for primary wave C. If price approaches the first target and either the structure of primary wave C is incomplete or price keeps falling, then attention would turn to the second target.

FIRST ALTERNATE DAILY CHART

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This alternate daily chart follows the First Alternate Monthly chart.

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 a complete zigzag. A target for cycle wave III is now calculated.

Intermediate wave (2) within cycle wave III may not move beyond the start of intermediate wave (1) above 3,233.13.

THIRD ALTERNATE DAILY CHART

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This alternate daily chart follows the third alternate monthly chart. It will be published daily because the structure of the current upwards wave is different and so the invalidation point is different. This alternate chart labels the subdivisions of the long bull market differently. The channel is a best fit.

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 (3) may be complete and intermediate wave (4) may not move into intermediate wave (1) price territory below 2,954.86.

Use Elliott’s first technique to draw a channel about primary wave 1. Draw the first trend line from the ends of intermediate waves (1) to (3), then place a parallel copy on the end of intermediate wave (2). Intermediate wave (4) remains within the channel and may find support about the lower edge.

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.

In the short term, invalidation of this wave count by a new low below 2,954.86 would add confidence to the first two wave counts.

This alternate wave count is bullish.

Cycle wave V may last from one to several years.

TECHNICAL ANALYSIS

WEEKLY CHART

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This week completes a bearish candlestick reversal pattern in Dark Cloud Cover. This is a strong example of this pattern with the close this week very near open for the prior week.

DAILY CHART

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The breakaway gap of 24th February has its upper edge at 3,328.45. A bearish analysis remains reasonable while this gap remains open. If this gap is closed, then a more bullish analysis that would expect new all time highs would increase in probability.

Towards the high were a 90% and an 80% up day. Those have now been followed by a very strong 90% down day (98.4% of volume was down and 99.6% of points were down) within three sessions. This represents a 180° reversal in sentiment from bullish to bearish, supporting the view of a sustainable high in place.

The island reversal is comprised of an exhaustion gap created on June 5th and now a possible breakaway gap created on June 11th. This breakaway gap may be used as resistance at 3,181.49, as breakaway gaps should not be closed while the resulting trend unfolds.

The breakaway gap of 24th February remains open and may continue to do so while the resulting trend from it continues.

Weaker volume and range for Friday along with a bullish long lower wick suggest a bounce for early next week.

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.

Bullish divergence noted last week remains.

This week both price and the AD line moved lower. There is no new divergence.

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.

Of all large, mid and small caps, it is small caps that are furthest off their all time highs and large caps that are closest. This rise is led by large caps, which is normally a feature of an aged bull market and not a new bull market.

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.

Although the NYSE AD line has made new all time highs, Lowry’s OCO AD line did not. Bullish divergence may still support a bullish wave count.

On Friday price has moved lower, but the AD line has moved higher. This divergence is bullish and supports the view that a bounce may unfold next week.

VOLATILITY – INVERTED VIX CHART

WEEKLY CHART

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

This week VIX has made a new low below the low five weeks ago, but price has not. This divergence is bearish.

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.

VIX has made a new swing low below the prior swing low of March 13th / 14th, but price has not. This divergence is bearish and supports either the main or first alternate Elliott wave counts.

On Friday price has moved lower, but inverted VIX has moved higher. This divergence is bullish for the short term.

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.

GOLD

A very small range day, which moved price slightly lower, leaves all three Elliott wave counts the same.

Summary: A high may be in for Gold, downwards movement may begin to a mid-term target at 1,505.

Further confidence in a downwards trend may be had if price makes a new low below 1,548.43.

A new high above 1,764.12 would indicate an upwards breakout. The target would then again be at 1,980.

Grand SuperCycle analysis is here.

Monthly charts were last updated here.

MAIN 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.

Super Cycle wave (b) within Grand Super Cycle wave IV may be a complete double zigzag.

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.

Super Cycle wave (c) downwards may continue to complete the larger (a)-(b)-(c) correction for Grand Super Cycle wave IV. Super Cycle wave (c) would be very likely to move below the end of Super Cycle wave (a) at 1,046.27 to avoid a truncation. When the bullish alternate wave count is invalidated, then a final target may be calculated for Super Cycle wave (c).

