Stocks - Probing the upper channel line. A reaction is likely.
Bonds - Yields probing the lower channel line. A reaction is likely.
USD - Index has already broken above the trend line, already retested once. Second retest in progress or or building a base?
Gold - [b]-up of B-down looks more likely than C-up.
Oil - A retrace of the rebound looks probable based on the wave structure and the dollar profile.
Commenting on the charts MTU has put up today -
ReplyDeleteLT DJIA CHART - assuming the chart of the main wave is from the 1942 or 1949 low (42 is my pref) a visual obv shows on this log chart with wave 1 (1942-1966) being the longest, the wave 3 (1982-2000) the next (both being similar length) and wave 5 (from 2009) to be the shortest which is a contracting sequence and would lend weight to the view wave 5 should extend further (and wont be wave 1 of the 5).
Thats also supported by the USD chart which shows large bull runs between 1980-85 and 1955-2000 which correlated with strong moves in DJIA wave 1 & 3 mentioned above where foreign money poured into that mkt, BUT the USD run since 2009 has been weak and choppy during the DJIA wave 5 which might be a sign there's not a bullish view of the mkt. The correlation between the 2 is somewhat consistent.
On the DJIA chart obv show even if a further advance were to happen, after a decade run (as since from 1942/49 & 1982) the mkt needs to have a sideways or corrective period of at least 2 years and we would measure that from Jan 2020.
Comparing the first decade section (particularly the first 5 yrs) of the advances from 1942/49 and 1982 to the one from 2009 those earlier ones should solid upward runaway thrusts, whereas from 2009 it has been more resistant hitting selling barriers more often on the way up since 2009 particularly between 2009-15. Again a sign of the mkt exhausting it energy.
We must also remember with DJIA that late 2019 (aka Jan 2020) was 90 years from the 1929 peak, and 20 years from 2000 peak & 54 yrs from the 1966 peak.
So I agree with MTU a reaction is likely.
ERR Correction - paragraph 1 should read that wave 5 shouldnt extend.
DeleteI also wanted to draw your attention to UKX.
ReplyDeleteThe long term chart shows a WEAK 5 WAVE ADVANCE from 2009 after the same larger double wave (as seen on DJIA - probably a LT wave 4) between 2000-2009.
The decline since 2018 top has been solid and broke the 50% support point of that 5 wave rally from 2009-2018 in March 2020 and the rally since has been weak and has not regained the Jan peak.
The odds are it is a bear mkt wave 1 or A pattern to March or May 2020. The rally since would appear to an a-b-c and whether its complete is uncertain. There may be a bit more left in it.
The SIZE of the 2020 correction indicates LT multi-decade trend change, after the clear 5 wave rally since 2009 (which was weak). At least on this index unless it later proves to be an anomaly on the chart.
So we have here a solid indication of main trend change.
And given whats going on in UK over the pandemic etc where the economy is collapsing one can not expect a rosey period in the short term. And if Biden were to be installed in US the same would happen and mkts would react.
I might suggest MTU does a EW count and comment on UKX.
The other point clearly also on the DJIA log chart is that if we take the 1932 low as the start of it there is a clear contracting sequence on impulse waves so far.
ReplyDeleteWave 1 1932-1966
Wave 3 1982-2000
Wave 5 2009-2020
The fact wave 3 was less in size on this log chart is the possible key to the possibility a contracting seq is running and 5 will be less, as is the fact 5 so far is also less in size than wave 3 and 1.
Remember that Elliott himself said waves 5 are usually weak waves - only in special circumstances do they extend.
The 1932 low is still quite possible as the correct wave start point despite the fact that the 1929-32 decline is only 2.75 yrs because of the sheer size of the price range. It also gives a good count to 1966.