WaveTrack International

Elliott Wave Financial Price Forecasting

DOW THEORY & ELLIOTT WAVE

by WaveTrack International| October 17, 2017 | No Comments

Dow Jones Industrials vs DJ Transportation Average

In recent media commentaries, analysts have been warning of an Armageddon collapse in stock markets because CAPE and P/E ratios are so historically high. What they seem to forget is that highs can go even higher! There doesn’t seem to be the same public euphoria that accompanied primary wave 3’s peak into the dot.com highs of March 2000. Neither is Dow Theory offering any bearish divergences at this stage of the secular-bull uptrend.

In this next chart, we examine Dow Theory’s concept of bullish/bearish divergences between the Dow Jones Industrial Average and the DJ-Transportation Average at key turning points – see fig #1. Dow Theorists will differ in their ‘trigger’ points in activating a buy or sell signal, but this is predicated on a preceding divergence or out/underperformance between these two indices. In order for a trend to be established, Charles Dow postulated that indices or market averages must confirm each other. If they differ at higher-highs, or lower-lows, then the trend may be in a process of ending. As you can see, both indices are trading into higher-highs, simultaneously. There are no divergences with either one lagging behind the other which would indicate underperformance, or weakness. Instead, both are confirming the overall markets uptrend.

Fig #1 - DOW THEORY - DJ Industrial v. DJ Transports - Daily chart by www.wavetrack.com

Fig #1 – DOW THEORY – DJ Industrial v. DJ Transports – Daily

Notable lagging or bearish divergences occurred prior to the 2007 financial-crisis and even in the minor corrections in 2011 and 2015-15 but not now. That’s good news for the foreseeable future, but what this doesn’t tell us is if there is a dual corrective decline around the corner!

Elliott Wave Analysis

The DJ-Industrial Average forecasts are in exact sync with the S&P 500. From what we can see, it is the same rhythm in the DJ-Transportation Average – see fig #2. Bottom-left is the low at the grand ‘Re-Synchronisation’ lows of Feb.’16 at 6403.30. A five wave pattern uptrend has since unfolded as minor wave v. five. Exactly the same degree of trend (nomenclature) as the S&P 500 and DJIA! The Transports is also approaching a terminal 3rd wave high within this uptrend. Here Fibonacci-price-ratio targets are measured towards 10434.40-10504.10+/-. These levels are derived from Fibonacci-price-ratio measurements within minute wave 3’s advance that began from the June ’16 Brexit low of 7029.40.

Fig #2 - DJ Transportation Average - Daily by www.wavetrack.com

Fig #2 – DJ Transportation Average – Daily

Once completed, minute wave 4 will begin a multi-month corrective decline lasting into year-end. Downside targets are towards the fib. 38.2% retracement area at 8975.50+/- (log scale). Extending this from the origin of wave 1 projects an ultimate high for wave 5 towards 11064.40+/- due sometime into the end of Q1’18.

Summing Up

The roles of Dow Theory (DT) and Elliott Wave Theory (EWT) differ. Dow Theory relies on the divergence effect at major peaks and troughs. Whereas EWT is a methodology tracking the seamless, sequential progress of price development. Both have their uses but are used quite differently.

With no obvious underperformance between the Dow Jones Industrials and the DJ-Transportation Average, we see no reason for supporting a major collapse as CAPE and P/E indicate. The Dow Jones Transportation Average is unfolding in sync with its major contemporaries.

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SPAIN IBEX-35 INDEX – CATALEXIT or BUST?

by WaveTrack International| October 12, 2017 | No Comments

CATALONIA INDEPENDENCE OR BUST?

Catalexit - Boom or Bust?  Photocredit: Courtesy of Wikimedia Commons

Catalexit – Boom or Bust? Photocredit: Courtesy of Wikimedia Commons

History Repeats?

Geopolitical events remain in focus this year following on from 2014’s Scottish referendum, last year’s June Brexit vote in the United Kingdom and Donald Trump’s surge into the White House last November. Now, it’s Catalonia’s turn to hold the headlines with the Catalexit. Interestingly enough, at each stage prior to the voting, the stock market has proved to be a reliable barometer in forecasting the outcome of each event.

Scotish Referendum

For example, just before the Scottish referendum of September ’14, the U.K.’s FTSE-100 index hit an important peak at 6904.86 which from an ELLIOTT WAVE perspective, ended intermediate wave (B), the second sequence of an expanding flat corrective pattern, opening the way for wave (C) declines which after the vote, sank prices down to 6072.68, down -10.8% per cent in just about a month. This was a perfect forecast even though to consensus views, the Scots vote to remain in the Union was thought to be bullish, not bearish.

Brexit

Then there was Brexit in June ’16. The FTSE-100 was already trending higher from the Feb.’16 lows prior to the vote on June 23rd – ELLIOTT WAVE forecasts had already signalled a temporary correction ending and a resumption of the dominant uptrend shortly before the vote. When the shock news came through in the early hours of the next morning, the index had a momentary wobble, trading down to 5788.74 but later surging higher to resume that uptrend. Once again, the index performed exactly to forecasts, even though from a fundamental, economics viewpoint, the market behaved completely contrary to conventional logic.

US Presidential Elections

The outcome of November’s Clinton vs. Trump Presidential election was again at odds with consensus thinking. If you remember, the media led us to believe that a Trump victory, albeit a remote possibility, would be a disaster for the U.S. economy. The fact that opinion turned quickly around after Trump’s inaugural speech was beside the point because the markets surged higher afterwards. But from an ELLIOTT WAVE perspective, the November 8th victory for Trump was ‘telegraphed’ a long time beforehand, labelled as ending a typical 2nd wave correction for the S&P 500 futures at 2028.50.

Catalexit – Independence or Bust?

So what next for Catalonian Independence? Does the Spanish IBEX 35 index indicate that independence will become reality? Or will the province go bust in their bid to break free from Spanish Sovereignty? As we’ve already seen from previous events, the problem is that the actual outcome of the event has little influence over the ultimate direction of the market – a consistency in economic fundamental logic simply doesn’t work.

