Lara’s Weekly: Elliott Wave and Technical Analysis of S&P500 and Gold and US Oil | Charts – November 29, 2019
S&P 500
A breach of a small short-term channel early on Friday indicated a small correction had begun. The Elliott wave count at that stage expected a small short-term pullback to continue.
Summary: A very brief and shallow correction may have begun which must remain above 3,120.46. This correction may be over within one to a very few days. The target for it to find support is about 3,130. Thereafter, the upwards trend may resume.
The next target at 3,179 is where minor wave 4 may begin (expect it to be very shallow). Thereafter, the next target is at 3,302 and then 3,336.
Three large pullbacks or consolidations during the next 1-2 years are expected: for minor wave 4, then intermediate (4), and then primary 4. Prior to each of these large corrections beginning, some weakness may begin to be evident.
The biggest picture, Grand Super Cycle analysis, is here.
Monthly charts were last published here. There are two further alternate monthly charts here.
ELLIOTT WAVE COUNTS
The two weekly Elliott wave counts below will be labelled First and Second. They may be about of even probability. When the fifth wave currently unfolding on weekly charts may be complete, then these two wave counts will diverge on the severity of the expected following bear market. To see an illustration of this future divergence monthly charts should be viewed.
FIRST WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
The basic Elliott wave structure consists of a five wave structure up followed by a three wave structure down (for a bull market). This wave count sees the bull market beginning in March 2009 as an incomplete five wave impulse and now within the last fifth wave, which is labelled cycle wave V. This impulse is best viewed on monthly charts. The weekly chart focusses on the end of it.
Elliott wave is fractal. This fifth wave labelled cycle wave V may end a larger fifth wave labelled Super Cycle wave (V), which may end a larger first wave labelled Grand Super Cycle wave I.
The teal Elliott channel is drawn using Elliott’s first technique about the impulse of Super Cycle wave (V). Draw the first trend line from the end of cycle wave I (off to the left of the chart, the weekly candlestick beginning 30th November 2014) to the end of cycle wave III, then place a parallel copy on the end of cycle wave II. This channel perfectly shows where cycle wave IV ended at support. The strongest portion of cycle wave III, the end of primary wave 3, overshoots the upper edge of the channel. This is a typical look for a third wave and suggests the channel is drawn correctly and the way the impulse is counted is correct.
Within Super Cycle wave (V), cycle wave III is shorter than cycle wave I. A core Elliott wave rule states that a third wave may never be the shortest. For this rule to be met in this instance, cycle wave V may not be longer in length than cycle wave III. This limit is at 3,477.39.
Cycle wave V may subdivide either as an impulse or an ending diagonal. Impulses are much more common. An alternative wave count which considered an ending diagonal has been invalidated. While it is possible a diagonal may become an alternate wave count in coming weeks or months, at this stage the structure does not fit.
At this stage, cycle wave V may take another one to two or so years to complete.
The daily chart below will focus on movement from the end of intermediate wave (1) within primary wave 3.
In historic analysis, two further monthly charts have been published that do not have a limit to upwards movement and are more bullish than this wave count. Members are encouraged to consider those possibilities (links below summary) alongside the wave counts presented on a daily and weekly basis.
Within cycle wave V, primary waves 1 and 2 may be complete. Within primary wave 3, intermediate waves (1) and (2) may be complete. Within the middle of intermediate wave (3), no second wave correction may move beyond its start below 2,855.96.
DAILY CHART
Click chart to enlarge.
All of primary wave 3, intermediate wave (3) and minor wave 3 may only subdivide as impulses.
Minor wave 3 may be underway and may be almost complete. Minor wave 3 now shows an increase in momentum beyond minor wave 1; MACD supports this wave count.
Minor wave 4 may not move into minor wave 1 price territory below 3,021.99.
Intermediate wave (3) must move far enough above the end of intermediate wave (1) to then allow intermediate wave (4) to unfold and remain above intermediate wave (1) price territory. While intermediate wave (3) has now moved beyond the end of intermediate wave (1), meeting a core Elliott wave rule, it still needs to continue higher to give room for intermediate wave (4).
