World Indices Roundup 2020

When a chart shows a dashed line/s indicating where price is forecast to head this should be taken as conceptual only. That is, it is just depicting a concept to aid understanding and not specifically showing time/duration or the end price level. How the price reaches the end point will also be more complex in form than depicted by a few dashed lines (remember waves are fractal).

When I want to be specific I will add some form of note to the chart or say something in my comments. However, don't then make the mistake of turning that into more than what is said/shown. So, the price target for the end of Intermediate wave (E) is 1600-1700. The duration of Intermediate wave (E) is 7-10 years commencing from its starting point, February 2020. In simple terms, there are three swings ahead, Minor wave C down, Minor wave D up and Minor wave E down.

 

@VanillaSlice I almost forgot. Some kind words are always appreciated, so thank you.

 

@sharon thank you too.

 

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The Nasdaq is now creating higher lows under its highs. It is above the 21EMA, and the 50DMA. We have been in a sideways box for awhile, with two rally attempts.

I focus on price action. Notice how the index reacted during the election (it rallied on the day despite some doubt about the result at the time, with some leaders acting well), plus the reversal off the high due to the announcement of the COVID vaccine but then it found support at the 21EMA. These are all clues to watch.



There has been rotation out of some of the COVID rally stocks. This is how bull markets stay alive - one sector leads, then another takes over.

In terms of leaders, TSLA has broken out on news it is joining the SP500. Other relative strength leaders to watch for clues include PINS, SNAP, NET, UPWK, QCOM, UBER, SONO and ALGN.

 

XJO

My XJO analysis confidence level is LOW. Why then have I released a wave count? The reason is, if the long-term wave count is correct and the wave count for the price action since the 2020 low is correct, then a reversal to the downside is ahead, possibly very soon.

Why is the confidence level LOW? The following apply:

• Although possible under NEoWave it was a surprise to determine the entire price history of XJO appears to be in an (upwards) corrective structure (see discussion below). At this stage I have not considered whether there are any other possible long-term alternative waves counts for XJO.
• Four main charts are used for NEoWave analysis: 6 month, 1 month, 1 week and 450 minute bar charts. The 6 month bar chart might lose too much detail. The 1 month bar chart is too complex and ideally, say, a 3 month bar chart might be better for analysis.
• The rally off the March 2020 low can be interpreted in (at least?) three ways. Of these three alternatives, one involves where the rally started from, i.e. maybe it didn’t start at the 23 March low (this is not discussed below as it may just create confusion). The other two alternatives relate to pattern/s the rally off the (assumed) low of 23 March have traced out.

Followers of my traditional or orthodox Elliott Wave Principle analysis of XJO would be aware that I have maintained that XJO has been in a large corrective pattern since the high of 2007. My NEoWave analysis is consistent with this, however, my wave count puts forward the idea that XJO’s entire history of price action is a much larger corrective pattern of which the 2007-2027/28 (estimated year of conclusion) period is just a part of.

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

Key points:

XJO is tracing out a multi-wave corrective structure at Primary wave degree:

• Primary wave ((A)) concluded at the 2007 high.
• Primary wave ((A)) was a triple corrective structure comprising a zigzag Intermediate waves (A) – (B) – (C), a diametric Intermediate waves (A), (B), (C), (D), (E), (F) and (G) and a second zigzag Intermediate wave (A) – (B) – (C). Each corrective structure was separated by an (X) wave.
• A diametric is a seven-wave corrective structure that is characterised by time duration similarity between all seven waves, although sometimes some waves will be significantly different in time duration. However, a diametric does not feature price similarly between waves. Waves A, B, C and D will often be confined between expanding trend lines and waves E, F and G will be confined between contracting trend lines forming a diamond pattern. The opposite may also occur forming a bow tie pattern.
• Primary wave ((B)) is assumed to be a triangle, more specifically a contracting triangle confined between two contracting trend lines. A triangle is a five-wave corrective structure. Primary wave ((B)) comprises Intermediate waves (A) – (E).
• Primary wave ((B)) may not be a triangle e.g. it could develop into a diametric
• If Primary wave ((B)) were to finish in 2028 that would result in a duration of 21 years, 21 being a Fibonacci number. This fits nicely with a projected end (i.e. high) of the residential real estate cycle around 2025-2026 and by extension a top in XJO around 2026.
• Intermediate wave (A) was the period from the November 2007 high to the March 2009 low. Intermediate wave (A) was most likely a multi-zigzag, although the subdivisions do not show on Chart 1.
• Intermediate wave (B) was the period from the March 2009 low to the February 2020 high. Intermediate wave (B) was a diametric.
• Intermediate wave (C) is currently underway.
• Intermediate wave (D) of Primary wave ((B)) may slightly exceed the Intermediate wave (B) high forming a running triangle in Primary wave ((B)) where both trend lines will slope upwards.

