S&P 500

Sideways movement ends the week and sees the Elliott wave count remain the same.

Summary: Sideways movement may continue next week. It may then be followed by a short lived upwards breakout before a trend change. The upwards breakout may end above 3,235.32, but it may not make a new all time high above 3,393.52.

The main wave count remains bearish and has two final targets at 2,034 and 1,708. A weekly alternate wave count has a target at 1,289 for a third wave down.

A new low below 2,965.66 would invalidate the third alternate wave count and provide confidence in downwards targets.

The third alternate wave count is bullish. A new high above 3,393.52 is now required for confidence in this wave count.

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 wave A may be complete. Primary wave B may be almost complete. When primary wave B may again be complete, then again a second target for primary wave C may be calculated.

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

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 was fully breached in March 2020 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. During the next downwards wave this line may offer some support.

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).

Primary wave B may continue a little higher as a double 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.

FIRST ALTERNATE WEEKLY CHART

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This alternate weekly chart follows the First Alternate Monthly chart. It is best viewed on a weekly chart time frame.

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 double zigzag.

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

THIRD ALTERNATE DAILY CHART – BULLISH

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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 (4) may be complete.

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 have found support about the lower edge.

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.

In the short term, invalidation of this wave count by a new low below 2,965.66 would add confidence to a bearish wave count.

This alternate wave count is bullish.

Bearish divergence between price and inverted VIX and RSI do not support this wave count. Weak volume does not support this wave count. However, the NYSE AD line has made a new all time high at the weekly chart level this week and On Balance Volume is bullish.

Cycle wave V may last from one to several years.

TECHNICAL ANALYSIS

WEEKLY CHART

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This week a bearish reversal pattern completes as a Hanging Man. However, the bullish implications of the long lower wick on a Hanging Man mean that the following candlestick should be bearish to give confidence in the Hanging Man as a reversal pattern. This essentially makes a Hanging Man a two candlestick reversal pattern.

Overall, this chart is bullish and offers some support to the bullish alternate wave count.

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.

The high of the 8th of June has been breached very slightly but still not on a closing basis.

Price is range bound with resistance about 3,230 and support about 2,965 to 3,000. A breakout of this range is required for confidence in the next direction for price. Volume suggests a downwards breakout may be more likely than upwards.

On Balance Volume is bullish, but now the short-term volume profile is not so clearly bullish. Strong divergence between price and RSI is bearish.

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 a 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.

At the end of this week, it is 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 five weeks is led mostly by large caps, so it lacks breadth. This is normal of an aged bullish move and supports the main Elliott wave count.

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 on the 8th of June 2020, Lowry’s OCO AD line did not. Bullish divergence may still support a bullish wave count.

The AD line has made a new swing low, but price has not. This divergence is bearish.

Bearish divergence remains in place. Today both price and the AD line moved slightly higher. There is no new divergence.

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.

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

This week price has made a new short-term swing high above the prior swing high of the 8th of June, but inverted VIX 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 for the short to mid term and supports the main Elliott wave count.

For the very short term, price moved higher but did not make a new high above the prior high two sessions prior while inverted VIX has made a strong new short-term high. This divergence is bullish for the very 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

Price remains range bound.

All three Elliott wave counts remain valid.

Summary: The upwards trend may still remain intact. The next target is at 1,820 or 1,980.

For the short term, a new low now below 1,795.07 would be a very early indication that there may be a high in place, at least for the short term. A new low below 1,672.80 would indicate a sustainable high in place.

Grand SuperCycle analysis is here.

Monthly charts were last updated here.

MAIN 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 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.

No second wave correction within intermediate wave (5) may move beyond its start below 1,672.80.

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

MAIN DAILY CHART

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Intermediate wave (5) may extending.

Minor wave 1 within intermediate wave (5) may be complete at the last high. Minor wave 2 may now also be complete, although it would be very shallow for a second wave.

The upwards trend may resume with some strength and support from volume for minor wave 3.

If it continues any lower, then minor wave 2 may not move beyond the start of minor wave 1 below 1,672.80.

