World Indices Roundup 2019

{Note from mods - this thread continued from here: World Indices Roundup - Jan/Feb 2018 Major Top?}



@Alex Straker I notice that this person also does technical analysis and he is suggesting the wave down is finished and that the uptrend will continue, whereas you are suggesting the SPY will still go down to 2,242 most likely this month. The article is in German, however it can be translated to English online.

EW Analyse - DOW Jones - Guten Appetit
EW Analyse - DOW Jones "I have a dream"

I would be interested to hear your thoughts on his technical analysis on the SPY and whether your opinion remains the same.

I am also interested to hear your thoughts now that the Fed says it will be more patient with monetary policy.

 

@keroppi Thanks for the questions. That article is on the DOW, I posted about the SPY. Appreciate your question about the market low but these are two different index charts entirely and although they are somewhat correlated, they cannot be compared for analysis on wave counts as fractals will inevitably vary between indexes made up from different sets of stocks.

Also you said this guy says the downside is over but his chart did not indicate the downside is over, he had a projection line showing another slightly lower low in the near future (looks like around Jan/Feb 2019 but hard to tell) so this article would in fact still correlate with my view on SPY.



FED has put the brakes on a bit to try and stop the panic button being hit too hard.

As I first posted about SPY back in December before the first January downturn, the US market was massively overbought and needs time to create the appropriate sized reactionary move. If we do see the SPY 2,242 area low, it is still in a mid term stage of this correction IMO. Most often but not always in a simple correction (ABC) this low will get taken out again later on by wave C.

So SPY going to around 2,242 support (& XJO to 5,343) represents an accumulation opportunity and some individual stocks will likely form long term lows around this same time depending on which stocks are leading in the sectors that recover early.

No advice.

 

Hi @Alex Straker, always a very interesting read thanks.

I’m curious about your view on currency when suggesting a good accumulation opportunity with the SPY as in your previous post. With the Aussie dollar being a risk currency it’s likely to weaken in this scenario thereby reducing the benefit of such an opportunity if taking an unhedged position. Hence do you take a view on currency given the $AU is likely to be in the 60’s under this scenario thereby potentially making hedged SPY look more attractive?

Hedging is always a difficult decision with it often recommended that investors choose one or the other then stick with in no matter what the market is doing. Might be ok for younger accumulators but many retirees don’t have the luxury of time if currency goes the in wrong direction.

Alternatively some advisors suggest that maintaining a 50 / 50 balanced split between hedged / unhedged is the position of least regret given the difficulty in forecasting currency. Of course they’re unlikely to have the trading skill of someone like yourself.

 

@Nodrog Thanks for your faith in me big guy You are definitely correct that currency forecasting is among the more difficult dark arts. Lots of moving parts and news impact can be fierce.

As a 'no brainer' approach I agree that retirees (or close to retirement) need to be aware of currency risk and take some appropriate mitigating steps. I am one of those advisers that believes 50/50 hedged/unhedged is a good choice in these circumstances. If an investor is so nervous about currency movement as to want to be fully hedged all the time they probably should not be holding international equities in the first place

If the investment time frame exceeds 7 years hedging is not usually a large consideration unless a strong fundamental driver points to severe long term weakness ahead in the relevant domestic currency.

 

Thanks for that Alex.

I agree that for many retirees / near retirrees wanting the no brainer approach 50 unhedged / 50 hedged makes a lot of sense. Been tempted with this myself at times. But given our level of wealth and being in a position of not having to draw on our International equity allocation for 7 plus years if needed we have chosen to remain unhedged. My main reasoning is that we are investing abroad primarily as protection against Home country risk. Additionally in theory unhedged International exposure will be of greatest benefit when it’s most needed given the Aussie dollar’s a risk currency.

That said the 50 / 50 split provides many more buying (and selling if needed) opportunities over the cycle, may be more suitable for some retirees and can appeal behaviourally. This has always been a difficult area for me despite extensive research unlike other areas of our personal financial planning decision making. Always a slight niggling feeling in the back of my mind that I’m still not 100% comfortable. Of course there are numerous other issues such as tax efficiency especially over time as assets are forced out of the Super environment.

As for faith in you, despite my usual caution about FPs in general, you’re anything but the typical FP being so much more than that. Which is why I’ve had no hesitation in recommending you to others as an advisor when asked.

Getting back to Markets it’s a bloody miserable day. Anything of interest is going up.

 

Interested in property?
try SGP. Been flogged and now ex div and bargain. IMO.

 

Yep, proudly different in so many ways..... Thanks again for spreading the good word!

 

Hi Alex Straker I stumbled across this forum and post. Great to see someone practicing TA and the Elliott Wave Principle.

XJO may have completed its A-B-C correction (at minor wave degree) on 24 December that started on 30 August 2018. It's stopped above where I thought it would. I believe it's possible to count five valid waves down from 12 November 2018, albeit messy. If true you would know this means the upper and lower trend lines (at intermediate wave degree) that define the ending diagonal are now defined and the end point of the remaining motive wave (wave (5) at intermediate degree) is much closer (in the future) because the A-B-C correction is not as deep. The ending diagonal has occurred in primary wave C (circle) of cycle wave b. When this motive wave finishes wave c (at cycle degree) of the larger a-b-c correction that started in 2007 will commence. This devastating wave will astound people.

I'm not proficient enough to try and predict when wave (5) will end and wanted to ask you that question.

Happy to share or send you a chart showing this wave count.

 

@kitdoctor I assume you mean in a negative sense?

 

Care you share your graphs and your predictions based on them?

