S&P 500

Price remains within a channel on the daily chart and above the short-term invalidation point.

Summary: The wave count expects the low of the 30th of October to not be breached for many months or years.

Wave counts are presented in order of probability.

For the short term, the upwards trend may continue to the next target at 4,606. The main wave count expects upwards movement to overall continue with another large consolidation prior to the target to begin before 3,920.24.

The first alternate wave count now is very bullish and expects an increase in upwards momentum in coming weeks.

The second alternate wave count expects a deeper pullback here.

The third alternate daily chart is judged to have a very low probability. For confidence it requires a new low below 3,549.85 and then below 3,233.94.

An alternate wave count at the weekly chart level has an about even probability with the main weekly chart.

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

Last monthly charts are here. Video is here.

ELLIOTT WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

Cycle wave V may last from one to several years. So far it is in its tenth month.

This wave count may allow time for the AD line to diverge from price as price makes final highs before the end of the bull market. The AD line most commonly diverges a minimum of 4 months prior to the end of a bull market. A longer divergence is positively correlated with a deeper bear market. A shorter divergence is positively correlated with a more shallow bear market. With zero divergence at this stage, if a surprise bear market does develop here, then it would likely be shallow.

Cycle wave V 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 waves 1 and 2 may be complete.

Primary wave 3 may only subdivide as an impulse.

There is already a Fibonacci ratio between cycle waves I and III within Super Cycle wave (V). The S&P500 often exhibits a Fibonacci ratio between two of its actionary waves but rarely between all three; it is less likely that cycle wave V would exhibit a Fibonacci ratio. The target for Super Cycle wave (V) to end would best be calculated at primary degree, but that cannot be done until all of primary waves 1, 2, 3 and 4 are complete.

MAIN WAVE COUNT

DAILY CHART

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Primary waves 1 and 2 may both be complete. Primary wave 3 may be underway.

Primary wave 3 may only subdivide as an impulse. Within primary wave 3: Intermediate waves (1) and (2) may be complete, and intermediate wave (3) may be an incomplete impulse.

Minor waves 1 through to 4 within intermediate wave (3) may be complete. No second wave correction within minor wave 5 may move beyond its start below 3,662.71.

The taupe best fit channel may provide support this week as minute wave ii within minor wave 5 ends at support.

If minor wave 3 is over, then it would be shorter in length than minor wave 1. Minor wave 3 is just 3.98 points shorter than 0.618 the length of minor wave 1. Because minor wave 3 may not be the shortest actionary wave within intermediate wave (3), minor wave 5 is limited to no longer than equality in length with minor wave 3.

Primary wave 1 looks extended. The target for primary wave 3 expects it to also be extended.

FIRST ALTERNATE WAVE COUNT

DAILY CHART

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This first alternate is judged to have about an even probability with the main wave count.

This first alternate wave count is the same as the main wave count, except the degree of labelling within intermediate wave (3) is moved down one degree. It is possible that minor wave 1 may be nearing an end.

Minute wave iii within minor wave 1 is shorter than minute wave i. This limits minute wave v to no longer than equality in length with minute wave iii, so that minute wave iii is not the shortest actionary wave.

When minor wave 1 may be complete, then minor wave 2 may not move beyond the start of minor wave 1 below 3,233.94. Minor wave 2 may be relatively brief and shallow due to the upwards pull of a third wave at three large degrees.

While both the main wave count and this first alternate wave count have a limit for a fifth wave up to end, this alternate expects only a small minor degree pullback to occur prior to the limit, which may be over briefly where the main wave count sees the limit as more important because it expects an intermediate degree correction to begin prior to it.

SECOND ALTERNATE WAVE COUNT

DAILY CHART

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It is also possible that intermediate wave (3) is complete and intermediate wave (4) may move lower. Intermediate wave (4) may find support about the lower edge of the weekly best fit channel although if it lasts long enough to exhibit a good proportion to intermediate wave (2), then it may breach the channel.

Intermediate wave (2) was a very deep zigzag lasting 14 sessions. Intermediate wave (4) may also be a zigzag as these are by a wide margin the most common Elliott wave corrective structure, but it may also subdivide as a flat, combination or triangle.

Intermediate wave (4) may not move into intermediate wave (1) price territory below 3,549.85.

THIRD ALTERNATE WAVE COUNT

DAILY CHART

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In the interest of always trying to consider all possibilities this alternate is considered.

This alternate wave count does not have support from classic technical analysis at this time, so it is judged to have a low probability. However, low probability does not mean no probability. Confidence / invalidation points may be used to judge any change in probability between the wave counts.

It is possible that primary wave 2 may be an incomplete expanded flat correction.