DAILY CHART

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Primary wave C within cycle wave y may be a complete five wave impulse.

A new low below 1,693.39 has added initial confidence to this wave count. A new low below 1,548.43 would invalidate a new more bullish alternate wave count (see below), so it would add further confidence to this main wave count.

When primary wave 1 is complete within the new downwards trend, then primary wave 2 may not move beyond the start of primary wave 1 above 1,764.12.

Intermediate wave (2) may be continuing further as an expanded flat correction. It may not move beyond the start of intermediate wave (1) above 1,764.12.

ALTERNATE DAILY CHART

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This alternate wave count has the lowest probability.

It remains possible that primary wave C may be an incomplete five wave impulse.

Within the impulse: intermediate waves (1) through to (3) may be complete and intermediate wave (4) may have continued lower as a double zigzag. Intermediate wave (4) may not move into intermediate wave (1) price territory below 1,548.43.

An Elliott channel is drawn about primary wave C. Primary wave C does not fit well within this channel, which reduces the probability of this wave count.

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

DAILY CHART

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Cycle wave IV may be an incomplete expanded flat correction. Primary wave A within the flat correction may have subdivided as a zigzag. Primary wave B may now be a complete zigzag. Primary wave B would be a 1.25 length of primary wave A. This is within the normal range for primary wave B within a flat from 1 to 1.38 times the length of primary wave A.

A target is calculated for primary wave C to end based upon the most common Fibonacci ratio to primary wave A within an expanded flat. Primary wave C must subdivide as a five wave motive structure.

It is still also possible that primary wave B could continue higher as a double zigzag. The common range of primary wave B would extend up to 1.38 times the length of primary wave A at 1,795.98. A maximum allowable guideline for primary wave B would be up to 2 times the length of primary wave A at 1,949.96. There is no Elliott wave rule stating a limit for B waves within expanded flat corrections, so there is no rule which may be used to determine an upper invalidation point for this wave count.

TECHNICAL ANALYSIS

WEEKLY CHART

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Price remains within a consolidation with support about 1,665 to 1,680. An inside sees price remain within this range. The short-term volume profile is still bearish, suggesting a downwards breakout.

DAILY CHART

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With a bearish reversal pattern having support from volume on the 18th of May, the risk that price has changed trend here is high.

Price remains range bound with support about 1,665 to 1,675 and resistance about 1,765 to 1,790. The short-term volume profile remains bearish, suggesting a downwards breakout may be more likely.

GDX WEEKLY CHART

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A bearish upper candlestick wick suggest more downwards movement ahead.

GDX DAILY CHART

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A head and shoulders pattern with double shoulders may be forming. A break below the neckline of a head and shoulders pattern is required for confidence in the pattern. A target would be about 24.90.

US OIL

Price has remained mostly within a channel this week, until the final session. This supports the main Elliott wave count. An alternate is discarded.

Summary: Oil may have found a major sustainable low. For the mid term, a deep multi-week pullback may have begun. The target is 21.78. 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.

DAILY CHART

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Labels are added for cycle wave I. This week the degree of labelling is moved up one degree; within an impulse for cycle wave I, primary wave 1 may now be complete.

A small channel is drawn about primary wave 1. Friday’s candlestick is below the channel; although it still touches the lower edge, this may indicate primary wave 1 may be over and primary wave 2 may have begun.

Primary wave 2 may not move beyond the start of primary wave 1 below 10.24. Primary wave 2 may be reasonably expected to be very deep and last at least five weeks.

ALTERNATE DAILY CHART

This week the alternate daily chart is discarded because, as it was labelled, downwards movement for Friday would be a fourth wave correction that overlaps into first wave price territory.

Now some further confidence may be had in the main wave count.

TECHNICAL ANALYSIS

WEEKLY CHART

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After upwards movement exhibited a decline in volume and range, now a red weekly candlestick with a slight increase in volume suggests the risk of a pullback here is higher.

DAILY CHART

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A pullback may have begun. But at this stage the pullback lacks strength.

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