S&P 500

Price has closed back within a prior consolidation zone.

The main Elliott wave count still has the same target. The alternate Elliott wave count remains valid.

Summary: The wave count expects a third wave at three large degrees may have moved through its middle and may now be completing.

A small correction may have been over at the last low and price may continue upwards from here to a target at 4,276.

The next mid-term target for the upwards trend is at 4,464 or 4,922. About one of these targets another multi-week pullback or consolidation may develop.

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

Last monthly charts are here. Video is here.

MAIN WAVE COUNT

WEEKLY CHART

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

A longer divergence between price and the AD line would be expected towards the end of Grand Super Cycle wave I.

It is possible that cycle wave V may continue until 2029, if the 2020s mirror the 1920s (although the alternate weekly wave count fits this expectation better).

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.

Primary wave 3 has now moved well above the end of primary wave 1. Primary wave 4 may not move into primary wave 1 price territory below 3,588.11.

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.

An acceleration channel is drawn about cycle wave V. Draw the first trend line from the end of primary wave 1 to the last high, then place a parallel copy on the end of primary wave 2. Keep redrawing the channel as price continues higher. When primary wave 3 is complete, then this channel would be drawn using Elliott’s first technique and may show were primary wave 4 may find support.

FIRST DAILY CHART

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The daily chart focusses on the unfolding impulse of primary wave 3 from the end of intermediate wave (1) within it.

Intermediate wave (1) within primary wave 3 may be complete.

Intermediate wave (2) may also be complete as a triple zigzag.

Intermediate wave (3) within primary wave 3 may now be underway and may have passed its middle.

Minor waves 1 and 2 within intermediate wave (3) may now be complete. When it arrives, then minor wave 4 may last about one to two weeks and may not move into minor wave 1 price territory below 3,983.87. While minor wave 5 continues, then within it no second wave correction may move beyond its start below 4,118.38.

Targets are calculated for intermediate wave (3) and for primary wave 3. As price approaches the first target for intermediate wave (3) and if the structure is complete and technical analysis suggests a pullback may occur, then the target may be useful. But if price moves through the first target or the structure is incomplete, then the second target may be used.

When minor wave 4 may be complete, then the target for intermediate wave (3) may also be calculated at minor degree. At that stage, the target may widen to a zone or it may change.

Draw a best fit channel about intermediate wave (3) as shown. Draw the first trend line from the end of minor wave 1 to the end of minute wave iii, then place a parallel copy on the end of minor wave 2.

SECOND DAILY CHART

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This wave count is now named as a second, rather than an alternate. The first and second wave counts may be of about even probability.

It remains possible that minor wave 3 may be over and minor wave 4 may continue further as an expanded flat. Minor wave 4 may not move into minor wave1 price territory below 3,983.87.

Minor wave 4 may continue for a few more days. It would be extremely likely that minute wave c would make at least a slight new low below the end of minute wave a at 4,118.38 to avoid a truncation and a very rare running flat.

ALTERNATE WAVE COUNT

WEEKLY CHART

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This wave count sees subdivisions within cycle wave V the same except the degree of labelling is moved down one degree. Primary wave 1 within cycle wave V may be incomplete.

Within primary wave 1: Intermediate waves (1) and (2) may be complete, intermediate wave (3) may be extending, and intermediate wave (4) may not move into intermediate wave (1) price territory below 3,588.11.

When primary wave 1 may be complete (in several months time), then a deeper and longer lasting pullback for primary wave 2 may unfold. Primary wave 2 may not move beyond the start of primary wave 1 below 2,191.86.

TECHNICAL ANALYSIS

WEEKLY CHART

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A series of higher highs and higher lows off the low of March 2020 continues. The last short-term swing low is now at 3,723.34. While this remains intact, the dominant view should be of an upwards trend. There is a long way for this trend to run before conditions may become extreme.

This chart has the look of a sustainable bull market in a relatively early stage; there is as yet no evidence that a larger correction should begin here. Although RSI has just now reached overbought, this market has a strong bullish bias and RSI can move deeply overbought and remain there for years prior to the bull market ending.

For the short term, this week closes as a small Gravestone Doji, a bearish candlestick reversal pattern. This supports the second Elliott wave count.