The target for intermediate wave (3) fits with a target calculated for minor wave 3.
Minor wave 2 was a sharp deep pullback, so when it arrives minor wave 4 may be expected to be a very shallow sideways consolidation to exhibit alternation. Minor wave 2 lasted 2 weeks, so minor wave 4 may be about the same duration to have good proportion.
Draw an Elliott channel about minor wave 3 using Elliott’s first technique: draw the first trend line from the end of minute wave i to minute wave iii, then place a parallel copy on the end of minute wave ii. The channel may show where minute wave v finds support and resistance along the way up.
SECOND WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
This weekly chart is almost identical to the first weekly chart, with the sole exception being the degree of labelling.
This weekly chart moves the degree of labelling for the impulse beginning in March 2009 all down one degree. This difference is best viewed on monthly charts.
The impulse is still viewed as nearing an end; a fifth wave is still seen as needing to complete higher. This wave count labels it primary wave 5.
Primary wave 5 may be subdividing as either an impulse, in the same way that cycle wave V is seen for the first weekly chart.
TECHNICAL ANALYSIS
MONTHLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
There are three large consolidations noted on this chart, in shaded areas. After a breakout from a multi-month consolidation, it is reasonable to expect a multi month bullish move may result.
This chart very clearly exhibits rising price on declining volume has now persisted for several years. A decline in volume this month, in current market conditions, is not of concern.
On Balance Volume supports the Elliott wave count.
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
It is very clear that the S&P is in an upwards trend and the bull market is continuing. Price does not move in straight lines; there will be pullbacks and consolidations along the way.
This week is a short week with New York closed for a day and a half for Thanksgiving Day.
A decline in volume this week is acceptable. The failure by On Balance Volume to confirm a new all time high this week is extremely small, and as this is a short week this shall be given no weight.
Overall, this chart supports the Elliott wave count.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
There is an upwards trend in place. There will be corrections along the way.
When this market is in a bullish trend, RSI can reach deeply overbought and remain there for some weeks.
Again, the last gap is closed with a new low below 3,142.69. This has happened twice recently and yet it was followed only by a very short-term pullback.
At this stage, there is an upwards trend that is not yet extreme. There is room for this trend to continue. There is zero evidence today that the trend is over. Assume the trend remains the same until proven otherwise.
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.
Bear markets from the Great Depression and onwards have been preceded by an average minimum of 4 months divergence between price and the AD line with only two exceptions in 1946 and 1976. With the AD line making new all time highs last week, the end of this bull market and the start of a new bear market is very likely a minimum of 4 months away, which is mid March 2020.
In all bear markets in the last 90 years there is some positive correlation (0.6022) between the length of bearish divergence and the depth of the following bear market. No to little divergence is correlated with more shallow bear markets. Longer divergence is correlated with deeper bear markets.
If a bear market does develop here, it comes after no bearish divergence. It would therefore more likely be shallow.
All of small, mid and large caps have made new swing highs above the prior swing high on the 13th of September, but only large caps have made new all time highs. This upwards movement appears to be mostly driven by large caps, which is a feature of aged bull markets. This bull market at over 10 years duration certainly fits the definition of aged.
Mid and small caps have not yet made new all time highs.
This week both price and the AD line have moved higher. Upwards movement this week from price has support from rising market breadth. This is bullish and supports the 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.
Breadth should be read as a leading indicator.
Both price and the AD line moved lower on Friday. Neither have made new short-term swing lows. There is no new 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.
The all time high for inverted VIX was on 30th October 2017. There is now over two years of bearish divergence between price and inverted VIX.
The rise in price is not coming with a normal corresponding decline in VIX; VIX remains elevated. This long-term divergence is bearish and may yet develop further as the bull market matures.
This divergence may be an early warning, a part of the process of a top developing that may take years. It may is clearly not useful in timing a trend change from bull to a fully fledged bear market.
Price has moved higher for three weeks in a row, but inverted VIX has moved lower. This divergence is now persistent enough to be considered to be sounding a strong warning that there is now reasonable risk to the downside.