IBEX-35 Index FORECAST – Indicator for the Catalexit Outcome?

From an ELLIOTT WAVE perspective, the IBEX 35 index has just completed a counter-trend decline that originated from the May high of 11240.00 into last week’s low at 9840.00 – see fig #1 (futures). This sequence has unfolded into a perfect double zig zag pattern where the first zig zag decline ending into the late-July low of 10350.00 is extended by a fib. 61.8% ratio, projecting the terminal low for the secondary sequence to the exact low traded on October 5th at 9840.00. Don’t forget, this low formed just a few days following the October 1st independence referendum. The swift push higher that followed provided what we term as a ‘reversal-signature’ confirming its completion and triggering the beginning of a new sustainable uptrend.

Catalexit - IBEX 35 Mini Futures - 180 mins.

IBEX 35 Mini Futures – 180 mins. – Elliott Wave Chart

If we zoom-out and insert this component sequence into its larger aggregate pattern, we can see that this corrective decline is simply ending a primary degree 4th wave within a developing five wave up-trending pattern – see fig #2 (cash index). A 5th wave advance is really bullish because it not only pulls the index back above the May ’17 high of 11180.30 (11240.00 futures) but using proprietary fib-price-ratios, projects a terminal 5th wave high towards 12618.70+/-, about +23% per cent above current levels.

Catalexit - IBEX 35 Index - Daily - Elliott Wave Chart by WaveTrack International

IBEX 35 Index – Daily – Elliott Wave Chart by WaveTrack International

Conclusion

We’ve demonstrated the ability to forecast the direction of the world’s major indices around major geopolitical events over the last few years, which is sound knowledge for any investor, fund manager or trader. But as we’ve also seen, the fundamental, or economic logic more often fails to explain the outcome of the event on each occasion. So it’s dangerous to think that just because the IBEX-35 index is forecast significantly higher over the next 6-month period, that Catalonia’s Catalexit-bid for independence will fail.

So far, talks between Catalonia’s regional leader Carles Puigdemont and Spanish Prime Minister Mariano Rajoy continue. Assuming the market’s logic that an uptrend in the IBEX-35 index indicates a political victory for Spanish unity then that outcome is indicated by the Elliott Wave analysis. But as time has proven before, economic logic often flies out of the window!

Elliott Wave @ its best!

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MAGICAL 7 – Cycle Declines in 7th Year of Decade

by WaveTrack International| October 3, 2017 | 5 Comments

7th year cycle by WaveTrack and Richard Mogey

The 7th Year Cycle

Richard Mogey is a former Executive Director of the Foundation for the Study of Cycles and is one of the world’s foremost cycle analysts with over 50-years’ experience. His latest weekly cycle analysis has taken an in-depth look at the evidence surrounding the 7th Year Cycle in the stock market and asks the question – does the 7th year really show a strong dip in price levels on a consistent basis?

In a nutshell, yes, there is evidence that a strong sell-off does occur in the 7th year of the decade – Richard adds though that out of the 21 ‘seventh-year’ examples that begins from the year 1793, 9 do not conform to the recurrence of a strong sell-off, equivalent to 42% per cent.

7th Year Cycle Research basis Dow Jones (DJIA)

In order to gain a true representation of like-for-like comparison, Richard has converted the Dow Jones (DJIA) data into logs then into a rate-of-change. This certainly helps in evaluating which of the 7th years in each successive decade fulfilled the criteria of staging a strong sell-off and those that didn’t.

A few aspects that became obvious to me in the analysis was that in those years where a 7th year did stage a mini-crash, this generally occurs into the last quarter of the year. Some did form a cycle-trough slightly earlier, but those that did fit the model ‘perfectly’ generally began those declines a few months previously.

Here are a few examples of the ‘prefect’ modelling from Richard’s analysis (fig’s # 1-3):

Fig #1 - 1937 - analysis by Richard Mogey Dow Jones 7th Year Cycle

Fig #1 – Dow Jones Cycle – 1937 – analysis by Richard Mogey

Fig #2 - 1967 - analysis by Richard Mogey - Dow Jones 7th Year Cycle

Fig #2 – Dow Jones Cycle – 1967 – analysis by Richard Mogey

Fig #3 - 1987 Dow Jones 7th Year Cycle - analysis by Richard Mogey

Fig #3 – Dow Jones Cycle – 1987 – analysis by Richard Mogey

Note that the peaks form in July/August, bottoming October/November.
Now take a look at the previous 7th year cycle of 2007 – see fig #4.

It didn’t quite unfold into the ‘idealised’ pattern frequency as the preceding peak occurred much earlier in the year in May forming two lows later, in August and eventually in November. But overall, it fulfilled the basic criteria of the form.

Fig #4 - 2007 - analysis by Richard Mogey

Fig #4 – 2007 – analysis by Richard Mogey

Richard concluded that this year’s stock market has had a straight-line upward trajectory since last year’s Presidential election so the available time remaining to fulfil a strong sell-off is now quite short as we enter the final quarter of this 7th year. If 2017 is going to be the thirteenth year that fulfils the strong sell-off criteria, then it would have to begin almost straight away.

Certainly, there is downside risk in this cycle’s analysis, but can Elliott Wave analysis clarify the probabilities?

Elliott Wave – Approaching 3rd Wave Peak

In WaveTrack International’s recent updates of the Elliott Wave Navigator and Elliott Wave Compass reports, the S&P’s upside progress from the grand ‘RE-SYNCHRONISATION’ lows of Feb.’16 illustrates an incomplete five wave ‘expanding-impulse’ pattern in upward progress. But it is approaching a terminal high for its 3rd wave sequence. See fig #5.

S&P 500 - Daily - analysis by Peter Goodburn - WaveTrack

S&P 500 – Daily – analysis by Peter Goodburn – WaveTrack

At the moment, the S&P is still pushing to higher-highs, to new record highs, but the upside targets to complete its 3rd wave which began from the June ’16 Brexit low of 1991.68 are fast being approached. Is this Richard’s 7th year cycle peak coming to fruition? If so, it’s several months late.

