S&P 500

Another small range day closes as an inside day. At the end of the week, all four Elliott wave counts remain the same.

Summary: The trend remains upwards.

A trend change may come before 3,432.15. Prior to this point a multi-week pullback or a 180° reversal may occur.

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 again be incomplete. Look for corrections to find support about the lower edge of the best fit channel while primary wave 1 continues higher. If this channel is breached, then that may provide early indication that primary wave 1 may be over.

When it arrives, primary wave 2 may 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 now at any stage. If it continues further, then intermediate wave (4) may not move into intermediate wave (1) price territory below 3,235.32. At this stage, a new low below 3,235.32 could not be part of intermediate wave (4) and would indicate an end to primary wave 5.

Cycle wave V has moved above the end of cycle wave I at 2,940.91, avoiding a truncation. It would still be likely for this wave count that cycle wave V would move above the price territory of cycle wave IV to make a new high above 3,393.52.

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 again be complete.

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 again be complete.

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 a complete 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 decline in range and volume this week indicates weakness. There is strong resistance here at the last all time high at 3,393.52. If this can be overcome, then expect some energy to be released and to see price move up with a little more strength.

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.

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, and has further weakened as price continues higher.

RSI and ADX are not extreme; there is room for upwards movement to continue.

For the short term, volume is now more bearish. Declining volume and range has long been a feature of this bull market, but for the last two sessions it is more extreme. Price has been unable to break above resistance so far at the last all time high, which is significant. For a more bullish outlook to prevail that resistance must be overcome 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.

Last 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.

All of small, mid and large caps have now made new swing highs above the prior highs of the 8th of June. This last rise was led by large caps, which is a feature of an aged 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.

Today price has moved sideways to complete an inside day, and the AD line is flat. There is no new short-term 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 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. VIX has moved slightly lower for this last week, but VVIX has moved more sharply higher. This is a week of single instance divergence, which 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 price has completed an inside day, and inverted VIX has moved slightly higher to make a new short-term high. This divergence is bullish for the very short term.

Comparing VIX and VVIX at the daily chart level: For Friday both have moved slightly lower; there is no new short-term 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.

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 small range inside day finishes the week and leaves all Elliott wave counts the same.

Summary: The pullback may be over. The upwards trend may resume.

Alternatively, it is possible that a wide ranging consolidation may continue for another week or two. An upwards swing may have begun.

The next longer-term target is now at 2,180.

A new low below 1,764.12 at any time frame would invalidate the main daily chart and add confidence in a bearish wave count. At that stage, a sustainable high would be in place and either a cycle degree fourth wave or a Super Cycle degree C wave down may be underway.

Grand SuperCycle analysis is here.

Last analysis of monthly charts is here with video here.

FIRST 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) through to (4) within primary wave C may be complete. If it continues any lower, then 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 (4) within primary wave C may be complete.

If it continues lower, then 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 have overshot the lower edge.

Intermediate wave (2) was a shallow double zigzag, lasting 15 sessions. Intermediate wave (4) may be complete as a deeper and quicker single zigzag. Fourth waves are most often more brief than their counterpart second wave corrections for this market, so it would look normal for intermediate wave (4) to be over here.

ALTERNATE DAILY CHART

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It is also possible that a Super Cycle degree trend change has occurred last week. However, we should always assume the trend remains the same until proven otherwise. Assume the upwards trend remains in place and the main wave count is correct until the upwards trend is invalidated with a new low below 1,764.12. At that stage, this would become the main wave count.

Super Cycle wave (c) would be likely to make at least a slight new low below the end of Super Cycle wave (a) at 1,046.27 to avoid a truncation. If price provides confidence in this wave count with a new low below 1,764.12, then a target would be calculated for Super Cycle wave (c) to end.

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 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 have overshot the lower edge of the channel.

If minor wave 4 continues lower, then it 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 last week is a bearish reversal pattern that should be given weight in these conditions.

Now a strong Bearish Engulfing candlestick pattern, which has support from volume, further supports the view that a high is in place for the mid or long term.

DAILY CHART

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RSI is back in neutral territory, but ADX is still elevated. Look for support about 1,800 if price gets that low.

It is also possible that there has been a major trend change, which the new alternate bearish wave count outlines.

GDX WEEKLY CHART

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Now two bearish candlestick reversal patterns in a Shooting Star and a Bearish Engulfing pattern indicate a trend change. With RSI reaching overbought at the high, these signals should be given weight. A trend change may be either a 180° change or a change to a sideways consolidation.

GDX DAILY CHART

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Price may have curved down to back test support about 37.50 after the upwards breakout. This would be typical behaviour.

Price is now at resistance and On Balance Volume is at resistance. Upwards movement may be limited here.

US OIL

An inside week this week leaves both Elliott wave counts for Oil valid.

Summary: Oil may have found a major sustainable low.

A slow rounded top may still be forming.

A pullback is still expected. 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 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 may have continued sideways this week. Minute wave b within minor wave 4 may be a double combination. A truncation for minute wave c is avoided. 

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 still 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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