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

Key points:

• Minor wave A of Intermediate wave (C) was the period from the February 2020 high to the March 2020 low.
• Minor wave B, the rally off the March 2020 low, is currently underway.
• It is possible that Minor wave C of Intermediate wave (C) to take out the March 2020 low, however, there is a possibility that Minor wave C wave may fail and finish above the March 2020 low.
• A failure of Minor wave C to take out the March 2020 low can also be explained by changing the wave count so that Minor wave A becomes the whole of Intermediate wave (C) (see Chart 2). This would maintain a 0.618% relationship between Intermediate wave (B) and what becomes Intermediate wave (C), albeit that they are adjacent waves and a 0.618% relationship between Intermediate wave (A) and (C) would be more common. The 0.618% relationship between Intermediate waves (B) and (C) can occur when the B wave of the triangle is larger than the A wave, as is the case here.
• Intermediate wave (C) may form a flat, a 3-3-5 corrective structure. Traditional or orthodox Elliott Wave Principle does not permit a flat to form as any of the five waves of a triangle.

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

Key points:

• Minor wave B could be forming a symmetrical comprising Minute waves ((a)), ((b)), ((c)), ((e)), ((f)), ((g)), ((h)) and ((i)). This is how it is labelled on this chart.
• If Minor wave B is a symmetrical then Fibonacci extension/retracement relationships do not apply to the internal sub-waves and no price forecast can be made as to where it will end. What I would suggest doing is monitoring momentum (e.g. RSI) at the weekly and daily time frames for concurrent overbought conditions as evidence of waning momentum.
• However, it is possible to label price action another way, a double zigzag, ((a)), ((b)), ((c)), ((x)) (shown), ((a)), ((b)), ((c)) (shown only for Alt 1 ((x)) ).
• In this alternative, Minute wave ((x)) is a diametric. The first nominated end point for ((x)) maintains the same time relationship between five of the seven waves. There is an alternative end point for Minute wave ((x)) (see chart).
• If the alternative wave count applies the target for the end of Minor wave B is 6582.1 – 6775.3 which would maintain a 0.5% or 0.618% relationship between the first zigzag and the second zigzag. A rise to 7400.9 where the length of the second zigzag would equal the first, exceeding the Intermediate wave (B) high would require a rethink. The alternative end point for Minute wave ((x)) would still permit a 0.5% or 0.618% relationship to exist between the second and first zigzags, without exceeding the high of Intermediate wave (B).

Charts 4 and 5: 450 Minute Bar Chart = One Week NEoWave Analysis Period (4 bars)

Key points:

• Minor wave B appears to be forming a symmetrical comprising Minute waves ((a)), ((b)), ((c)), ((e)), ((f)), ((g)), ((h)) and ((i)) (see Chart 4). This is how it is labelled on this chart. There is some doubt over the form or pattern of Minute wave ((c)) that can’t be determined without creating another chart at a lower time frame.
• There is good time similarity between seven (assuming Minute wave ((i)) is almost over) of the nine Minute waves (see Chart 5) to support the above conclusion.
• 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 5900 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 which would be an extraordinary case of 2021 rhyming with 2020.

 

History provides a guide as to may happen when things get a little crazy.



Source: www.indexindicators.com 25 November 2020

 

Bitcoin forming the right side of a monster base. Something to watch as its becomes more mainstream and institutions start to accumulate. Also, bitcoin stock plays like SQ and PYPL are ones to watch.

 

Hedge fund Pantera estimates that in the past 2 years, Square users accounted for 40% of bitcoin that entered the market, and in just the past 3 weeks since Paypal launched its crypto feature, their clients have purchased about 70% of the new supply of bitcoin.

 

Bitcoin - the digital Tulips of the 21st century.

 

The Nasdaq broke out of its range. It now has had a break off an all time high and many growth leaders were down today. It is one day only, but something to be aware of.

Leaders to watch include TSLA, SNAP, PINS, ZS and CRWD.

 

Perhaps. All innovation climbs a wall of doubt.

 

I’m sorry but does this mean overbought and a correction is on the cards or breakout of trading range and strong growth ahead?
All in your opinion of course

 

Sorry, I was probably too brief.

The Nasdaq broke out of a trading range on 25/11. It had one negative day while in an uptrend on 9/12.

If we see strength today and/or the days ahead (such as leading stocks showing strength in a weak tape), that's a clue about what the institutions are doing. Or leaders and/or the leading index (i.e. nasdaq) recovering quickly, or perhaps finding support at a key moving average = more clues. Alternatively, if we see more weakness, stalling action and/or break in support, that's another clue.

To be honest, I don't predict anything. I’m interpreting price action. I have no idea when the next correction will happen or, when it starts to happen, how deep it will go. Nobody can.

 

My analysis tells me that SPX and XJO went too far for my counts from the March low to remain valid. I can see that SPX's price action has morphed into what is now a third pattern. XJO is unclear. A slight pull-back will now occur before a final advance occurs to a more significant top in the New Year. I will say early in the New Year.

 

No it does not mean they are overbought. If any companies follow for the sake of following and not on their metrics, they may be. These companies have had a report, nothing to do with average prices of unrelated companies. SNAP and ZS had a positive forward statements, and revenue growth of over 50%, PINS had revenue growth of 36% and has 100 million new users a month, but is in early stage of monetization and could increase revenue per user 400%. CRWD had 87% revenue growth and 77% gross margin on subscriptions. TSLA had a share split, is going into the S&P 500 where index funds will have to pay through the nose for it to meet their mandate. SNAP may be more expensive than PINS, ZScaler and CRWD, I think it has a shorter runway for growth, it is the only one I dont own

 

Bitcoin breaks out to an all time high.

 

ASX 200 continues to trend up, now about 6% from its pre-covid high.

 

Japan continues on ...

 

Bitcoin still going ...