We believe this will trigger a strong sell-off as a 4th wave correction unfolds – the exact same Elliott Wave pattern is also visible in the Dow Jones (DJIA) – watch for resistance towards 22750.00 to 22800.00+/-.

For the S&P 500, a 4th wave correction would pull prices down towards the fib. 38.2% retracement level at 2338.00+/-. Depending on exactly where the 3rd wave peaks, towards 2553.00-2580.00+/-, this is about an -8% or -9% per cent correction. That would certainly conform to Richard’s criteria for adding 2017 as one of those 7th years that resulted in a strong sell-off.

After the 7th Year Cycle Lows

Now the good news (especially for portfolio fund managers and long-only funds!) – Richard adds that once the strong sell-off is over, the markets recover again but not into a correction but into higher-highs. He estimates the next advance is good for a +10% to +12% per cent gain.

From an Elliott Wave perspective, that would fit perfectly into the development of a final 5th wave advance, which projects the S&P 50 towards 2739.55+/- sometime into the end of Q1 2018.

So there we have it. There is definitely some downside risk for U.S. and global stock markets as we enter into this final quarter of the 7th year of this decade. I would add that Richard says that if a more imminent decline is avoided, the Dow Jones (DJIA) could easily stretch this year’s gains by another +8% to +10% per cent. Either way, a little piece of history is expected to be made before the year end – and you can probably guess which way I’m expecting the markets to trade!

If you wish to know more about Richard Mogey’s amazing work and CycleTech software you can contact him here:
Richard Mogeys Cycle work and CycleTech Software
email: rmogey@comcast.net

Learn more about Richard Mogey’s background

Richard Mogey, one of the world’s foremost authorities on cycles, has been studying cyclic activity in disciplines from natural phenomena to financial markets. He is a direct heir to the philosophy of Edward R. Dewey who founded the Foundation for the Study of Cycles.

From 1988 to 1997 Mr. Mogey was the Research Director, Executive Director, Chief Financial Officer, and Chief Economist for the original “Foundation for the Study of Cycles, Inc.”, an international nonprofit research organization. He was the chief statistician and economist at the Foundation from 1989 to 1997. He created and co-authored two magazines for investors, Business and Investment Cycles and Cycles Projections, and was responsible for the editorial content of the popular journal, Cycles Magazine. He has developed the Foundation’s award winning cycle analysis software, Techsignal.

He wrote for 10 years’ articles for Cycles Magazine which is available in all major libraries. His articles can easily be found online. From 1997 to 2003, he was Managing Director and Director of Research at Iris Financial Group, a hedge fund in Portland, Or.

In 2005, he returned to the Foundation for the Study of Cycles as Chief Voluntary Officer. Richard also served as, Director of Research and Chief Economist from 2005 -2010. From 2010 to 2012, he directed several trading projects at Weiss Research, in Jupiter Florida.

From 2004 to 2015 he was Head of research at CMF Investment Advisors, LLC.
He currently is Head of Research at Vorsus Capital, LLC. From 1995 to present he has developed proprietary stock and futures trading tools and software.

He has lectured at the University of Virginia and Temple University’s Business Schools on economics and the business cycle. He has spoken widely and has presented papers at economic conferences world wide including the Russian Academy of Sciences. He is an experienced computer programmer with an extensive background in statistics.

Richard has a BA in Philosophy and Classics, Magna cum Laude, from the University of California at Irvine.

BITCOIN – BUBBLE OR NO BUBBLE?

by WaveTrack International| September 13, 2017 | No Comments

Bitcoin – To Be or Not To Be?!

Much hype has surrounded Bitcoin over the last few years but especially this year since prices of the crypto-currency have gained by a phenomenal +555% per cent! So far, I’ve resisted various requests to look into the Elliott Wave pattern development of Bitcoin, mainly because its data-history is relatively short, beginning from July 2010 which shortens the odds of making reliable long-term price forecasts. But also because its reason for existence relies on the idea that we shouldn’t trust the banking system allowing users to transact outside the system.

Executive Order 6102

That’s all sound logic except when you realise that governments can control transactions just as they did back in year-1933. This was when Executive Order 6102 was implemented by President Franklin D. Roosevelt which prevented the ownership of gold coin, bullion, certificates by any individual, partnership, association or corporation. Several notable arrests were made as confiscations continued within U.S. borders. If history has a precedent like this, yes, it can repeat sometime in the future given the right conditions of financial stress.

Gold Coin, Gold Bullion Confiscation by the order of the President - 1933 - image source by courtesy of Wikipedia

Gold Coin, Gold Bullion Confiscation by the order of the President – 1933 – image source by courtesy of Wikipedia

A modern day example surfaced in Monday’s press – the Chinese government announced it is planning to shut down platforms that transact in the buying and selling of Bitcoin. The Bank of China has led a draft of instructions that would ban Chinese exchanges from providing virtual-currency trading services. Furthermore, Chinese authorities have now declared the mechanisms that raise funding for crypto-currencies or Initial Coin Offerings (ICO’s) as illegal. How much further are these restrictions going to go?

Does this mean that we shouldn’t invest in Bitcoin? After all, many analysts are voicing concerns of a bubble that is about to burst!

Well, there’s always a chance that other governments will also close down crypto-currency platforms – that is the risk we face. But from an Elliott Wave perspective, the exponential uptrend seems likely to continue over the next year or two.

Bitcoin – Cryptocurrency – No Bubble!

A 5th wave advance began from the Jan.’15 low of 170.00. It began building into a typical step-like 1-2-1-2-1-2 sequence until earlier this year, in January ’17 when it finally underwent ‘price-expansion’ which characterises its 3rd-of-3rd-of-3rd wave acceleration. This is where this year’s gain of +555% per cent comes from. So far, this third wave impulse pattern remains incomplete, aiming for price levels towards 6932.00+/- (yes, that’s a gain of +62% per cent from current levels of 4261.00). And even after a corrective decline, the is more upside potential going forward to complete the larger five wave pattern from the Jan.’15 low.