The last time this happened was after early January 2018. It was followed by primary wave 4.
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. Neither have made new short-term swing lows. There is no new divergence.
DOW THEORY
Dow Theory confirmed a bear market in December 2018. This does not necessarily mean a bear market at Grand Super Cycle degree though; Dow Theory makes no comment on Elliott wave counts. On the 25th of August 2015 Dow Theory also confirmed a bear market. The Elliott wave count sees that as part of cycle wave II. After Dow Theory confirmation of a bear market in August 2015, price went on to make new all time highs and the bull market continued.
DJIA: 23,344.52 – a close on the 19th of December at 23,284.97 confirms a bear market.
DJT: 9,806.79 – price has closed below this point on the 13th of December.
S&P500: 2,532.69 – a close on the 19th of December at 2,506.96 provides support to a bear market conclusion.
Nasdaq: 6,630.67 – a close on the 19th of December at 6,618.86 provides support to a bear market conclusion.
With all the indices having moved higher following a Dow Theory bear market confirmation, Dow Theory would confirm a bull market if the following highs are made:
DJIA: 26,951.81 – a close above this point has been made on the 3rd of July 2019.
DJT: 11,623.58 – to date DJT has failed to confirm an ongoing bull market.
S&P500: 2,940.91 – a close above this point was made on the 29th of April 2019.
Nasdaq: 8,133.30 – a close above this point was made on the 26th of April 2019.
GOLD
A small range week leaves all three Elliott wave counts unchanged.
Summary: The downwards trend may resume. The Elliott wave target is at 1,348.
A target calculated from the triangle is about 1,431.
For the very short term, a new swing high above 1,514.29 would add some confidence in a more bullish outlook. The target would then be at 1,567, 1,635 or 1,693.
For the bigger picture, the bearish Elliott wave count expects a new downwards trend to last one to several years has begun. The alternate bearish wave count looks at the possibility that one final high to 1,559 is required first.
The bullish Elliott wave count expects a primary degree fourth wave has completed and the upwards trend has resumed.
Grand SuperCycle analysis is here.
Monthly charts were last published here.
BEARISH ELLIOTT WAVE COUNT
WEEKLY CHART
Click chart to enlarge.
It is possible that Super Cycle wave (b) is complete as a double zigzag.
The first zigzag in the double is labelled cycle wave w. The double is joined by a three in the opposite direction, a triangle 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 new low below 1,346.45 would add strong confidence to this wave count. At that stage, the bullish Elliott wave count would be invalidated.
A wide best fit channel is added in light blue. This channel contains all of Super Cycle wave (b) and may provide resistance and support. Copy this channel over to daily charts.
Super Cycle wave (c) must subdivide as a five wave structure, most likely an impulse. It may last several years. It would be very likely to make new lows below the end of Super Cycle wave (a) at 1,046.27 to avoid a truncation.
DAILY CHART
Click chart to enlarge.
Classic analysis now reasonably supports this wave count.
Cycle wave y may be a complete zigzag. Within both of primary waves A and C, there is good proportion between intermediate waves (2) and (4). Within both of primary waves A and C, there is good alternation in structure of intermediate waves (2) and (4).
Within cycle wave y, there is no Fibonacci Ratio between primary waves A and C.
If there has been a trend change at Super Cycle degree, then a five down needs to develop on the daily and weekly charts. So far that is incomplete. It will be labelled intermediate wave (1).
ALTERNATE DAILY CHART
Click chart to enlarge.
It is possible that the double zigzag for Super Cycle wave (b) may be incomplete and may yet require one more high.
Within cycle wave y, primary wave A may have been over at the last high.
Primary wave B may be complete as a single zigzag. Within the zigzag, intermediate wave (C) is just 3.56 short of equality in length with intermediate wave (A). Intermediate wave (B) is a running contracting triangle.
It is possible for this wave count that primary wave B could continue lower as a double zigzag. Primary wave B may not move beyond the start of primary wave A below 1,266.61.
A new low now below 1,446.68 would see primary wave B relabelled as a double zigzag, continuing lower.
