World Indices Roundup 2020

Simply looking at the numbers over the past few hours and with 7 days to go in the land of the mask-free ..
Dow Jones Industrial Average
INDEXDJX: .DJI
27,510.75 −824.82 (2.91%)
26 Oct, 12:56 pm.xxx..

Dow Jones slumps on rising virus cases, fading stimulus hopes - The Economic Times

 

We have a gap below the 50 DMA. Potential leaders like BYND & TWLO don't look they are holding the top of their constellations. AMD and MSFT were muted in their reactions to positive earnings.

TSLA easing below it's 50 DMA but showing some strength.

ZM and PTON, the covid kings, showing strength in weakness at the moment. FSLR, SNAP and ALGN are others.

 

2020 US Presidential Election

Dow Jones Industrial Average
INDEXDJX: .DJI
26,621.63 −841.56 (3.06%)
28 Oct, 1:06 pm GMT-4 ·

Looking good a few more days like this and Mr Biden's and Ms Harris scare campaign's stories may turn into a above 10 percent swing while pushing the leftist platform..

 

My forecast for GFC Mark II remains unchanged, commencing sometime in 2025 - 2026. However, to interpret this to mean "...we still have a few good years to go [in the stock market]..." is an oversimplification.

In previous posts I've explained that XJO did not resume a healthy bull market advance from the 2009 low. IMO the market is in part of a large corrective structure or what can be described as a bear market rally. This explains its lackluster performance since 2009. Some corrective structures do involve the achievement of a new higher high, just like occurred in February 2020 but nevertheless a corrective structure is playing out. What counts is the corrective structure had to retrace price below the previous 2007 high. This requirement was achieved with the March 2020 low. What remains uncertain though is whether the large corrective structure is complete. Having said this, it is not necessary for the March 2020 low to be taken out to complete the large corrective structure. That is the nature of Elliott wave patterns, they do not necessarily end/start at major highs/lows.

IMO, going forward XJO may not achieve a new all-time high heading into 2025-2026 and in simple terms undergo a series of volatile up, then down moves. The (only?) good news is the 2009 low will hold.

The residential property market has already turned based on the CoreLogic Home Dwelling Index. So, dwelling prices (attached and detached) are now rising across all of the nation's capital cities and Australia as a whole (broadly speaking). All the commentators, banks etc. that forecast a crash or significant price correction were incorrect. Over the last few months I've only seen revised forecasts being released downgrading the extent of price correction. The second half of the residential real estate cycle is right on cue and gathering momentum.

 

The Nasdaq is now correcting below the 50 DMA. Interestingly, the volume has been light suggesting a lack of buyers rather than heavy sellers. But price matters most.

Leaders that broke out in September have now retraced back to their starting positions, or further. In the last week, there were days where the leaders were getting hit hard while the index looked ok - a big clue. Good earnings reports, for the most part, have been met with muted action at best. In hindsight, the early clue was FSLY getting hammered.

TSLA has moved below its 50 DMA, and ZM is coming down to test its own 50 DMA. Maybe these two leaders have topped or maybe they need time before moving up again. Something to watch.

At the moment, it’s hard to find many bases in fundamentally strong stocks. But leaders setup during corrections, which is the time for the market to set the stage for the next rally. It’s a good idea to keep an eye on stocks that are strong in a weak market as they are indicating they could be the next leaders (e.g. ALGN, SNAP, PINS, etc).

There is obviously a big news event next week. I find it is best not to listen to the subjective noise (news), but to the objective message in the price action.

 

Yes, most likely people are waiting for the outcome to be clear.

With that said, I try not to prescribe "why" to price behaviour. I'm have a cautious view based on price action, not because of the election or a personal opinion on what could happen. If there is a contested election or something else, I will let the price action guide me because the market has this funny thing of doing the opposite of what everyone thinks is rationale in the circumstances

The strong rally as a lead up to the COVID plunge (Jan-Feb 2020) and then the 82% rally off the bottom are recent examples of this.

 

ASX200 pullbacks to 200 DMA average where it finds support and creates a higher low.

 

Japan - building the right side of a monster base ...

 

ASX 200 breaks out ...