Shorter-Term – Fib-Price-Ratios

Within this year’s 3rd-of-3rd-of-3rd wave advance, it’s finalising fifth wave advance began pulling prices higher from the July ’17 low of 1905.96 (intraday recorded 1809.26). Furthermore, this subdivides into a five wave pattern labelled in micro-degree, [1]-[2]-[3]-[4]-[5]. Wave [4] is currently engaged in a corrective decline from the current all-time-high of 4920.24 – see fig #1.

Bitcoin - 60 mins. chart - Forecast by WaveTrack International | www.wavetrack.com

Bitcoin – 60 mins. chart – Forecast by WaveTrack International

It seems that Bitcoin unfolds into the overall rhythms and patterns defined by the Elliott Wave Principle. In this chart, we can see the finalising sequences of wave [3] advance. Its fourth wave subdivision, labelled wave < 4 > can be seen taking the form of a symmetrical expanding flat pattern from 4419.21 to 3601.06. Note the adherence of fib-price-ratios, where wave ‘a’ from 4419.21 to 3817.85 is extended by a fib. 9.01% ratio to project the high for wave ‘b’ to 4471.67 and by a fib. 38.2% ratio for wave ‘c’ to 3601.06.

The following advance as wave < 5 > unfolds into a five wave impulse pattern which includes an uncommon 1st wave ‘extension’. Its finalising fifth wave unfolds by a fib. 38.2% ratio of the net gain in the first-third sequence projecting close to the high at 4920.24.

A Counter-Trend Decline

The high at 4920.24 ended micro-wave [3] which originated from the July 26th low of 2409.21. Wave [4] has since begun a counter-trend decline, taking the form of a double zig zag pattern, labelled < a >–< b >–< c >–< x >–< a >–< b >–< c >. This appears incomplete with the pattern projecting more declines over the coming week or two.

The first zig zag ended at 4124.00 earlier this month (September) with wave < x > subsequently ending a rally to 4678.90. Should fib-price-ratio equality exist, then the secondary zig zag will ultimately test levels towards 3922.00+/-. Extending the first zig zag by a fib. 38.2% ratio projects slightly lower to 3855.00+/-. Once tested, we expect to see Bitcoin resume its larger uptrend.

Conclusion

From an Elliott Wave perspective, there seems little doubt that Bitcoin has much more upside potential, not only in the months to come but the next couple of years. Talk of a bubble burst seems far too early, even though this year’s exponential gains are impressive. The objective is to ride the wave, but get out before the inevitable collapse that will surely follow.

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Solar Eclipse, Donald Trump, 7-Year Cycle and The Harbinger

by WaveTrack International| August 24, 2017 | No Comments

The Harbinger,<br />Solar Eclipse, Donald Trump and 7-Year Cycle

The Harbinger, Solar Eclipse, Donald Trump and 7-Year Cycle

The Harbinger by Johnathan Cahn or SHEMITAH REVISITED

Monday’s U.S. Solar Eclipse was quite an event, even though I was only viewing this from a live streaming event hosted by NASA. We’ve had two solar eclipses in Munich, Germany since I arrived eighteen years ago and on both occasions, took photographs of the moon’s gradual transit across the sun until just the corona was visible – amazing! But what has that to do with The Harbinger or our ‘Shemitah Forecast‘ two years ago?

The eclipse triggered another memory – it was reading Jonathan Cahn’s The Harbinger book whilst on my annual sabbatical (summer recess/vacation) a few years ago. I thought this to be a very intelligently written and well-researched book on how the Harbinger reveals a potential path of redemption for the U.S. and the World. It refers to the Bible’s various passages related to solar eclipses and its portent:

Matthew 24:29
‘The sun will be darkened, and the moon will not give its light; the stars will fall from the sky, and the powers of the heavens will be shaken’

The Harbinger, Solar-Ecplise and Donald Trump

President Trump, as head of state, seems bent on an unintentional path of self-destruction. In the light of this I wondered what his administration represents at a time of heightened geopolitical tension – especially in connection to the prophecies in ‘The Harbinger’. When I dipped briefly into Jonathan Cahn’s blog, I read that he has it on good authority that some of President Trump’s closest allies are aware of the Harbinger and some of its prophecies. Donald Trump was born on an eclipse day, adding to the intrigue and drama. Does yesterday’s solar eclipse have significance for Trump given its transit across the United States?

One of the interesting aspects of The Harbinger was its description of the 7-Year Shemitah cycle. I took some interest in this, and thoroughly checked it out. My conclusions were aired in the Elliott Wave Navigator report dt. August 10th 2015. 1508_The Elliott Wave Navigator – Complimentary PDF-Download. It mainly dramatised stock market ‘shocks’ around a 7-year period and the 50-year Jubilee year in September ’15. These cycles did signal the sharp accelerative decline of -10.7% in August and the resulting recovery which our analysis averaged historically to +23.7% per cent – the following advance was more like +18.9% per cent – pretty good! Compare BEFORE & AFTER – fig’s #1 & #2.

Dow Jones 30 Index - Daily - Forecast 9th August 2015 - 7 Year Cycle Forecast inspired by The Harbinger Jonathan Cahn

Fig #1 – Dow Jones 30 Index – Daily – Forecast 9th August 2015

Dow Jones 30 Index - Daily - Result 22nd August 2017 - 7 Year Cycle Update inspired by The Harbinger Jonathan Cahn

Fig #2 – Dow Jones 30 Index – Daily – Result 22nd August 2017

The Paradigm

I haven’t returned to the Harbinger or the 7-year cycle since, mainly because the next 7-year event is still some way off. But I did discover that Jonathan Cahn is preparing to publish his next book next month, entitled ‘The Paradigm’ on September 19th. Sadly, it will come too late for this year’s sabbatical, but this might be worth taking a look. Maybe it reveals another aspect of the 7-Year Shemitah cycle relevant to the current SECULAR-BULL UPTREND?!!