Primary wave C would be expected to find strong resistance and end at the upper edge of the blue best fit channel copied over from the weekly chart.
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 in November 2015.
If Gold is in a new bull market, then it should begin with a five wave structure upwards on the weekly chart. However, the biggest problem with this wave count is the structure labelled cycle wave I because this wave count must see it as a five wave structure, but it looks more like a three wave structure.
Commodities often exhibit swift strong fifth waves that force the fourth wave corrections coming just prior and just after to be more brief and shallow than their counterpart second waves. It is unusual for a commodity to exhibit a quick second wave and a more time consuming fourth wave, and this is how cycle wave I is labelled. This wave count still suffers from this very substantial problem, and for this reason the bearish wave count is still considered because it has a better fit in terms of Elliott wave structure.
Cycle wave II subdivides well as a double combination: zigzag – X – expanded flat.
Cycle wave III may have begun. Within cycle wave III, primary waves 1 and 2 may now be complete. Primary wave 3 has now moved above the end of primary wave 1 meeting a core Elliott wave rule. It has now moved far enough to allow room for primary wave 4 to unfold and remain above primary wave 1 price territory. Primary wave 4 may not move into primary wave 1 price territory below 1,346.45.
Cycle wave III so far for this wave count would have been underway now for 67 weeks. It exhibits some support from volume and increasing ATR. This wave count has some support from classic technical analysis.
The channel drawn about cycle wave III is an adjusted Elliott channel. The lower edge is pulled lower.
Add the wide best fit channel to weekly and daily charts.
DAILY CHART
Click chart to enlarge.
Primary wave 4 may be complete as a single zigzag. Primary wave 4 may have lasted 49 sessions, just six more than primary wave 2, which lasted 43 sessions. The proportion remains very good for this part of the wave count.
A target for cycle wave III is calculated also now at primary degree. If price reaches the first target and keeps rising, then the second higher target may be used.
If it continues any further, then primary wave 4 may not move into primary wave 1 price territory below 1,346.45.
If primary wave 4 is a single zigzag, then there is no alternation in structure with the single zigzag of primary wave 2. There is some alternation within the structures: primary wave 2 as a zigzag has intermediate wave (B) as a zigzag, while intermediate wave (B) within the zigzag of primary wave 4 is a triangle. Primary wave 2 is shallow at 0.43 the length of primary wave 1, and primary wave 4 is close to the same at 0.38 the length of primary wave 3. There is inadequate alternation in depth.
TECHNICAL ANALYSIS
MONTHLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Overall, this chart is bullish. However, with RSI reaching overbought at the last high, upwards movement may be limited.
The last two months of sideways movement look like a consolidation within an ongoing upwards trend.
Some suspicion regarding the current upwards trend may be warranted by bearish divergence between price and On Balance Volume at the last lows. Also, at the last high price has made a substantial new high above April 2018, but On Balance Volume is flat.
November completes with downwards movement that does not have support from volume. The market has fallen of its own weight.
The all time high for Gold in September 2011 is on the upper left hand side of this chart. Notice upwards movement ended with strong support from volume and early downwards months exhibited volume which was weaker. Strong volume is not required at the beginning of a bearish movement for Gold for it to be sustainable.
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
When trends reach very extreme, candlestick reversal patterns should be given weight. The Dark Cloud Cover bearish reversal pattern is given more bearish weight from the long upper wick.
A very strong downwards week with strong support from volume four weeks ago supports a bearish view.
This week is another small range week that has closed green and the balance of volume is upwards, although the week moved price higher with a higher high and a higher low. The short-term volume profile looks bearish, but a better judgement may come at the daily chart level.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Since the last high on the 4th of September, there is now a series of swing lows and swing highs.
After a breakout from the triangle, the target is to be about 1,431.
The downwards breakout from the triangle had strong support from volume pushing price lower, so confidence may be had in the breakout. A back test of resistance at the lower triangle trend line has completed; resistance has successfully held there. It looks reasonable to now expect new lows from Gold in coming days. This chart strongly supports the bearish Elliott wave count.
