S&P 500

While both short-term Elliott wave counts remain valid, a channel breach on Friday suggests they may be swapped over.

Summary: With the best fit channel breached, it is possible that the bounce is over and the bear market has resumed. A new low below 3,127.66 would add reasonable confidence to this view. A new low below 2,965.66 would invalidate the alternate bullish wave count and add strong confidence in a bearish wave count.

The third alternate wave count is bullish. A new high above 3,393.52 is still required for confidence in this wave count. A new high above 3,328.45 would increase probability of a bullish 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. At the end of this week, again both of primary waves A and B may be complete. A new target is calculated for primary wave C to end.

As price approaches the first target, if the structure may be complete, then it may end there. But if the structure is incomplete or price keeps falling, then attention would turn to the second target.

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 now be a complete double zigzag.

If primary wave A is correctly labelled as a five wave impulse, and if primary wave B continues higher, then it 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). The lower edge of this channel is now breached by a full daily candlestick below it. The channel is no longer showing where price is finding support. This slightly reduces the probability of this wave count.

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.

Cycle wave V may last from one to several years.

TECHNICAL ANALYSIS

WEEKLY CHART

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This week completes a Shooting Star bearish candlestick pattern.

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.

At the high within this week is a Bearish Engulfing pattern. This appears while RSI reached overbought and then exhibited bearish divergence with the prior swing high of the 8th of June. This supports the main Elliott wave count.

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.

Again, 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 six weeks is led 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.

Price has made a new short-term swing low, but the AD line has not. This divergence is bullish for the short term. Downwards movement on Friday did not come with a normal corresponding decline in breadth. The divergence is weak. 

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 moved higher, but inverted VIX is flat to slightly declining. This divergence is bearish and adds to bearish divergence between swing highs.

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.

On Friday price moved lower, but inverted VIX moved slightly 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

Upwards movement continues towards targets. This week targets are recalculated.

Summary: A new target is at 1,984 for a third wave to end, which may end with strength. A classic analysis target is at 1,930.

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

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.

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 nearing completion. No second wave correction within intermediate wave (3) may move beyond the start of its first wave 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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The daily chart shows detail of primary wave C as an incomplete impulse.

Intermediate waves (1) and (2) within primary wave C may be complete. Intermediate wave (3) may be incomplete.

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

Draw a best fit channel about primary wave C as shown. The lower edge of the channel may continue to provide support to corrections along the way up. When intermediate wave (3) may be complete, then the channel will be redrawn using Elliott’s technique. The lower edge of the redrawn channel may provide support for intermediate wave (4).

The final target for Super Cycle wave (b) to end is recalculated this week. The target for intermediate wave (3) is also recalculated. 

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 acceleration channel about primary wave 5 as shown. Keep redrawing the channel as price continues higher. When intermediate wave (3) is over, then intermediate wave (4) may find support about the lower edge of the channel.

Intermediate wave (4) may not move into intermediate wave (1) price territory below 1,701.61.

If intermediate wave (3) continues higher, then it must end at or before the limit at 1,937.61.

TECHNICAL ANALYSIS

WEEKLY CHART

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

ADX remains extreme. RSI is not yet extreme, but it does still exhibit bearish divergence (sometimes this may simply disappear). There is room for this trend to continue.

DAILY CHART

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A target calculated from the width of the consolidation is at 1,930.

RSI may reach more deeply overbought while price continues higher. ADX is not extreme at this time frame. There is room for this trend to continue.

Volume and range continues to increase. The trend has strength.

The last blow off top on this chart was the 24th of February. It ended with strength.

Another blow off top may be forming. It may continue for another one to very few days.

The reversal after blow off tops is usually sharp and quick. A bearish candlestick pattern would indicate a high in place at this stage.

GDX WEEKLY CHART

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There is an upwards trend. ADX is not extreme. RSI has only just reached into overbought. There is room for the trend to continue.

GDX DAILY CHART

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A target calculated from the width of the consolidation zone is at 43.78. The Bearish Engulfing pattern is followed by a green daily candlestick to counter the bearish signal.

US OIL

Another small range week continues to form a rounded top.

This week one of three Elliott wave counts was invalidated.

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 32.67. 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 have continued higher this week as a double zigzag. It would now be 1.24 times the length of intermediate wave (A), which 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 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 (5) may be subdividing as an ending contracting diagonal. If this structure is correct, then minor wave 5 may not be longer than equality in length with minor wave 3 at 44.63. If this limit is passed, then intermediate wave (5) must be relabelled. Minor wave 4 within the diagonal may not move beyond the end of minor wave 2 below 38.53.

The channel is redrawn this week to better contain upwards movement.

TECHNICAL ANALYSIS

WEEKLY CHART

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This week a little support from volume and a bullish signal from On Balance Volume support the main Elliott wave count.

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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