World Indices Roundup 2020

history is always much smarter than me , however my trading platform won't let me buy at yesterday's prices if they were particularly cheap ( nor sell at yesterday's highs )

so the option is to take a chance , or not , and wait for the end of trading to see if you were tight

 

Essentially if you liken day trading to gambling (which essentially it is), using TA tools is like counting cards in blackjack - it increases the odds in your favour to win more often than you lose.

 

Yeah you're right, it should just read "trading" as opposed to "investing"

 

"Day trading is defined as the purchase and sale of a security within a single trading day. It can occur in any marketplace but is most common in the foreign exchange (forex) and stock markets."

I'm not doing this.

 

The is never enough TIME in the day to explore TIME relationships in financial markets. A lot of searches reveal nothing but then sometimes a TIME relationship appears and you say to yourself, “Was that possible, or was that just a coincidence?” So, was there a TIME relationship between the current market correction and the previous comparable event that occurred? It appears there could have been.

The 2007-2009 market correction was an end of long-cycle event. On my charts of XJO I have labelled the 2007 peak as the end of Supercycle wave (III), a very large degree Elliott wave. The previous comparable event to that which started on 20 February 2020 was actually the 2001-2003 correction, the tech wreck, internet bubble or dot-com bubble. This was the event that was the prelude to the end of cycle correction. XJO commenced a downturn on 2 July 2001 falling 23% before bottoming on 13 March 2003.

Fast forward 6798 days or about 18.6 years from the start of that previous downturn and the current cycle’s downturn was due to commence on 11 February 2020. There’s that number again, 18.6 years. Another approach would be to add 6765 days (Fibonacci number) to 2 July 2001 which results in a future date of 9 January 2020. Knowing these two dates would signal to be on high alert in January – February 2020 for a potentially significant event.

Going forward 6765 days from 1 November 2007 is May 2026. Similarly, 18.6 years from 1 November 2007 high in XJO is June 2026. So, this is also a potential target period for the end of the current cycle.

 

What about the duration of the rally from the 10 March 2009 low to the 20 February 2020 high? Is there a TIME relationship? The rally lasted 3999 days or 10 years 49 weeks and 3 days or just short of 11 years. Eleven is a Fibonacci number.

 

Agree 110% with above.
I have beating the 2026 drum since 2016/7.
Not because of Fib or Gann or Phil Andersons works.
From my own (limited and beginner) research, 2026 is the time when the music stopsand we have to find a seat. This next leg up is when we will see record highs and much higher than previous highs. (Dow 33-35000, our markets could reach 10,000.
USD the currency to hold.

My opinion, don't follow me as I'm took the wrong turn!

 

Leaders are still leading... as SP-500 bounces off its 50 day moving average & NDX off its 21 EMA. Software is one of the key leading groups.

Other leading stocks from above include COUP, NVDA, SHOP, TSLA, ZS, CHGG, TWLO.

Watch the leaders

 

So what I’m taking from this is that you now believe the correction being experienced is just that, a correction?
The larger event is further down the road?
Based on this, what is your XJO price target for this correction?

 

@MikeyM thanks for the questions.

When you say "...is that you now believe..." are you implying that I've changed my view/mind? i.e. that I've previously stated the sell off in equity markets that commenced in February is the start of GFC Mark II and now I'm not saying this?

When you use the word correction, are you using this in a sense where some arbitrary scale is associated with a price/value retracement? i.e. a correction is X% and a bear market is Y% where Y>X.

 

The other way of looking at this logic raises a red flag. In a healthy market both secondary indexes (e.g. Russell 1000/2000 - containing higher risk companies), blue chip indexes (DJIA, S&P 500, NASDAQ Composite) and broad indexes (NYSE Index) all keep moving to higher highs together. When only one or two indexes move to a higher high and the rest are still lagging after a significant set back this is referred to as a non-confirmation, signalling a fractured market and potential trouble ahead, if the market isn't already in trouble.

 

Yes, from my interpretation of your posts, I am of the opinion that previous thoughts were that we were in for some real trouble. However, from the most recent update, I get the feeling there is now an air of optimism in the short term at least?

in terms of the use of “correction”, my thought process here is that a correction is considered less severe than an all out collapse / crash. obviously nothing can be predicted 100% but to have an advantage in our favour using technical analysis is my ultimate aim. I will continue to learn and hopefully one day have a semi solid understanding of TA.

 

In the context of the current market ...? This is an unusual market with extraordinary strength in some sectors. Doesn't make it "unhealthy". But there will be a pullback or larger correction at some point - maybe tomorrow, or in a week, or a month.

The QQQs have gone up 30% since March and now at all time highs - that's not robinhood traders, or pensioners putting some money to work. Only massive institutional sized money voting with their wallets can move those massive stocks like that.

The leading group for this bull move has been large cap tech (QQQ) along with software and medical. Not surprising given COVID (in hindsight). These are all reflected heavily in the Nasdaq.

Institutional money has avoided value and small caps (DJI and Russ). That's not surprising either.

The divergence of the indexes reflects where the stock earnings are but isn't unhealthy per se. Its just a characteristic of this bull and where institutions have put their money.

 

Thanks @MikeyM now I know how to respond.