Most sincerely,
Peter Goodburn

XETRA DAX SETS THE TREND!

by WaveTrack International| August 21, 2017 | No Comments

Sentiment is Bearish

U.S. stock markets were reeling last week as the Trump administration was engaged in reputational ‘damage-limitation’ over the President’s Charlottesville comments that drew a moral equivalence between neo-Nazis and anti-fascists. The fallout that followed resulted in the resignation of Trump’s ‘America First’ architect Steve Bannon as White House chief strategist. Losing an ally is one thing but when major industry chiefs began to resign from Trump’s advisory councils, the markets listen, then react as they did last week with sharp declines in the benchmark S&P 500 index.

This latest sell-off comes at a time of heightened anxiety over recent warnings from industry luminaries over the high readings from the CAPE (Cyclically-Adjusted Price/Earnings) and S&P/Sales ratios. Yes, they are historically high but are not at all-time highs and even if they were, as the time-old adage states, never be afraid of buying high if the market is still trending higher!

Whilst sentiment is clearly bearish right now, there are signs that this will change later this week. The S&P, Dow Jones and Nasdaq 100 are engaged in corrective declines which are somewhat complex in their Elliott Wave pattern criteria, which opens the way for slightly variant permutational possibilities. But Europe’s Xetra Dax has no such ambiguities.

Xetra Dax Sets the Trend

The Dax began declining from its June ’17 high of 12948.50 (futures) as a 4th wave correction within the dominant, larger uptrend that started from the Feb.’16 low. It has since completed a picture-perfect three wave zig zag pattern into last week’s low at 11926.00 – see fig #1.

XETRA DAX SETS THE TREND!

Fig #1 – XETRA DAX SETS THE TREND! 240 mins. – by WaveTrack International

Labelled in minute degree, a-b-c, this pattern subdivides into a required 5-3-5 sequence whilst adhering to dimensionally perfect Fib-Price-Ratio (FPR) measurements. For example:

Wave a x 61.8% ratio minus 12303.00 = Wave c low at 11926.00

In other words, extending wave a by a fib. 61.8% ratio at its low of 12303.00 projects a terminal low for wave c at the exact low of 11926.00. This use of the ‘golden-ratio’ and phi is paramount in verifying corrective patterns like this.

The following advance from the low of 11926.00 has unfolded into a five wave expanding-impulse pattern to 12295.00 (see inset). This ‘proofs’ the preceding zig zag ended at 11926.00 whilst confirming a new uptrend. It’s only a matter of a day or so before the index turns back higher.

The Xetra Dax, therefore, sets the trend for other major indices to begin a synchronised recovery during the coming week. So fear not – shake off the bearish sentiment – start to look forward to some impressive gains!

Learn how to take advantage of WaveTrack’s Fibonacci-Price-Ratios!

Watch WaveTrack’s Fib-Price-Ratio videos on youtube to see how these measurements are applied. WaveTrack’s first Elliott Wave Academy video

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Global Opportunities, US Risks and the Grand ‘Re-Synchronisation’

by WaveTrack International| August 17, 2017 | No Comments

US+Global_Opportunities+US_Risk_WaveTrack_GailFosler

Global Opportunities, US Risk – Global Outlook Report by Gail Fosler in collaboration with Peter Goodburn

Global Financial Opportunities, US Risks

Elliott Wave Indicators

It was in early-January 2010 that we caught the first glimpse of how the US asset price recovery was developing. Even if contrived by central bank intervention following the end of the financial-crisis just 9-months earlier. It became apparent as major US stock prices continued higher along with commodity prices that Elliott Wave ‘impulse’ patterns were emerging. This was confirming the continued upside progress which has lasted another 7-years to this day.

The definition of an uptrend, in layman terms, is a price chart which depicts the progress of higher-highs and higher-lows. In Elliott Wave Theory (EWT), this is somewhat more explicit. Elliott Wave defines an uptrend as a five wave pattern development, an ‘impulse’ pattern, 1-2-3-4-5 but with very specific parameters. Why does this provide such a huge advantage over other methods? Because it also adds price ‘dimension’ and often some degree of ‘timing’ in the assessment for completion. In this way, EWT is classified in scientific terms as a ‘deterministic’ or predictive system. As by the means of this ‘string’ of patterned price data it can be ‘nonlinearly’ extrapolated to project the future course of price activity.

The ‘Inflation-Pop’

Evidence of a five wave impulse pattern development from the financial-crisis lows of end-2008, early-2009 led to an amazing financial discovery. It projected a continuation of the asset price recovery to new record highs! Even though this event was many years into the future. The continuation of gains in Commodity prices and Emerging Markets was projected to new all-time-highs. Actually, several years into the end of the current decade and perhaps early into the next! This event is termed as the ‘INFLATION-POP’ because its specific Elliott Wave pattern development was identified as a three wave zig zag sequence – see fig #1. This meant it would ultimately test new record highs in a relatively short period of time prior to the asset bubble getting ‘popped’.

Zig Zag Single - US Discover of Elliott Wave Patterns by R.N. Elliott ©WaveSearch

Zig Zag Single – Elliott Wave Pattern ©WaveSearch

Grand ‘Re-Synchronisation’

The fixed positive-correlation between US stock indices and commodities continued until late-2012 when peaks were broken above in the benchmark S&P 500 whilst commodities continued to trade lower. This dislocation ended in Jan/Feb.’16 when both asset classes formed major lows. Representing a corrective decline in the S&P 500 from the May ’15 high but a far larger corrective decline in commodities that began from the peaks of 2011. When these formed major lows together, we termed this event as the Grand ‘RE-SYNCHRONISATION’ process. It triggered a simultaneous ‘BUY’ signal for both asset classes but it also brought PATTERN RE-ALIGNMENT together. See fig #2.