Intermediate wave (B) may have continued higher as a double zigzag. Intermediate wave (B) is now 1.67 times the length of intermediate wave (A), which is beyond the common range of up to 1.38. The probability of this wave count declines as price continues higher.

There is no rule for flat corrections that state a limit for B waves, so it is possible that intermediate wave (B) may extend higher. If intermediate wave (B) were to reach twice the length of intermediate wave (A) at 3,942.28, then the idea of a flat correction should be discarded based upon a very low probability.

ALTERNATE WEEKLY CHART

Click chart to enlarge.

This wave count is the same as the first weekly chart with the exception of the degree of labelling within cycle wave V.

If the degree of labelling within cycle wave V is moved down one degree, then only primary wave 1 may be currently unfolding. When primary wave 1 may be complete, then a multi-week pullback or consolidation may begin for primary wave 2. Primary wave 2 may not move beyond the start of primary wave 1 below 2,191.86.

This wave count is more bullish than the main weekly chart. It expects that cycle wave V may be in an earlier stage and may yet last many more years than the main weekly chart expects it to. These two weekly wave counts are of an even probability. In coming months to years classic technical analysis will be used to judge the probability of these two weekly wave counts.

TECHNICAL ANALYSIS

WEEKLY CHART

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

This chart is bullish and still supports the main Elliott wave count. All of volume, ADX and MACD are bullish. There is no bearish candlestick reversal pattern. Conditions are not extreme. There is room for this upwards trend to continue.

On Balance Volume now has a new range.

DAILY CHART

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

The last swing low of the 4th of January at 3,662.71 remains intact. While this has not been breached, a series of higher highs and higher lows off the low of the 30th of October remains. If the last swing low is breached, then it would be possible that a trend change for the mid term has occurred.

Overall, this chart is fairly bullish and supports the main or first alternate Elliott wave count (or the weekly alternate, which is more bullish).

The Hanging Man at the high has now been followed by some sideways and downwards movement. Next support is at 3,725.

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.

Lowry’s Operating Companies Only AD line has made a new all time high on the 14th of January. This is a strong bullish signal and supports the main Elliott wave count.

Large caps all time high: 3,826.69 on January 8, 2021.

Mid caps all time high: 2,462.73 on January 14, 2021.

Small caps all time high: 1,237.54 on January 14, 2021.

This week the AD line has made a new all time high, but price has not. This divergence is bullish. 

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.

Short-term bearish divergence noted two days ago has now been followed by downwards movement, so it may now be resolved.

To end the week both the AD line and price have moved a little lower but neither have made new short-term swing lows. There is no new divergence. Short-term bullish divergence remains.

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. The all time high for inverted VIX was in the week beginning October 30, 2017. There is over 3 years of bearish divergence between price and inverted VIX. There is all of long, mid and short-term bearish divergence. This bearish divergence may develop further before the bull market ends. It may be a very early indicator of an upcoming bear market, but it is not proving to be useful in timing.

This week price has completed an inside week, which closed red, and inverted VIX has moved lower to make a new short-term low. This divergence is bearish for the short term.

Comparing VIX and VVIX: Both VIX and VVIX have moved higher. There is no new 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.

Both price and inverted VIX have moved lower but neither have made new swing lows. There is no new divergence. Mid-term bearish divergence remains.

Comparing VIX and VVIX at the daily chart level: Bearish divergence noted two days ago has now been followed by downwards movement, so it may now be resolved. Today both VIX and VVIX have moved higher. There is no new divergence.

DOW THEORY

Dow Theory confirms a new bull market with new highs made on a closing basis:

DJIA: 29,568.57 – closed above on 16th November 2020.

DJT: 11,623.58 – closed above on 7th October 2020.

Adding in the S&P and Nasdaq for an extended Dow Theory, confirmation of a bull market would require new highs made on a closing basis:

S&P500: 3,393.52 – closed above on 21st August 2020.

Nasdaq: 9,838.37 – closed above on June 8, 2020.

The following major swing lows would need to be seen on a closing basis for Dow Theory to confirm a change from bull to a bear market:

DJIA: 18,213.65

DJT: 6,481.20

Adding in the S&P and Nasdaq for an extended Dow Theory, confirmation of a new bear market would require new lows on a closing basis:

S&P500: 2,191.86

Nasdaq: 6,631.42

GOLD

Downwards movement to end the week fits the first Elliott wave count best.

Both Elliott wave counts remain valid.

Summary: The first wave count is bearish for the bigger picture and has only one daily chart. This wave count expects a multi-year bear market may be in its early stages to end below 1,046.