DAILY CHART

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The series of higher highs and higher lows from the low of the 30th of October continues.

Pullbacks are a normal and to be expected part of a bullish trend.

Support for On Balance Volume is strong. This supports the first Elliott wave count.

Two bearish candlestick reversal patterns (in conjunction with the pattern on the weekly chart), a Hanging Man and a Gravestone Doji, support the second Elliott wave count. Bearish divergence between price and RSI supports the second 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.

Lowry’s Operating Companies Only AD line has made a new all time high on the 29th of April. This supports the first Elliott wave count.

Large caps all time high: 4,218.78 on April 29, 2021.

Mid caps all time high: 2,778.84 on April 29, 2021.

Small caps all time high: 1,399.31 on March 12, 2021.

The last new high is found in large and mid caps. Small caps now have a fairly long lag of over a month; this fits with the main Elliott wave count, which expects a minor degree correction may continue. Small caps can lag and large caps can lead for some time while price travels a reasonable distance. Lagging small caps at this stage does not necessarily mean a larger correction should begin here.

This week again price and the AD line both make new all time highs. Upwards movement has support from rising market breadth. This is bullish and supports the first 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.

Both price and the AD line have moved lower today. 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. 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. 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.

For the second week in a row price has moved higher, but inverted VIX has moved lower. This bearish divergence supports the second Elliott wave count.

Comparing VIX and VVIX at the weekly chart level:

This week both VIX and VVIX have moved higher. There is no new divergence.

There is now a cluster of three weeks of short-term bearish divergence for price. This 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.

Both price and inverted VIX have moved lower on Friday. There is no new short-term divergence.

Comparing VIX and VVIX at the daily chart level:

Today both VIX and VVIX have moved higher. There is no new short-term divergence.

There is still a cluster of short-term bearish divergence for price.

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.

Most recently, last week both DJIA and DJT have made new all time highs. An ongoing bull market is again confirmed by Dow Theory.

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

A breach of a small channel now at the daily chart level supports the first preferred Elliott wave count.

Both Elliott wave counts remain valid.

Summary: The first wave count is bearish for the bigger picture and classic technical analysis supports this view. This wave count expects a multi-year bear market may be in its early stages to end below 1,046.

The bounce may be over. A target for the next wave down is now calculated at 1,675.

A long-term target is at 657.

The second wave count is bullish. A new upwards wave may now have begun. The target is at 2,094.

Grand SuperCycle analysis and last monthly charts are here.

FIRST ELLIOTT WAVE COUNT

WEEKLY CHART

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The bigger picture for this first Elliott wave count sees Gold as now 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).

DAILY CHART

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Within a new bear market, cycle wave I may be an incomplete five wave impulse.

Cycle wave II within the new downwards trend may not move beyond the start of cycle wave I 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 both of minor wave 5 or intermediate wave (5) may exhibit this tendency; there may be one or more selling climaxes along the way down.

Draw an acceleration channel about downwards movement. Draw the first trend line from the end of primary wave 1 to the last low, then place a parallel copy on the end of primary wave 2. Keep redrawing the channel as price continues lower.

Minor wave 4 may be complete as a flat. It may have found resistance close to the upper edge of the cyan Acceleration channel.

If it continues further, then minor wave 4 may not move into minor wave 1 price territory above 1,849.22.

Draw a channel about minute wave c within minor wave 4. Draw the first trend line from the ends of minuette waves (i) to (iii), then place a parallel copy on the end of minuette wave (ii). This channel is now breached by downwards movement at the daily chart level, which may be an indication that minor wave 4 may be over.

SECOND 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 second weekly chart on prior analysis here). 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 wave IV may be a complete triple zigzag. The rarity of triple zigzags reduces the probability of this wave count further.

If the third zigzag of primary wave Z continues lower, then 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 a complete triple zigzag.

The purpose of multiple zigzags is to deepen a correction when the first zigzag does not move price deep enough. To achieve this purpose multiple zigzags normally have a clear counter trend slope. Cycle wave IV looks normal with a clear downwards slope.

A target is recalculated for cycle wave V. If cycle wave IV continues lower, then this target must again be recalculated.