 

@itsmescottyc unfortunately yes. The challenge is to understand when wave c will commence and what's install for property prices. Property prices/indexes also follow the Elliott Wave Principle (although many will doubt this). As Alex has stated each market (financial asset) must be analysed individually but this does not mean that markets can't sychronise in major bear markets (although property prices will lag equity prices). They are essentially being driven by the same thing - social mood. I am not saying that there are not geographical, locational, scarcity, quality aspects etc. to property. These are why one property is more or less valuable than another property.

Very broadly Australian residential property has ended (e.g. Melbourne, Sydney) or is topping (e.g. Brisbane) impulse wave (3) (at intermediate wave degree) and started wave (4). Wave (4) is a corrective wave (prices fall). Wave (5) will be the final wave up. Technically wave (5) does not have to go beyond the end of wave (3). This means the high of wave (5) does not exceed the high of wave (3).

See also my post Property Market Future Recovery Signal Generated

 

@Foxdan let @Alex Straker respond first. I'm sure he won't mind because I can tell he's open to sharing ideas and helping others.

 

Throw up a chart. A picture tells a thousand words and I was lost trying to follow what you said.

 

@kitdoctor

G'day Noel!

Great to see you have wandered in to our TA 'nether regions' of PC

Really appreciate your excellent Elliott knowledge and input, feel free to post charts it would be great to have someone of your caliber posting their charts.

As you know, Elliott counts can be a little subjective so we may not always get the same wave counts but I am very interested to see how other Elliott practitioners are viewing the markets. When Elliott is difficult to get a handle on I tend to put focus on the geometry, I find that if the count becomes unclear the geometry normally gives the best answers.

I saw you posted some charts in another thread, feel free to post some here Bit hard to visualise what you are saying without the chart. Will see if I can answer your question when I get the chance to take a closer look.

 

Hi @Alex Straker. Yes I posted about the S&P ASX 200 in this thread:

Predictions for a Top in the S&P ASX 200

 

My current chart for the DJIA. My current thinking is the bear market is underway. I called the top as January 2018 though and it went higher to 3 October. Watching commentary from Martin Armstrong to provide an alternative perspective.

 

@kitdoctor Thanks for that, our thinking aligns very well on most of your wave counts I am right with you on the DJIA counts and bear market. If you read this thread you will have seen I made a similar forecast for major tops in both price and time for 4 indices back in Jan 2018 also then a second one later on the year for the final tops

Despite differing in some aspects, we are coming to many of the same conclusions. 24 December low also formed above the support level I expected which was around 5,343. Also 5 waves down from 12NOV is valid, agree with this and recently labelled it same way

Was also interested to see on your XJO charts timing for your forecast top of August 2020, I have a Gann based forecast model that I don't disclose here that says we are due for a top OCT/NOV2020 so we are fairly close on this one also although I have not attempted to map out price projections for this yet.

Agree with a lot of your minor degree counts, we differ a little on the major degrees as I see the whole post GFC move as a potential leading diagonal (even though they are rare!) for XJO but I can certainly respect your count also and was using some similar elements until until I re-wrote my count due to time proportions providing further hints. As you quite rightly said, XJO has indeed been choppy post GFC and this makes for some ambiguity with regard to wave patterns.

For me, some of the time proportions of your XJO major degree count don't make sense. For example if you assume the post GFC move is an a-b-c correction to the GFC 'impulse' down then the time proportion it has in relation to the GFC move down is radically outside the boundaries of 'normal'. Of course as Elliott enthusiasts we know there are times when the market throws the 'normal' rule book out the window

Would be interested to see if you have any higher time frame work on XJO, I suspect some of what you are saying may make more sense from that viewpoint. Was trying to follow some of your other count info above but not sure I quite grasped it yet.

My main question is: Do you hold the view this recent 24DEC 5,410 low on XJO won't be exceeded again during 2019? So in other words your view is bull market now until the forecast 2020 top?

Believe me I respect all views and am very interested to hear more of your reasoning. BTW I appreciate what you have been saying about forecasting various trends, cricket team performance etc in the other thread. Finally someone here understands where I have been coming from all these years that mathematically precise cycles & harmonics are a real natural phenomenon.

 

A few conceptual diagrams to help understand my wave count.

Supercycle wave (IV) comprises a three wave cycle degree correction a-b-c

At Primary wave (circle) degree Cycle wave a divides into three waves as does Cycle wave b (and Cycle wave c although not labelled)

The ending diagonal in the Primary wave C (circle) position showing its Intermediate waves (1), (2), (3), (4) and (5). Minor degree wave at A-B-C not labelled (and cycle wave c A-B-C not shown)

 

I would describe the entire advance in the S&P ASX 200 from the March 2009 low as a bear market rally as the trend at Supercycle degree is down (assuming wave count is correct).

I see the low on 24 December 2018 as being the end of the Minor degree corrective wave pattern A-B-C from 30 August 2018 that makes up Intermediate wave (4). I'm hoping I'm wrong though and that it's the end of Minor wave 2. A piece of evidence that suggests an alternative wave count is the current stage the property market is at. The property market's advance is not over (because its cycle would be too short). The property market has to complete its fourth wave correction and its fifth wave advance. For equity markets and property markets to rise to their tops which should occur relatively closely to one another (<12 months apart) would suggest the S&P ASX 200 has longer to go than my August 2020 forecast of a top.

 

@kitdoctor 1. In both scenarios you present you are saying the ASX low on 24 December won't be breached this year, right? 2. Usually the ASX and the SPY move in the same direction, but you see further downside for the SPY and not the ASX this year, is this correct?

@Alex Straker 1. Given that support formed above 5,343 for the ASX and above 2,242 for the SPY, do you still anticipate the SPY will test 2,242 in February as you forecast? If not, when do you see the SPY hitting the 2,242 level you mentioned? 2. Once the SPY hits around 2,242, do you still see a strong rally after that?