For the short term, downwards movement may increase in momentum next week. A short-term target is at 1,645. A long-term target is at 657. Some confidence may be had in this bearish wave count if price makes a new low below 1,766.53. This wave count may be discarded if price makes a new high above 1,957.87.

The second wave count is bullish for the bigger picture. It now expects that the pullback was over at the last low and the bull market for Gold has resumed to a new mid-term target at 2,141 and thereafter a final target at 2,182. Confidence may be had in this second wave count if price makes a new high above 1,957.87.

Grand SuperCycle analysis is here.

Last analysis of monthly charts is here.

FIRST ELLIOTT WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

The bigger picture for this first 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. Grand Super Cycle wave IV may be subdividing as an expanded flat pattern.

Super Cycle wave (b) within Grand Super Cycle wave IV may be a complete double zigzag. This wave count expects Super Cycle wave (c) to move price below the end of Super Cycle wave (a) at 1,046.27 to avoid a truncation and a very rare running flat. The target calculated expects a common Fibonacci ratio for Super Cycle wave (c).

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.

A best fit channel is drawn about primary wave C to contain as much of this movement as possible. This channel is now clearly breached, which suggests the upwards wave labelled cycle wave y may be over. The lower edge of the channel may provide resistance for any deeper bounces.

DAILY CHART

Click chart to enlarge.

Within a new bear market, primary wave 1 may be an incomplete five wave impulse.

Primary wave 2 within the new downwards trend may not move beyond the start of primary wave 1 above 2,070.48.

Gold typically exhibits extended and strong fifth waves; this tendency is especially prevalent for fifth waves to end third wave impulses one degree higher. One or more of minuette wave (v), minute wave v and minor wave 5 may exhibit this tendency; there may be one or more selling climaxes along the way down. Minute wave iv and minor wave 4 may be relatively brief and shallow.

Draw an acceleration channel about downwards movement and keep redrawing the channel as price makes new lows. Draw the first trend line from the end of intermediate wave (1) to the last low, then place a parallel copy on the end of intermediate wave (2). When intermediate wave (3) may be complete, then this channel would be drawn using Elliott’s technique about primary wave 1. The upper edge of this channel has again been breached. The upper edge of this channel was breached at the end of minute wave ii and yet price continued lower from there; the upper edge of the channel may not perfectly show were price finds resistance. This is common for Gold early in a new trend as its impulses are often curved in form with deep and time consuming second wave corrections. If the lower edge of the channel is breached, then it would indicate a third wave down underway.

Minuette wave (ii) may have continued higher as a double zigzag. No second wave correction within minuette wave (iii) may move beyond its start above 1,957.87.

A new low below 1,766.53 would add reasonable confidence to this wave count.

Draw a small channel about most recent downwards movement. The upper edge may show where bounces along the way down may find resistance.

SECOND 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 first 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.

Cycle waves III and IV may be complete.

Cycle wave IV may be a complete double zigzag. It is also possible that cycle wave IV may continue sideways as a flat or lower as a triple zigzag. For this reason the invalidation point is at the end of cycle wave I. Cycle wave IV may not move into cycle wave I price territory below 1,303.51.

Draw an Elliott channel about this impulse as shown. Cycle wave V may find resistance about the upper edge.

DAILY CHART

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Cycle wave IV may be over as a double zigzag.

A new swing high above 1,957.87 would add reasonable confidence to this wave count. Finally, a new all time high would add strong confidence to this wave count.

If cycle wave IV is complete, then it would have lasted only 17 weeks compared to 119 weeks for cycle wave II. While it is normal for Gold to exhibit fourth waves that are more brief than their counterpart second waves, a difference this great is unusual. This reduces the probability of this wave count.

When primary wave 1 within cycle wave V is complete, then primary wave 2 may not move beyond the start of primary wave 1 below 1,766.53.

Intermediate wave (1) may have ended at the last swing high. Intermediate wave (1) will subdivide on lower time frames as a five wave structure, but at the daily chart level it does not look like a normal five wave impulse, which reduces the probability of this wave count.

Intermediate wave (2) may be continuing a little lower as a zigzag. Intermediate wave (2) may not move beyond the start of intermediate wave (1) below 1,766.53.

TECHNICAL ANALYSIS

WEEKLY CHART

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

At the last high were two bearish candlestick patterns with overbought RSI exhibiting double bearish divergence. It is possible there may have been a 180° trend change at the high. A new swing low below 1,671.70 would add confidence in that view.

From the all time high is now a series of two lower swing highs and three lower swing lows, which may be a new downwards trend. However, downwards movement from the all time high has now lasted long enough to bring ADX and RSI down from extreme, so there is again room for an upwards trend to continue.

DAILY CHART

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

From the high on August 7, 2020, there has been a series of lower lows and lower highs. The last swing high at 1,966.10 on the 9th of November remains intact.