A best fit channel is drawn about cycle wave IV. If this channel is breached by upwards movement with at least one full daily candlestick above and not touching the upper edge of the channel, then that may provide confidence in this second Elliott wave count. The upper edge of this channel at this stage is not breached and, in the first instance, resistance may be expected if price continues higher to the trend line.

Minor wave 1 may be a complete impulse. Minor wave 2 may now be a complete double zigzag.

TECHNICAL ANALYSIS

WEEKLY CHART

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Although this week volume has slightly declined, it remains heavier than immediately prior upwards weeks. Resistance about 1,800 has held.

DAILY CHART

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There is now a bearish candlestick reversal pattern in a Dark Cloud Cover to indicate the bounce may be over. The short-term volume profile remains bearish.

Weight is given in this analysis to the bearish signal from On Balance Volume.

GDX WEEKLY CHART

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This week a bearish reversal pattern in an Evening Star has support for the third downwards candlestick. Price has turned down from resistance. The bounce looks to be over.

GDX DAILY CHART

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Both volume and On Balance Volume are bearish.

US OIL

Upwards movement remains below the short-term invalidation point on the daily Elliott wave count.

Summary: Downwards movement may continue for another two to four weeks to a new target zone at 54.86 – 55.75. Thereafter, the next target is at 46.76 if price keeps falling.

Alternatively, the upwards trend may have already resumed. Confidence in this view may be had if price makes a new high above 67.97 in the short term.

The larger trend remains up.

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 (II), 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 to the downside, which is a typical look for the end of a movement for a commodity.

The upper edge of the channel may provide resistance. Price is reacting down from the upper edge of this channel.

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. Primary wave 2 within cycle wave III may not move beyond the start of primary wave 1 below 33.65.

DAILY CHART

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Primary wave 2 would most likely subdivide as a zigzag. Intermediate wave (A) within the zigzag may be a complete impulse. Intermediate wave (B) may have continued higher this week as a double zigzag. If intermediate wave (A) is correctly labelled as a five wave impulse, then intermediate wave (B) may not move beyond its start above 67.97.

Primary wave 2 may last weeks to months.

As price approaches the first target zone at 54.86 to 55.75, and if then the structure is complete and technical analysis indicates a low may be in place, then it may end there. But if price keeps falling and / or the structure of primary wave 2 is incomplete, then the 0.618 Fibonacci ratio at 46.76 would be the next target.

Labelling within primary wave 2 may still change as it unfolds and alternate wave counts for the short-term structure may need to be considered. There are several different structures that primary wave 2 may unfold as.

Primary wave 2 may not move beyond the start of primary wave 1 below 33.65.

ALTERNATE WEEKLY CHART

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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.

Primary wave 3 may have ended at the last high. Primary wave 3 is close to equal in length with primary wave 1; it is 0.79 longer than primary wave 1.

Primary wave 4 may subdivide as any corrective structure. It is possible that primary wave 4 may be a complete triangle; this is now outlined on a daily chart below. If it continues further, then primary wave 4 may not move into primary wave 1 price territory below 43.77.

ALTERNATE DAILY CHART

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It is possible that primary wave 4 may be a complete regular contracting triangle. This triangle does not have a normal look; intermediate wave (A) is much longer than all other triangle sub-waves, which is abnormal and reduces the probability of this alternate wave count.

Primary wave 5 must subdivide as a five wave motive structure, most likely an impulse. Intermediate waves (1) and (2) within primary wave 5 may be complete.

Intermediate wave (3) must subdivide as an impulse. Within intermediate wave (1): Minor wave 1 may be incomplete, and minor wave 2 may not move beyond the start of minor wave 1 below 60.62.

If price makes a new high above 67.97 by any amount at any time frame, then some confidence may be had in this alternate wave count.

TECHNICAL ANALYSIS

WEEKLY CHART

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A bearish candlestick pattern on the weekly chart supports the Elliott wave counts.

ADX at the high reached extreme. RSI reached extreme at the last high. Given extreme conditions a bearish candlestick pattern should be given weight. A multi-week to multi-month pullback is a reasonable expectation here.

Volume is still weak for upwards movement. On Balance Volume is at support; this may halt a fall in price. If On Balance Volume breaks below support next week, then that would be a reasonably bearish signal.

DAILY CHART

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This week volume , ADX and On Balance Volume are bullish, supporting the alternate Elliott wave count.

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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.