IMO the trouble in various equity markets that started in February is not the beginning of GFC Mark II. This is due in 2026. Note, I am not making any comparison between the size/scale of this current market correction (see below) and the associated destruction of capital, central bank intervention, economic fallout etc. etc. and the 2007 - 2009 GFC. Nor am I saying there are not difficult times ahead (potentially 1-2 years) for the Australian economy but after this it's full steam ahead to 2026. Finally, across previous posts I was consistently saying the coming correction (i.e. that is now occurring) would be nasty. I think I posted twice in early February 2020 warning it was imminent.

I'm using the term correction in a TA sense, meaning a move that retraces price/value and is counter to the dominant trend. Generally speaking, the dominant long-term trend of stock market indexes is up, reflecting mankind's progress. So, a correction in the context of that dominant long-term trend is a move that takes price/value net down. How this occurs is a different matter but at the end of the correction there has been some price/value retracement. The form of some corrective Elliott wave structures in a market that's long-term trend is up actually take price/value to a new high before taking price/value down to achieve the net retracement. Reaching that new high may take years. The perfect examples are in the charts of the big four Australian banks which I have recently analysed in detail. Their price action since their highs in 2007 and all that has occurred since then is corrective in form. In other words, their price action did not resume a long-term trend to the upside at the market bottom in 2009.

The situation with the big four banks has swayed me to become more bearish about the long-term Elliott wave count for XJO. Put simply, I'm now more convinced that XJO's price action since the low of 2009 is corrective in form not motive in form and an alternative wave count applies. It also follows that the price action from the November 2007 high to the March 2009 low is part of the unfinished corrective structure. My long-term count identifies a leading diagonal which is motive in form and assumes the correction that started in November 2007 finished in March 2009. There is a possibility the high of 7197.2 in February 2020 will not be exceeded between now and well beyond 2026. I'm going to have to relabel my chart's long-term preferred wave count and I'm really just waiting for the right time to do this and will discuss why there is this possibility at that time. At the moment IMO XJO is poised to move lower and I'm just waiting to see whether this expected move makes the long-term wave count any clearer. I do not have a single price or time target but have multiple targets and assess the situation as the market reveals itself. I think trying to explain all of this will just create confusion.

 

What is the difference between “corrective” in form vs “motive”? Are you saying that while the motive price action since 2009, it was still corrective in form? What does this mean? How can you disconnect actual directional movement of price from the very terms used to describe that direction. If it is corrective while moving up, what is it correcting from?

 

I think Kit is saying we are still in a bear market that started in 2007 and the “bull run” from 2009 to 2020 was actually a dead cat bounce...

 

NASDAQ tried to break the 10,000 mark but couldn't hold. It is testing its 21 EMA, which it has done 3 times since the rally started. On the weekly chart, there are two weeks out of the last 3 where it has closed at the bottom of its range. The 13 week, big move from the bottom has been both strong and an outlier historically.

Most leaders are extended in their up moves, and there are some looking tired. NFLX, which lead this bull move with AMZN, broke an all time high on low volume, and has reversed. AMZN had a stalling week. Two liquid tech stocks in the QQQs - GOOGL and FB - were hit hard on Friday, so that is something to watch closely also.

When a correction comes at some point, we don't know how far it will go. Perhaps it will be shallow and short, or sideways, or another big move down. Corrections are healthy. They allow us to see where the strength is in a market, and gives stocks an opportunity to setup for the next move up.

 

Despite indications last week of a possible correction coming, the Nasdaq has rallied off its 21 EMA with three strong days then hit its all time highs (the close of Thursday wasn't ideal as it was at the session low). It is now above the 10,000 level.

GOOGL and FB recovered from their one day sell off in three days - a sign of strength.

Still no indications of institutional selling in the leaders. Leaders are still leading.

 

@marty998 nailed it. The November high in 2007 was a historic high ending a bull market fifth wave of Primary degree that started in 1992. The completion of that wave ended another wave Cycle wave V, one degree higher, and then that ended another wave Supercycle wave (III), again one degree higher. In its simplest form (ignoring triangles and other complex corrective structures) a three wave correction must then occur - one wave down, one wave up and a second wave down. At a large wave degree (remember waves are fractal so they can be viewed/seen at multiple time frames) the fall from the November high of 2007 to the bottom in March 2009 could be viewed as the first wave down. The entire move from the March low of 2009 to the February 2020 high could be viewed as the wave up. The fall from the February 2020 high could be viewed as part of the second wave down.

Just because a new high was achieved doesn't qualify it as a raging bull market. The form, character or "look" is all wrong, let alone that it only marginally exceeded the November 2007 high after more than 10 years. The advance is choppy, with multiple deep retracements at major turning points that overlap previous advances, rather than strongly trending. There are EW corrective structures that include rises to new all-time highs. All they have to achieve is a net retracement in price when they finish. In XJO's case, all that has to be achieved is a net retracement in price when the corrective structure finishes from the price level achieved at the November 2007.

In my previous post I alluded to the potential that the February 2020 high could well mark the all-time high for many years. What may be happening is that XJO is carving out a triangle, a series of five overlapping waves when viewed in the big picture context.

An example of a (contracting) triangle corrective structure is the price action in the Shanghai Composite for the last 13 years. However, in this case a new all-time high was not achieved in the ((B)) wave of the triangle. See how where it is predicted to finish at the end of Primary wave ((E)) it will have achieved a net retracement from the starting point at the 2007 high. Another form of triangle, a running triangle allows the B wave to achieve a higher high than the end of the third wave where the triangle started.