US SP500 | Hang Seng | MSCI Emerging Markets | Singapore Straits Times - Correlation Study by WaveTrack International

SP500 | Hang Seng | MSCI Emerging Markets | Singapore Straits Times – Correlation Study by WaveTrack International

Since then, prices have surged higher as the next phase of the ‘inflation-pop’ gets underway. Price trends like this do not head directly higher in a straight-line. Instead, they are dynamic in their progress unfolding with alternating corrective declining sequences along the way. The Elliott Wave methodology is equipped to identify those occasions when pockets of corrective price declines are about to begin. But overall, the major uptrends are set to continue in the years ahead.

Gail Fosler Group LLC – Oil Prices, the US Dollar, and Emerging Markets

Much of our analysis has overlapped with the findings of one of our closest allies, the Gail Fosler Group LLC. Gail is a formidable economist, twice awarded the nomination of America’s most accurate economic forecaster by the Wall Street Journal. She is the former president and trustee of The Conference Board, and is a member of The Conference Board’s Global Advisory Council.

Gail’s team of economists have recently updated their outlook in their latestGlobal Opportunities, US Risks report. An excerpt Oil Prices, the US Dollar, and Emerging Markets is posted on their website. You can read an extract in these links. The full report is available too – just contact Gail’s team.

You’ll be amazed at how one of America’s most acclaimed economists looks at the world’s financial developments and how it dovetails into our own ‘inflation-pop’ hypothesis.

Gail’s report is ‘Vitally Important for Traders in Securities, Commodities, Investors, Bankers, Business Managers (CEO’s) and Trusts’. And with recent geopolitical risks being heightened, I think we all agree how important it is to understand how the current financial landscape is unfolding.

Yours faithfully,
Peter Goodburn, CFTe, MSTA
Managing Director & Chief Elliott Wave Strategist
WaveTrack International

USD Dollar Index | EUR/USD – Fib-Price-Ratio Tutorial

by WaveTrack International| August 14, 2017 | No Comments

EUR/USD and US$ Dollar Index - Fibonacci-Price-Ratios

US$ Dollar Index compared to EUR/USD – Fibonacci-Price-Ratio Tutorial

USD Dollar Index | EUR/USD

It is almost two weeks ago that we published an Elliott Wave example of how to measure the termination of a 5th wave extension. In this case a 5th wave within an ‘expanding-impulse’ pattern – read USD Index article here. Our chosen subject was the USD dollar index (DXY) and its five wave decline that began from 96.51 ending into the early August low at 92.55. The application of Fib-Price-Ratios and phi creating a ‘golden-section’ by using 61.8 and its reciprocal 161.8 is a common phenomenon. This Fib-Price-Ratio can be used on a daily basis to determine the terminal high or low of an ‘expanding-impulse’ pattern. In this earlier example, extending waves (i)-(iv) by a fib. 61.8% ratio projected the terminal low for wave (v).

In this latest example for the US$ dollar index and the EUR/USD, we use the reciprocal 161.8% ratio.

Fibonacci-Price-Ratios

With the DXY low at 92.55 confirming the end of its five wave decline, the index begins a larger counter-trend upswing, beginning with a five wave advance as minute wave a – see fig #1, left. This five wave pattern is classified as an ‘expanding-impulse’ because one of its impulse sequences, [i]-[iii]-[v] has undergone ‘price-expansion’, one sequence being obviously larger than the other two, in this case, a common 3rd as minuette wave [iii].

US Dollar Index compared to EUR/USD - 60 mins.

US Dollar Index compared to EUR/USD – 60 mins. by WaveTrack International

Extending minuette wave [i] by a fib. 161.8% ratio projects within a few pips of the terminal high of wave [v] at 93.88, a common fib-price-ratio relationship.

By comparison, the EUR/USD declined synchronously from 1.1911 as the same five wave ‘expanding-impulse’ pattern ending at 1.1689 – see fig #1, right. In contrast, though, a slightly different application of the 161.8% ratio is used. Relative to wave 1, wave 4 is a very deep correction, even approaching the overlap of wave 1. When 4th waves unfold deeply like this, we tend to find a frequency recurrence where waves 1-4 is extended by a fib. 161.8% ratio – same ratio, different location for the measurement. This projected the EUR/USD to the exact low of 1.1689.

So there it is. Using a fib. 161.8% ratio to project the terminal high/low of an ‘expanding-impulse’ pattern but two slightly different concepts of expression! These are common ratios to watch for and they recur throughout the week. Now see if you can identify some!

Learn how to take advantage of WaveTrack’s Fibonacci-Price-Ratios!

Watch WaveTrack’s Fib-Price-Ratio videos on youtube to see how these measurements are applied. WaveTrack’s first Elliott Wave Academy video

Ensure you’re tracking our forecasts – subscribe online for the EW-COMPASS REPORT.

Visit us @ www.wavetrack.com and subsribe to our latest EW-COMPASS report!

Check out WaveTrack’s latest CURRENCY VIDEO @ CURRENCIES and INTEREST RATES VIDEO PART III and subsribe to our latest EW-COMPASS report!

REELIN’ IN THE YEARS! – A Look-Back to the Secular-Bull Uptrend of the 1990’s & New Updates!

by WaveTrack International| August 7, 2017 | No Comments

S&P 100 Index & Dow Jones 30 Index – Secular-Bull Uptrend Intact! – by Peter Goodburn

Mainstream Elliott Wave believe a financial collapse is imminent. However, WaveTrack’s analysis comes to a different conclusion. Let’s consider the arguments why a Secular-Bull Uptrend is still intact?!

‘Your everlasting summer
You can see it fading fast
So you grab a piece of something
That you think is gonna last’

I came across this chart of the S&P 100 whilst looking through our WaveSearch archives this w/end and thought how appropriate it would be to revisit a forecast of the past, somewhat forgotten, that I thought was gonna last!