A close near the high for Friday’s session and some support from volume suggest a small bounce may continue on Monday. Overall, in most recent days of the last two weeks volume is still strongest on downwards days.
GDX WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
GDX, like Gold, often begins a new trend slowly with overlapping and flat or declining ATR. From the last major high at 30.96 a few weeks ago, there has been a strong Bearish Engulfing pattern and strong downwards weeks with greater range and volume than upwards weeks. GDX may have had a trend change. However, bullish divergence between price and On Balance Volume is strong and persistent; it contradicts the view of a trend change.
GDX DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
GDX has made a new swing low. There is now a series of four lower swing highs and four lower swing lows from the high on the 4th of September. It still looks like GDX may have had a trend change. This view should remain dominant while the last swing high at 28.18 on the 31st of October remains intact.
For the short term, a little support from volume on Friday and a close near the high for the session suggest Monday may begin with a little upwards movement.
US OIL
Last week’s analysis advised members to expect a B wave to unfold for a couple of weeks or so as either a sharp downwards movement or a choppy, overlapping sideways movement. A sharp pullback on Friday fits expectations.
Summary: The bearish wave count looks most likely to follow a triangle pattern here, with an upwards swing to end short of the upper A-C trend line. Within this upwards swing, minor wave B may continue a little lower and then may either be complete or may continue sideways for several sessions. Thereafter, minor wave C upwards should complete the triangle, falling just short of the A-C trend line.
When the triangle may be complete, then a downwards breakout would be expected. This may come in another one to two months.
The bullish wave count now also expects a triangle to complete before an upwards breakout.
MAIN ELLIOTT WAVE COUNT – BEARISH
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 is still within a three steps back pattern, which began in July 2008. The Elliott wave count expects that the bear market for US Oil continues.
This Elliott wave corrective structure is a double zigzag, which is a fairly common structure. The correction is labelled Super Cycle wave (II).
The first zigzag in the double is complete and labelled cycle wave y. The double is joined by a three in the opposite direction labelled cycle wave x, which subdivides as a zigzag. The second zigzag in the double may now have begun, labelled cycle wave w.
The purpose of a second zigzag in a double zigzag is to deepen the correction when the first zigzag does not move price deep enough. To achieve this purpose cycle wave y may be expected to move reasonably below the end of cycle wave w at 26.06. When primary wave B may be complete then the start of primary wave C may be known and a target may be calculated.
Cycle wave y is expected to subdivide as a zigzag, which subdivides 5-3-5.
Cycle wave w lasted 7.6 years and cycle wave x lasted 2.7 years. Cycle wave y may be expected to last possibly about a Fibonacci 5 or 8 years.
Primary wave B may not move beyond the start of primary wave A above 76.90.
WEEKLY CHART
Click chart to enlarge.
This weekly chart shows all of cycle wave y so far.
Cycle wave y is expected to subdivide as a zigzag. A zigzag subdivides 5-3-5. Primary wave A must subdivide as a five wave structure if this wave count is correct.
Primary wave A may be a complete five wave impulse at the last low.
Primary wave B may now be continuing further as a triangle or combination. Both ideas are outlined in daily charts below, and a triangle is labelled on the weekly chart.
When primary wave B may be complete, then a downwards breakout would be expected for primary wave C.
Primary wave B may not move beyond the start of primary wave A above 76.90.
DAILY CHART
Click chart to enlarge.
This daily chart will now show movement within the triangle from the low of the 7th of August 2019, labelled intermediate wave (B).
Note that monthly and weekly charts are on a semi-log scale, but the daily charts are on an arithmetic scale. This makes a slight difference to trend channels.
Elliott wave triangles are always continuation patterns. When primary wave B is complete, then a downwards breakout would be expected for primary wave C.
This chart considers a triangle for primary wave B. The triangle may be a regular contracting triangle.
Within a contracting triangle: intermediate wave (C) may not move beyond the end of intermediate wave (A); intermediate wave (D) may not move beyond the end of intermediate wave (B); intermediate wave (E) may not move beyond the end of intermediate wave (C) above 63.38, and would most likely fall short of the (A)-(C) trend line.