ALTERNATE DAILY CHART

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This wave count is the same as the first main daily chart up to the low labelled intermediate wave (4). Thereafter, the degree of labelling within intermediate wave (5) is moved up one degree. It is possible that intermediate wave (5) may be over.

This wave count requires a new low below 1,672.80 before confidence may be had in it.

If Super Cycle wave (b) is over, then within a new downwards trend no second wave correction may move beyond its start above 1,815.35.

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 be continuing 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.

Primary wave B is now beyond the most common range, but remains within allowable limits. It may be over now with only one very slight new high.

The best fit channel about intermediate wave (Y) is slightly adjusted to contain recent lows. Assume upwards movement may continue while price remains within the channel. If the channel is breached, then assume intermediate wave (Y) may be over.

TECHNICAL ANALYSIS

WEEKLY CHART

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An upwards breakout has support from volume and a bullish signal from On Balance Volume.

Extreme ADX and bearish divergence between price and RSI are warnings that this breakout may still be false, so a trend change may occur. Risk management during extreme conditions is essential.

DAILY CHART

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The consolidation zone spans from resistance about 1,800 to support about 1,680.

An upwards breakout has some support from volume. Price has closed above resistance. A target calculated from the width of the consolidation is at 1,930.

RSI is not yet overbought. ADX is not extreme. There is room for this trend to continue.

On Balance Volume trend lines are adjusted. On Balance Volume is constrained.

GDX WEEKLY CHART

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The bullish implications of the long lower wick on a Hanging Man candlestick pattern mean it needs bearish confirmation in the following candlestick before some confidence may be had in it as a reversal pattern. This makes a Hanging Man essentially a two candlestick pattern.

A possible reversal pattern with a bearish volume profile and bearish divergence between price and RSI is a warning that the risk of a trend change here is high.

GDX DAILY CHART

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A close back above the prior consolidation zone switches the view that the breakout may have been valid and may be followed by upwards movement. While price remains above support at prior resistance and On Balance Volume remains above support, upwards movement may be expected as reasonably likely. A target calculated from the width of the consolidation zone is at 43.78.

US OIL

Another very small range week with slight upwards movement fits the first two Elliott wave counts best. A top may be forming.

Summary: Oil may have found a major sustainable low.

A slow rounded top looks to be forming. It may take a few more weeks to form before a pullback begins to gather strength.

For the mid term, a multi-week pullback may end about 31.16 or 22.23. 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.

DAILY CHART

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Labels are added for cycle wave I. 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 be a complete contracting triangle, at 1.09 times the length of intermediate wave (A) at its terminus. This is within the common range for intermediate wave (B) within a flat from 1 to 1.38 times the length of intermediate wave (A), giving a range from 40.44 to 42.75.

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.

ALTERNATE DAILY CHART

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It is possible that primary wave 1 may have ended at the last high.

Primary wave 2 may have begun at the last high. The most common structure for a second wave is a zigzag. Primary wave 2 may end about the 0.618 Fibonacci ratio of primary wave 1, or it may be deeper than that target.

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

SECOND ALTERNATE DAILY CHART

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It is also possible that primary wave 1 may be incomplete.

Intermediate wave (3) within primary wave 1 may be complete at the last high. Intermediate wave (3) at 17.25 in length is shorter than intermediate wave (1) at 17.73 in length. For this wave count, if intermediate wave (5) has begun at the low for June 25th, then it is limited to no longer than equality in length with intermediate wave (3) at 54.33.

Intermediate wave (4) may not move into intermediate wave (1) price territory below 27.97.

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

Sideways movement of the last week has now breached the channel drawn about primary wave 1. If this wave count is correct, then price should remain within that channel while primary wave 1 completes. The breach of the channel reduces the probability of this wave count.

TECHNICAL ANALYSIS

WEEKLY CHART

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The short-term volume profile remains slightly bearish and price remains just below a strong cluster of resistance. With Stochastics now overbought, the risk of a multi-week pullback remains high.

DAILY CHART

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Bearish divergence with price and RSI is clear. The probability of a multi-week pullback remains high.

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