Appropriate for two reasons – first, because it’s almost 18-years old and yet still remains valid to this day along with Fib-Price-Ratios et al. Second, it comes at a time when mainstream Elliott Wave analysis is forewarning of a similar approach to ending primary wave 5’s advance from the 2009 low. I’d like to comment on the qualities of the first and respond to the second.

Forecasting the end of the 1990’s Secular-Bull Uptrend

To gain confidence in forecasting the present, the future, we must rely on the timeless qualities of Natural Law applied in the past. If we can discover a consistent method within these Laws, then we increase the probability of understanding the path that lies ahead, in the future.

The final phase of the S&P 100’s secular-bull uptrend of the 1990’s is of particular interest because it embodies the concept of Fibonacci Ratio and Proportion as a complementary methodology to the Elliott Wave Principle (EWP). Applied correctly, it goes far beyond the subjective nature of the human mind that creates concepts according to its own belief system. Indeed, it adds empirical objective evidence, a combination of the quantitative qualities of geometric ratio and proportion along with the qualitative aspects of the EWP.

Fibonacci-Price-Ratios

This chart, published on November 18th, 1999 labelled the entire 1990’s advance as unfolding into a five wave ‘expanding-impulse’ pattern. But more importantly, approaching a major, terminal high towards 862.00-67.00+/-. See fig #1.

S&P 100 - Forecast 18th November 1999 - Financial Forecasting by WaveTrack International

S&P 100 – Forecast 18th November 1999 – Financial Forecasting by WaveTrack International

Labelled in intermediate degree, (1)-(2)-(3)-(4)-(5), wave (5) upside targets were derived where it unfolds by a fib. 61.8% ratio of wave (3). You may also notice that wave (3) unfolded by a fib. 261.8% ratio of wave (1) – whilst this fib-price-ratio can sometimes occur, we have since discovered this to be a rare recurrence. More likely, the initial 1-2-1-2-1 sequence between 105.85-223.60 is best extended by a fib. 161.8% ratio in order to project the final peak – alternatively, the final fifth wave unfolds by a fib. 100% equality ratio of the 1-2-1-2-1 sequence – see fig #2. The result is the same, however, with FIB-PRICE-RATIOS corroborating the approach of a TERMINAL PEAK.

S&P 100 - Result 2017! - Successful Financial Forecasting by WaveTrack International - Why a Secular-Bull Uptrend is still Intact!

S&P 100 – Result 2017! Financial Forecasting by WaveTrack International

History has since told the ongoing story. The end of the 1990’s BOOM eventually went BUST four months later from a peak of 846.40, just 16 points from the projection! The following collapse was later known as the dot.com BUST! And initiating the beginning of a primary degree, 4th wave correction that ultimately ended in March ’09.

An Imminent Top for Primary wave 5? – No!

Correlation studies feature as a main part of our Elliott Wave assessment. This has been instrumental in forecasting the correct pattern sequence unfolding for major global indices over the last several years (including the S&P 500 and the Dow Jones).

For example, global indices will end their respective Elliott Wave patterns and each form major peaks and troughs at approximately the same time. Actually, within several months of each other. This was the case when stock markets reached peaks in October 2007 ahead of the financial-crisis. And also at the end of its decline in Oct.’08 and March ’09. This was true when comparing U.S. indices against very different Elliott Wave patterns that were at terminal locations for European and Asian indices. It was also replicated across different asset classes, like Emerging Markets and Commodities.

Mainstream Elliott Wave

Mainstream Elliott Wave analysts are forecasting that there is a more imminent peak being approached by the major U.S. indices in the months ahead, in 2017. Would it not be more reasonable to expect similar terminal patterns being approached in European indices, Asian indices, Emerging Markets and Commodities? Because, if a terminal peak is being approached as primary wave 5, it would open the way for a systemic collapse. Why? Because it also ends a 5th wave in cycle degree that dates back to the Great Depression low of 1932. But are those other stock indices, Emerging Markets and Commodities in pattern alignment?

No, they are not.

Dow Jones 30 and why the Secular-Bull is still intact

In our annual report of 2015, published Dec.’14, we cited why the secular-bull uptrend of primary wave 5 would last into the end of the current decade. There were compelling reasons attributed to W.D. Gann’s 90-year cycle, a geometric Fib-Price-Ratio convergence-matrix in the Dow Jones index far above current levels. And just as important, the fact that other major indices, asset classes like Emerging Markets and Commodities were not in EW pattern alignment.

Since that report, we have updated the progress of these asset classes each month in the institutional EW-Navigator report and at 6-month intervals in our special Video Series, the last published in June (2017).

In these reports, we cited that the Dow Jones (DJIA) was still engaged in primary wave 5’s advance. This advance would ultimately prolong the secular-bull uptrend into the end of Gann’s 90-year cycle and with upside price targets to forty-thousand 40,000.00+/-. See fig #3. Three fib-price-ratio measurements were used over differing degrees of trend and each projected a convergence-matrix towards the 40,000.00+/- level. When a convergence like this occurs, it attracts the price activity towards it. Call it Fibonacci-Price-Ratio magic. Or in more scientific terms a ‘high-frequency recurrence‘.

Dow Jones 30 Index - Quarterly Forecast - Secular-Bull Uptrend Intact!

Dow Jones 30 Index – Quarterly Forecast – Secular-Bull Uptrend Intact!

Prolonging Primary wave 5’s Secular-Bull Uptrend

Let’s assume our analysis is correct. Then primary wave 5 IS NOT heading towards a terminal peak in the next few months. We are labelling primary wave 5’s advance from the March ’09 low of 6470.00 in intermediate degree, (1)-(2)-(3)-(4)-(5). This confirms the approach to a terminal high for intermediate wave (3) sometime into year-end (2017) or latest into Q1-2018.

The reason for not labelling this as a terminal peak for wave (5) is because other asset classes, Emerging Markets and Commodities only began the final phase of the ‘INFLATION-POP’ advance last year. Starting from the ‘RE-SYNCHRONISATION’ lows of Jan/Feb.’16. They are still in the relatively early stages of a 3-4 year uptrend. This doesn’t fit at all with mainstream perma-bear forecasts for an imminent collapse that begins a secular-bear decline. It’s far too early.