Intermediate wave (E) must complete as a zigzag, subdividing as a 5-3-5 structure. Minor wave A upwards is a complete leading diagonal.
Minor wave B may subdivide as more than 23 possible corrective structures. It may be a quick sharp zigzag, or it may be a more complicated and time consuming triangle, combination or flat correction. Minor wave B may not move beyond the start of minor wave A below 51.90. Strength at the end of Friday’s session indicates more downwards movement; minor wave B may continue lower as a single zigzag or sideways as a combination or triangle.
DAILY CHART II
Click chart to enlarge.
This daily chart begins from the end of minute wave w.
When an Elliott wave triangle is considered, it is essential that alternates are also considered. Too many times an Elliott wave triangle may look to be completing only for the structure to be invalidated; the correction turns out to be something else, and the something else is almost always a combination.
Primary wave B may be a double combination: zigzag – X – flat. Intermediate wave (W) fits as a zigzag. Intermediate wave (Y) may be unfolding as a flat correction.
Within intermediate wave (Y), minor wave A may be complete. Minor wave B may be an incomplete double combination.
Within minor wave B, minute wave w may be a complete zigzag. Minute wave x may join the double in the opposite direction as a zigzag. Minute wave y may now continue as a flat correction.
Within minute wave y, minuette wave (b) must subdivide as a corrective structure and must retrace a minimum 0.9 length of minuette wave (a) at 62.14 or higher.
When minuette wave (b) has met the minimum requirement and may be a complete corrective structure, then minuette wave (c) may begin and unfold lower to end below the end of minuette wave (a) at 51.00 to avoid a truncation.
The purpose of double combinations is to take up time and move price sideways. To achieve this purpose the second structure in the double usually ends about the same level as the first.
ALTERNATE ELLIOTT WAVE COUNT
MONTHLY CHART
Click chart to enlarge.
It is possible that the bear market is over for Oil and a new bull market has begun.
For a bullish wave count for Oil, the upwards wave from the major low at 26.06 in February 2016 must be seen as a complete five wave impulse. This is labelled cycle wave I.
Cycle wave II may be a complete zigzag at 0.679 the depth of cycle wave I.
A target is calculated for cycle wave III to reach a common Fibonacci ratio to cycle wave I.
Within cycle wave III, no second wave correction may move beyond the start of its first wave below 42.37.
WEEKLY CHART
Click chart to enlarge.
This weekly chart shows detail of cycle wave I as a five wave impulse.
Cycle wave II does look best as a three. This is the only part of this wave count that has a better look than the main wave count, which sees this downwards wave as a five.
The upwards wave of primary wave 1 within cycle wave III must be seen as a five wave structure for a bullish wave count to work. This movement at lower time frames does not subdivide well as a five; this reduces the probability of this wave count.
Cycle wave III may only subdivide as an impulse. Within cycle wave III, so far primary wave 1 may be complete. Primary wave 2 may be moving sideways as a double combination. Primary wave 2 may not move beyond the start of primary wave 1 below 42.37.
DAILY CHART
Click chart to enlarge.
This daily chart begins from the end of minor wave A.
Primary wave 2 may be continuing as a double combination.
The first structure in the double would be complete, a zigzag labelled intermediate wave (W). Within intermediate wave (W), minor wave C ends with a slight truncation for minute wave v. This is acceptable.
The double may be now joined by a complete three in the opposite direction, a zigzag labelled intermediate wave (X).
Intermediate wave (Y) may now be completing as a running contracting or barrier triangle.
Within the triangle of intermediate wave (Y), minor waves A, B and C may be complete.
Within a contracting triangle, minor wave D may not move beyond the end of minor wave B above 63.38.
Within a barrier triangle, minor wave D should end about the same level as minor wave B at 63.38, so that the B-D trend line looks essentially flat. In practice this means minor wave D may end very slightly above the end of minor wave B and the triangle may remain valid.