 

I am discontinuing my traditional or orthodox Elliott Wave Principle analysis and related commentary on ASX listed stocks (130+), major stock indexes (e.g. XJO, DJI, SHCOMP etc.), commodities and currency pairs. A lot of this information is not published here on PropertyChat but is shared in other social media outlets.

Over the last two months I have commenced a process of gradually adopting an advanced form of Elliott wave analysis known as NEoWave analysis, named after Glenn Neely. NEoWave emerged in the early 1990s but is practised by very, very few analysts worldwide due to its increased complexity. The increased complexity does however help address the major criticism of traditional Elliott Wave Principle analysis being highly subjective.

A key difference with NEoWave is that it introduces completely new fractal corrective patterns that were not present in markets when R N Elliott developed the Elliott Wave Principle in the 1930s. However, although NEoWave delivers more accurate and reliable analysis, these new patterns which have emerged post the publication of Glenn Neely’s book in 1990 do create a major problem. They do not conform to Fibonacci relationships, making forecasting more difficult when these patterns are present.

With NEoWave chart preparation is particularly more onerous and resource intensive, so much so that the charting platform I use, TradingView, is unable to cope with the charts I’ve created at my current subscription level. I’m planning on upgrading my subscription level but will also have to rationalise the number of charts I maintain as the transition to NEoWave analysis occurs. In terms of important stock markets indices, at this stage, I intend to focus on the S&P 500 (SPX) and ASX S&P 200 (XJO).

 

Best of luck with the change @kitdoctor - can't wait to see what you come up with (if you would be so as to share your findings with us).

 

SPX

My SPX analysis confidence level is HIGH.

Chart 1: Six Month Bar Chart = Two Year NEoWave Analysis Period (4 bars)

Key points:

• Cycle wave II concluded in 1949. TradingView does not have sufficient historical data to show the start and finish of Cycle wave I.
• Cycle wave III commenced in 1949 and comprises Primary waves ((1)) – ((5)) of which Primary waves ((1)), ((2)) and ((3)) are complete.
• SPX is in Primary wave ((4)), a corrective wave, that commenced at the high in 2000.
• Primary wave ((4)) is subdividing into a five-wave neutral triangle, Intermediate waves (A), (B), (C), (D) and (E). A neutral triangle is a five-wave corrective structure that neither contracts or expands in price.
• Primary wave ((4)) has an estimated duration of 25-30 years.
• The last phase of Primary wave ((4)), Intermediate wave (E), commenced at the high of 2020.
• Intermediate wave (E) is most likely forming an expanding triangle, a five-wave corrective structure. The waves of an expanding triangle form a pair of expanding trend lines.
• Intermediate wave (E) has an estimated duration of 7-10 years. Volatile up and down swings, like the mini-collapse in February-March 2020, followed by a subsequent rally will be a key feature going forward.

Chart 2: One Month Bar Chart = Four Month NEoWave Analysis Period (4 bars)

Key points:

• Minor wave A of Intermediate wave (E) was the mini-collapse of February-March 2020.
• Minor wave B of Intermediate wave (E) is the current rally off the March 2020 low.
• Minor wave B is very mature. Be on alert for Minor B to finish any time going forward as the end of the year approaches. A break below 3200 would be a strong indication that Minor wave C is underway. The Xmas-New Year seasonal bounce may prolong the completion of Minor wave B.
• Minor wave C is expected to break the Minor wave A (March 2020) low.
• Minor wave C may be longer than Minor wave E (see Alt C and Alt E on chart) or Minor wave E will be the longest wave of Intermediate wave (E).
• 1600-1700 is the downside target range for SPX.

Chart 3: 450 Minute Bar Chart = One Week NEoWave Analysis Period (4 bars)

Key points:

• Minor wave B is a symmetrical corrective structure, a nine-wave structure, Minute waves ((a)) – ((i)).
• A symmetrical is a corrective structure that is characterised by time duration similarity between all nine waves, although sometimes some waves can be significantly different in time duration.
• Minute waves ((a)), ((b)), ((c)), ((d)), ((f)), ((g)) and ((h)) are all similar in time duration. If Minute wave ((i)) is going to be similar in time duration it must end very soon, i.e. November/December.

 

@kitdoctor - in relation to the following....