This year’s upside forecast projecting a terminal high as intermediate wave (3) is right on track. Once completed, it opens the way for a -20% or -25% per cent correction in major U.S. indices as wave (4). However, this is not nor can it be, the beginning of a secular-bear downtrend. It’s only a 4th wave correction, significant as it will be!

Learn how to take advantage of WaveTrack’s Fibonacci-Price-Ratios!

Watch WaveTrack’s Fib-Price-Ratio videos on youtube to see how these measurements can be applied. WaveTrack’s first Elliott Wave Academy video

Ensure you’re tracking our forecasts – subscribe online for the EW-COMPASS REPORT.

Visit us @ www.wavetrack.com and subsribe to our latest EW-COMPASS report!

Check out WaveTrack’s latest CURRENCY VIDEO @ CURRENCIES and INTEREST RATES VIDEO PART III and subsribe to our latest EW-COMPASS report!

US-Dollar Index and the Power of Fibonacci Ratio’s

by WaveTrack International| August 3, 2017 | 2 Comments

US-Dollar Index

The latest decline in the US-Dollar Index (DXY) has pulled levels down to next target levels at 92.55+/-. Hence, this target level ends its larger minor degree 3rd wave sequence within this year’s impulse downtrend. Momentum shows an oversold condition as last week’s IMM data highlights money managers piling out of dollar holdings. The net short positioning is at -$9.7bn, which constitutes the biggest bear bet since 2012 when the index was trading at 79.27. Surely, a counter-trend 4th wave rally seems inevitable but from what exact level – beginning from where? This is important to assess because as we all know, getting into a trade, even slightly before it turns, can often test one’s resilience.

Without the use of geometric analysis, Elliott Wave can often be somewhat ‘subjective’ in its assessment of locating a pattern development. But adding this to your repertoire, you quickly discover a way that overturns subjectivity, turning the methodology into a more quantitative, objective process.

What is geometric analysis? It’s a branch of mathematics concerned with questions of shape, size, relative position of figures (patterns) and the properties of space. I’d also like to also add the word ‘dimension’ because in Elliott Wave analysis, dimension is one of the key attributes in identifying any one of R.N. Elliott’s 13 patterns.

The tools to work with are two-fold. First, the Fibonacci ratio sequence and second, using our natural ‘eye’ to identify the dimension of each EW pattern. For the latter, we have to train our ‘eye’ to these patterns. So think pattern, not waves! Waves are the components of the pattern – they are very important, but its more important to train ourselves in pattern identification.

Fibonacci-Price-Ratios

Each of R.N. Elliott’s 13 patterns unfold to common fib-price-ratio measurements which define their dimensions, or shape. There are slight variations but these are confined into maximum limits. In this study of the US-Dollar Index, we examine a segment/component within its recent decline and attempt to determine its terminal low.

The DXY began declining into a five wave expanding-impulse pattern from January’s high of 103.82. We already know from using fib-price-ratio analysis that a larger 3rd wave impulse pattern is approaching downside completion from 102.26. Measuring the minute degree subdivision of this 3rd wave, 1-2-3-4-5, a 5th wave low projects to 92.50+/- where minute wave 5 unfolds by a fib. 61.8% correlative ratio of waves 1-3. Can the 92.50+/- level be verified within the substructure of minute wave 5’s final phase of the decline?

Minute wave 5 can be seen subdividing into minuette degree, [i]-[ii]-[iii]-[iv]-[v] – see fig #1. It begins subdividing into a fractal series of 1-2’s, three in total before ‘price-expansion’ unfolds defined as the 3rd-of-3rd-of-3rd wave sequence, between 95.92 and 94.48 as micro-wave [3]. What follows is a compensatory amount of 4-5’s, three in all to the current low at 92.55. But can Fib-Price-Ratios help identify this low?

US-Dollar Index - 60 mins.

US-Dollar Index – 60 mins. – FIB-PRICE-RATIO Tutorial – 5th Wave Projection – How to Measure Termination!

Best Fibonacci-Price-Ratio Techniques

One of the most common fib-price-ratio techniques that can be used in identifying the terminal low of a five wave impulse pattern like this is to extend waves [i]-[iv] by a fib. 61.8% ratio. In this example, it projects wave [v] to a low at 92.64+/-. That’s in close proximity to the 92.50+/- measurement derived from minor degree measurements. When two or three fib-price-ratios meet or converge like this, it heightens the probability of a reversal-signature.

Yesterday’s action (August 2nd) saw the DXY trade momentarily below these target levels. However, it quickly staged ‘rejection’, isolating the low as a single 60 minute bar. This is a great ‘reversal-signature’ because the DXY responded so well to the number. Even better if it undergoes an overshoot but speedily responds higher without looking back.

The confidence fib-price-ratios bring to the table are profound when it comes to our decision-making process. To witness and learn this process has huge benefits for each and everyone’s foray into the journey of trading.

Learn how to take advantage of WaveTrack’s Fibonacci-Price-Ratios!

Watch WaveTrack’s Fib-Price-Ratio videos on youtube to see how these measurements can be applied. WaveTrack’s first Elliott Wave Academy video

Keep tuned for more updates!

Ensure you’re tracking our forecasts – subscribe online for the EW-COMPASS REPORT.

Visit us @ www.wavetrack.com and subsribe to our latest EW-COMPASS report!

Check out WaveTrack’s latest CURRENCY VIDEO @ CURRENCIES and INTEREST RATES VIDEO PART III and subsribe to our latest EW-COMPASS report!

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About WTI

WaveTrack International is a financial price forecasting company dedicated to the Elliott Wave principle and work of the R.N. Elliott. Clients include Investment Banks, Pension Funds, Total/Absolute-Return/Hedge Funds, Sovereign Wealth Funds, Corporate and Market-Making/Trading institutions and informed individuals -- & just about anyone who is affected by directional price change.

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