Minor wave D may be subdividing as a double zigzag. One of the five sub-waves of a triangle normally subdivides as a more complicated multiple; wave D is the most likely to do so.
Finally, for both a contracting and barrier triangle, minor wave E may not move beyond the end of minor wave C below 51.00.
Primary wave 2 may not move beyond the start of primary wave 1 below 42.37.
When the structure of primary wave 2 may be complete for this bullish wave count, then an upwards breakout would be expected.
TECHNICAL ANALYSIS
MONTHLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
There is now double bullish divergence between price and On Balance Volume. This supports the alternate Elliott wave count.
Overall, price has been moving sideways for a few months now. Within this sideways movement, the downwards month of May has greatest range and volume; this supports the main Elliott wave count.
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
A large triangle may be unfolding. Classic triangles may be either continuation or reversal patterns. A breakout is required before they may be acted on and a target may be calculated.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
A strong downwards session with strong support from volume for Friday suggests at least a little more downwards movement may begin next week.
Price remains range bound. There is no clear trend.
—
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.
Love the new format, very easy to read.
One thing I miss, though, is the count ‘number of comments’ on the front page. If comment count increases I would go in and if it did not, I would skip. It sure was a time saving feature.
I agree on both points, very easy to read, and miss the comment count.
I too miss it and it is on Cesar’s list of things to fix
Hi Lara, just wanted to clarify that you really meant that 4, (4) and circle 4 correctives on the S&P500 could take 1-2 years, is that correct? 1-2 years?
Yes, that is correct.
It could be over in 1 year. It could take 2 years.
I have learned over time to be patient. Corrections can last longer than expected.
It’s taken 12 months so far from the start of cycle wave V, and if the wave count is right the middle has just been passed. If the three fourth waves to unfold are equivalent in duration to their counterpart second waves then one more year may finish it. But if these fourth waves are more time consuming (as fourth waves can be) then I’d allow another year in total for all three, plus the fifth waves to follow.
Does that make sense?
Yes it does, thank you
Hi Lara, any thoughts or comments on the SPX price action over the past two days. Seems we came up short of the Wave iii targets?
Yes, there is a chart below which I posted yesterday.
Minor 4 has arrived earlier than expected, the target for minor 3 was not met.
Updated chart for the daily S&P500:
The downwards move today comes with support from volume and creates a Bearish Engulfing reversal pattern. It looks like minor wave 4 has arrived a bit earlier than expected, the target was not met.
I am now expecting a relatively shallow consolidation for minor wave 4 to continue for a couple of weeks or so. Support may be about 3,108 or 3,081.
Next support below now is at 3,037. Invalidation at 3,021.99.
Despite strong downward movement I am still expecting minor 4 to overall be a sideways chop. The low today for 3rd Dec may be fairly close to where it’s going to find support.
Hi everybody.
We’ve changed the WP theme of the website, it needed updating. Cesar is still working finishing up some small details with this, and we would like to know if you are finding everything you need okay or if you have noticed any problems with the new layout.
Please email me admin@elliottwavegold.com or Cesar webmaster@elliottwavegold.com if you require any assistance.
Lara
The new format looks good. Is there some way to see the number of comments listed on the home page for the various markets or grouping of markets without having to log in? Thats how it was in the old format.
Thanks so much
Rich
Hi Lara,
Another technical analyst brought the GDX market breath forward. Would you put any weight on this indicator? It made a 3-year high 2 weeks ago… The symbol is $GDXADP in stockcharts.com.
All the best to you,
Mathieu
I may give it some weight as I do tend to give breadth reasonable weight.
However, I would like to study its history next to GDX price and learn about its behaviour first.
I can find $GDXADP on StockCharts but I can’t figure out how to get $GDXADP to be cumulative rather than to 100.
Does it provide what you are looking for by choosing Cumulative from the Type drop down menu in the Chart Attributes section in StockCharts?
Why yes it does, thank you very much. I learned something new today. 🙂
Very useful. I have a collection of components of GDX stocks that I used to look at to get a feel for the mood. This beats it and gives a precise view into the mood, especially with RSI that I can then use for bull range and bear range study.
Thank you