• Cycle wave II concluded in 1949. TradingView does not have sufficient historical data to show the start and finish of Cycle wave I.
• SPX is in Primary wave ((4)), a corrective wave, that commenced at the high in 2000.

I'm assuming that Cycle wave III occurred from 1949 to 2000. Therefore, Cycle waves 2, 3, 4 have taken 70 years to run their course. For simplicity sake I'm going to round out a 5 wave count full cycle to 100 years.

As far as I'm aware, accurate data for stock markets would be hard to find for anything more than 200 years at the absolute maximum.

Obviously you have a high level of confidence in the analysis but I'm wondering if 2 cycles worth of data could really be enough to determine if the patterns being seen are anything more than random movements that happen to look similar?

 

thanks for sharing kitdoctor...
would you also have the equivalent charts for XJO as well ?

 

No, Cycle wave III is still underway. Cycle wave III’s first subdivision of lower wave degree is Primary waves ((1)), ((2)), ((3)), ((4)) and ((5)) (where (()) denotes a circle). When Primary wave ((4)) which is a sub-wave of Cycle wave III concludes, Primary wave ((5)) of Cycle wave III will start. When Primary wave ((5)) concludes it will complete a larger or higher degree wave that is one level higher, that is, Cycle wave III. Cycle wave IV will then start and after it finishes Cycle wave V will start.

No, not the case. For example, Robert Prechter has been able to construct a composite chart for the DJIA starting from 1695. This early period encompasses the first modern mania or bubble The South Sea Bubble of 1720 (see South Sea Company - Wikipedia). The period from 1695 – 1788 is constructed using data from the London Stock Exchange. The Foundation for the Study of Cycles - The World Center for Cycles Research (FSC) has compiled US stock-price data dating back to 1789. The DJIA came into existence in 1886, although Charles Dow created his first stock index in 1884.

Glenn Neely approached the development of a long-term chart for the US stock market differently. Initially he did this for the DJIA and published his findings in 1988 in a paper The Future Course of the U.S Stock Market: An Elliott Wave Perspective in Volume 39 No. 7 of Cycles Magazine. He started with the data compiled by the FSC but what he did was determine a starting point for the DJIA (had the index existed and society kept records) which he estimated to be 0.30 in 1765 ± 10 years. What I have done is adopted Glen Neely’s view that 1949 was the start of a large third-degree wave consistent with society’s rapid progression in many fields of endeavour since that date.

This misses a fundamental part of wave theory – waves are fractal, in that waves create patterns at smaller time frames that are similar representations of patterns that exist at larger time frames. Smaller patterns build into larger patterns, some of which are just larger representations of the smaller patterns. Alternatively, the larger patterns may be a different pattern to the other smaller patterns that it is comprised of. The patterns made by combining waves can be seen at any time frame whether it is minute, hour, day, week, month, year, decade etc. Your argument is, a (mere) few patterns look similar at a high time frame (years/decades) on a chart of SPX, so what? Just an infrequent occurrence during a period of time that is historically insignificant.

My argument is the patterns you say are infrequent are visible to the trained eye again and again and again and again at any time frame across any freely traded market that has its price/time action recorded. To someone (e.g. Glenn Neely) who has mastered NEoWave and has worked with thousands of patterns over four decades and seen them repeat and repeat and become so adept that he can spot them with just a glance, the idea that market behaviour is just random doesn’t hold. This doesn’t mean that prediction or forecasting is easy. This is because prediction or forecasting involves working with incomplete patterns. Taking this a little further, patterns are the most unpredictable when they are at their mid-point. It is at this point where a pattern can usually take a few alternative directions and one must wait for the pattern to reveal itself.

 

Yes. I'm staging the release, with SPX first. Maybe this helps to not overwhelm readers...well that's the idea anyway.

 

I like to be overwhelmed with data and read it all in one go

 

your charts and forecast are always a joy to read
thanks for sharing.

 

hi kitdoctor, just a quick question:
chart2 above shows the index hits a major low at 2000 by 2024
however chart3 shows it gets down to 1700 just after 2023 ?

so does this mean it will get down to 1700 by 2023, bounces back up then drop down to 2000 as the next trough in 2024 ?