There is strength in downwards movement with push from volume and increasing ATR. ADX gives a strong bearish signal.

After what looks like a small pause this week within a downwards trend, Friday completes a stronger red candlestick. However, volume did not push price lower; it fell of its own weight.

ADX and RSI are not extreme. There is room for downwards movement to continue.

GDX WEEKLY CHART

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

If GDX makes a new swing high above 41.59 and On Balance Volume breaks above resistance, then the pullback of the last several weeks may be considered over.

A close very near the low for the week is bearish.

GDX DAILY CHART

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

Overall, from the high on August 5th, there is still a series of lower lows and lower highs, the basic definition of a downwards trend. For this view to change a new high above 41.59 would have to be seen.

A new low below 36.68 has closed the last gap and is bearish.

The mid-term 55 day average has crossed below the long-term 200 day average. This crossover is bearish.

A close very near the low for Friday, with push from volume, strongly suggests more downwards movement next week.

US OIL

Again, more upwards movement has unfolded as expected.

Price remains within the channel on the daily chart.

Summary: Classic analysis suggests a high may be in place for the short to mid term, but the Elliott wave count allows for one final small wave up to a target at 55.40.

A new low below 48.96 and a breach of the channel on the daily chart would indicate a trend change. At that stage, a multi-week pullback or consolidation may be expected.

A longer-term target for a third wave is at 87.90 or 121.43.

Oil may have found a major sustainable low in April 2020.

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.

Following Super Cycle wave (III), which was a correction (three steps back), Super Cycle wave (III), which may have begun, should be five steps up when complete. 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.

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. 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. If resistance is breached, then the upper edge may provide support for a back test.

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. However, while this is a common tendency, it is not always seen and may not have been seen in this instance. The first reasonably sized pullback may be over already.

WEEKLY CHART

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Super Cycle wave (III) must subdivide as an impulse. Cycle wave I within the impulse may be complete. Cycle wave II may also now be complete, and cycle wave III upwards may now have begun. If cycle wave II continues lower, then it may not move beyond the start of cycle wave I below 10.24.

There is only one daily chart following this main weekly chart. An alternate is presented below on a weekly chart.

DAILY CHART

Click chart to enlarge.

Cycle wave III may only subdivide as an impulse. Within the impulse: Primary wave 1 may be incomplete, and primary wave 2 may not move beyond the start of primary wave 1 below 33.65.

Intermediate wave (5) within primary wave 1 may have begun.

Minor waves 1 through to 4 within intermediate wave (5) may be complete. If minor wave 4 moves lower, then it may not move into minor wave 1 price territory below 48.96. If minor wave 3 is over at the last high, then it would be 0.59 short of 2.618 the length of minor wave 1.

Intermediate wave (5) has passed equality in length with intermediate wave (1), and the structure is incomplete. The next Fibonacci ratio in the sequence is used to calculate a new target for intermediate wave (5).

In the short term, a new low below 48.96 prior to new highs would be a strong indication that primary wave 1 should be over and primary wave 2 should be underway. A new low below 48.96 prior to new highs could not be minor wave 4, so minor waves 4 and 5 would have to be over at that stage. This would also come with a breach of the best fit channel.

When primary wave 1 is complete, then a multi-week pullback or consolidation for primary wave 2 should begin. The best fit channel may help as a guide to when primary wave 1 may be over. When this channel is breached by at least one full daily candlestick of downwards movement below and not touching the lower edge, then it may indicate a trend change.

ALTERNATE WEEKLY CHART

Click chart to enlarge.

This alternate wave count moves the degree of labelling within the start of the bull market down one degree. It is possible that cycle wave I is incomplete.

The target for primary wave 3 is lower than the target on the first wave count.

A daily chart for this alternate would be the same as the daily chart for the main wave count, except the degree of labelling would be one degree lower. The channel would be the same.

TECHNICAL ANALYSIS

WEEKLY CHART

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

Price is within a cluster of resistance and support; this may slow it down.

ADX gives a strong bullish signal. There is a lot of room for an upwards trend to continue as RSI and ADX are not extreme.

DAILY CHART

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

A target calculated from the pennant pattern at 53.03 has been met and slightly exceeded, and is now followed by a Bearish Engulfing candlestick pattern. At the time this chart was prepared the Bearish Engulfing pattern did not have support from volume, but sometimes StockCharts data is changed retrospectively. If it does change to have support from volume, then a little confidence that a high may be in place may be had. 

At the daily chart level, this upwards trend is now extreme and RSI is overbought. However, this market can sustain extreme conditions for some time while price travels a reasonable distance.

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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.