S&P 500

Upwards movement remains below the mid-term invalidation point on the daily chart.

Summary: This analysis still leans bearish in expecting a sustainable high may be in place on June 8th. The main wave count is bearish and will remain the most likely scenario while price remains below 3,233.13.

The main wave count has two final targets at 2,031 and 1,708. A weekly 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 third alternate wave count outlines a bullish scenario. However, weakness in volume and breadth does not support this wave count at this time as it sees a third wave upwards underway. Third waves should exhibit strength. A new high above 3,233.13 is still 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

Click chart to enlarge.

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.

For this weekly chart, two daily charts are provided below. The main daily chart considers primary wave B complete as a single zigzag. The alternate daily chart considers primary wave B continuing higher as a double zigzag.

MAIN DAILY CHART

Click chart to enlarge.

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). It may now be complete.

Draw a channel about cycle wave II using Elliott’s technique for a correction  (light blue). Draw the first trend line from the start of primary wave A to the end of primary wave B, then place a parallel copy on the end of primary wave A. Primary wave C may find support about the lower edge of this channel. If this main daily chart is correct, then the upper edge should provide resistance. If price breaks above the upper edge of this trend channel on Monday, then the alternate daily chart below may increase in probability.

Intermediate wave (1) within primary wave C may be complete. Intermediate wave (2) may have continued higher as a double zigzag.

Intermediate wave (2) 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.

Primary wave A lasted 23 sessions, 2 more than a Fibonacci 21. Primary wave B may have lasted 53 sessions, two short of a Fibonacci 55. Primary wave C may end in a total 55 or 89 Fibonacci sessions, give or take about two either side of each number. So far it has lasted 23 sessions, and so if these estimates are wrong they may be too brief.

ALTERNATE DAILY CHART

Click chart to enlarge.

This alternate chart is the same as the main wave count up to the low labelled primary wave A. Thereafter, it considers the possibility that primary wave B may continue 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.

Primary wave B no longer fits well within a channel drawn using Elliott’s technique about the double zigzag, so a best fit channel is used. A breach of the lower edge of this channel may indicate a trend change.

FIRST ALTERNATE WEEKLY CHART

Click chart to enlarge.

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 a complete zigzag. It is possible that cycle wave II may still continue higher as a double zigzag.

Cycle wave II may not move beyond the start of cycle wave I above 3,393.52.

THIRD ALTERNATE DAILY CHART

Click chart to enlarge.

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 have found 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.

This alternate wave count expects that at this stage a third wave labelled minor wave 3 should be unfolding higher. Volume and breadth do not at this stage support this wave count, so it remains an alternate.

Cycle wave V may last from one to several years.

TECHNICAL ANALYSIS

WEEKLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

The signal from On Balance Volume is weak because the trend line breached had only the minimum of two anchor points required to draw a line. It was not long held. 

Dark Cloud Cover 5 weeks ago is still a bearish reversal signal and should be considered as such while its high remains intact.

DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

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.

90% and 80% days are used to indicate a shift in sentiment from bearish to bullish, and vice versa. A sentiment shift occurs when one 90% or two back to back 80% days in one direction are then followed within three to four sessions by one 90% or two back to back 80% days in the opposite direction. This has occurred only twice on this chart.

The first instance is a 90% down day on the 18th of March followed by a 90% up day four sessions later on the 24th of March. It was this technical evidence that was primarily used to identify a sustainable low on the 23rd of March.

The second instance was a 90% up day on the 5th of June then an 80% up day on the 8th of June followed three sessions later by a very strong 90% down day on the 11th of June. This indicates a good probability that the high on the 8th of June may be sustainable.

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.

Volume does not support upwards movement. Stochastics is now overbought. This upwards swing may end soon.

The Fibonacci 55 day moving average has now crossed above the long term 200 day moving average. This is a bullish signal, which may support the alternate bullish wave count. But it should be given only a little weight in the overall analysis.

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.

On the week beginning 1st of June the NYSE all issues AD line made new all time highs, although Lowry’s Operating Companies Only AD line did 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.

This week both price and the AD line have moved higher. 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.

At the end of this week, it is only large caps that have made new short-term swing highs above the prior high of the 6th of July. Small and mid caps have not. The rise this week was let 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.

Both price and the AD line have moved higher to end the week. Price has made a new high very slightly above the prior high of the 6th of July, but the AD line has not. This divergence is bearish.

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 both price and inverted VIX have moved higher. There is no new short-term divergence.

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.

Short-term bullish divergence has now been followed by upwards movement, so it may now be resolved. There is no new divergence.

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

After an upwards breakout, price has continued higher this week as the main wave count for Gold expected.

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

Grand SuperCycle analysis is here.

Monthly charts were last updated here.

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

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.

Two daily charts below label intermediate wave (5) in two different ways. Although they are labelled “main” and “alternate”, they may be about even in probability.

MAIN DAILY CHART

Click chart to enlarge.

Minor waves 1 through to 4 within intermediate wave (5) may be complete. Minor wave 5 may be extending.

No second wave correction within minor wave 5 may move beyond the start of its first wave below 1,759.10.

Draw an Elliott channel about intermediate wave (5): draw the first trend line from the ends of minor waves 1 to 3, then place a parallel copy on the end of minor wave 2. Minor wave 5 may have the strength to break above the upper edge of this channel as fifth waves for commodities may be particularly strong.

ALTERNATE DAILY CHART

Click chart to enlarge.

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 down one degree. It is possible that only minor wave 1 within intermediate wave (5) is nearing an end.

The channel is the same. Subdivisions at lower time frames are the same. The degree of labelling is the only difference.

Minor wave 2 may not move beyond the start of minor wave 1 below 1,672.80.

ALTERNATE BULLISH ELLIOTT WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

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

Click chart to enlarge.

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.

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

Click chart to enlarge. Chart courtesy of StockCharts.com.

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

A bearish upper wick and extreme ADX are warnings that this breakout may still be false, so a trend change may occur. Risk management during extreme conditions is essential.

DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

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.

Downwards movement following the breakout may be a back test of support at prior resistance. This is normal after a breakout. While price remains above support at the upper edge of the consolidation zone, the breakout looks most likely valid.

Longer term bearish divergence between price and RSI, with declining ATR, warn of weakness. This market is vulnerable to a potential trend change.

GDX WEEKLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

There has been an upwards breakout this week. Neither RSI nor ADX are extreme. There is room for this trend to continue.

Bearish divergence with RSI is a warning to proceed with caution.

GDX DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

There is an upwards breakout. A target would be at 43.82.

Downwards movement may be a typical test of support at prior resistance. The breakout remains valid while price remains above the upper edge of the consolidation zone.

US OIL

Another small range week remains below resistance. All three short-term Elliott wave counts remain valid.

Summary: Oil may have found a major sustainable low.

For the mid term, a multi-week pullback may end about 31.75 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

Click chart to enlarge.

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

Click chart to enlarge.

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

Click chart to enlarge.

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 also be a complete zigzag, at 1.2 times the length of intermediate wave (a). 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

Click chart to enlarge.

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

Click chart to enlarge.

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.

TECHNICAL ANALYSIS

WEEKLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

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

Click chart to enlarge. Chart courtesy of StockCharts.com.

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

—
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.