WaveTrack International

Elliott Wave Financial Price Forecasting

DJ Transportation Average – The Beginning of a Major Advance

by WaveTrack International| April 22, 2016 | No Comments

The price declines that began unfolding for the DJ Transportation Average from the November ’14 all-time-high of 9310.20 ended a typical counter-trend zig zag pattern last January at 6403.30. This is labelled as a 4th wave retracement within the upward progress of intermediate wave (3) that began its uptrend from the Oct.’11 low. A 5th wave advance is now engaged to the upside with ultimate targets towards 10876.20+/- derived where it unfolds by a fib. 61.8% ratio of the net advance of the 1st-3rd waves.

It may take another year or so before the 10876.20+/- number is reached with the condition that it subdivides into a five wave expanding-impulse pattern, labelled in minute degree, 1-2-3-4-5.

DJ Transp Avg 160422 440x342 DJ Transportation Average   The Beginning of a Major Advance

DJ Transportation Average – 60 mins. – WaveTrack International

Minute wave 1 began this uptrend last January from 6403.20 – see fig #1. It too must subdivide into a smaller five wave expanding-impulse pattern (the term ‘expanding-impulse’ is given to five wave patterns that contain ‘price-expansion’ in one of the impulse waves, i.e. 1-3-5 – in other words, one of the waves ‘extends’ so that it measures larger than the other two, commonly occurring in the 3rd wave position – this differentiates it from a ‘diagonal-impulse’ that does not contain the quality of ‘price-expansion’ – a diagonal contains ‘overlap’ because its 3rd wave has not expanded the price action).

The DJ Transportation Average’s upside progress began hesitantly, building into a series of gradual upside movements in a step-like progression associated with a sequence of 1-2-1-2-1-2’s. These are a function of ‘fractalisation’ where a 3rd wave subdivides into smaller degrees of trend prior to ‘price-expansion’. This is evident in the DJTA upswing until a 3rd-of-3rd-of-3rd wave advance began mid-February. The conclusion of price-expansion as this third wave ended on the 17th February at 7383.10. The series of 1-2’s, three of them in total must ultimately be followed by an equal amount of 4-5’s, i.e. 4-5-4-5-4-5. Two 4-5’s have so far completed, a third 4th wave as minuette wave [iv] into the early-April low at 7623.80. This leaves just one final 5th wave advance, as minuette wave [v] to develop higher.

A final upside target is measured towards the 8462.60+/- to 8491.70+/- levels. These are derived from two ‘golden-section’ measurements of the entire impulse pattern from the Jan. ’16 low. The point where price-expansion began at 7129.40 is extended from the Jan.’16 low by a fib. 161.8% ratio that projects to 8462.60+/-. Also, extending minuette waves [i]-[iv] by a fib. 61.8% ratio projects to 8491.70+/-.

So these become the main target levels for the completion of this impulse pattern. Naturally, a counter-trend decline will then begin a larger 2nd wave pullback. It will be interesting to see how deep that one evolves!

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Mining Investment Asia 2016 Conference – Singapore 13th April 2016

by WaveTrack International| April 11, 2016 | No Comments

Logo Asia Mining Investment 440x106 Mining Investment Asia 2016 Conference   Singapore 13th April 2016

Mining Investment Asia 2016

Announcement – MINING INVESTMENT ASIA 2016 CONFERENCE SINGAPORE – 13th April 2016

WaveTrack’s founder Peter Goodburn is being invited by the high profile Mining Investment Asia 2016 conference in Singapore to speak about ‘Is the commodity super-cyle really dead? Cand inflation re-appear and what impact can this have on price-forecasts for copper and gold during the next several years’.

He will be featuring the impressive Copper forecast published in January 2011 (see below – forecast published in WaveTrack’s reknown ‘Base Metals Report’) and show during the conference WaveTrack’s updated forecast for 2016 and beyond.

08 Cu3m110121 440x343 Mining Investment Asia 2016 Conference   Singapore 13th April 2016

WaveTrack’s Copper Forecast January 2011!

For more information visit www.mininginvestmentasial.com

WaveTack’s Base Metals Report

Global Stock Index Tracking

by WaveTrack International| April 5, 2016 | No Comments

STOCK INDEX TRACKING 440x440 Global Stock Index Tracking

86% of Active Equity Funds Underperform – Can Stock Index Tracking Reverse this Figure?

86% of Active Equity Funds Underperform – Can Global Index Tracking Reverse this Figure?

A recent survey of 25,000 ‘active’ equity funds has revealed that firms based in Continental Europe, almost all underperformed their benchmark index over the past decade. A figure of 80% per cent underperformed over the past five-year period, rising to even higher levels in the Netherlands, Switzerland and Denmark.

The research by S&P/Dow Jones Indices also showed that 98.9% per cent of U.S. equity funds underperformed their benchmark over the last ten-year period as did 97% per cent of those specialising in Emerging Market funds and 97.8% per cent for those managing Global Equity funds.

U.K. active equity funds fared better by comparison, outperforming over a 1-3-5 year period but over 10-years, all categories underperformed.

These latest statistics are nothing new to the active vs. passive fund management debate on efficiency – it’s been hotly contested for the last decade and longer. There are trade-offs for both methodologies of course. Investing in ‘active’ equity funds enables managers to be agile in manging portfolios in an environment where price volatility has increased during the last decade-and-a-half. Passive funds attracts lower fees for the investor.

What can we glean from this survey?

A few aspects come to mind.

  • The efficiency of active equity funds would not be debated if they outperformed the index, after fees, on a more regular basis.
  • Over a ten year assessment, nearly all funds underperform – this is most probably due to the fact that it encompasses the period of the financial-crisis sell-off during 2007-09 – and yet, the percentage figures are still incredibly high over the 5-year sampling.
  • It is driving investment out of active equity funds and into the low-cost exchange traded fund market which has a six-fold increase over the last decade to $2.9tn dollars.

But the real question remains not of underperformance per se, but its cause/s. Is this because of poor stock-picking? – if so, is the analysis underperforming? – if not, are there other causes such as the difficulties in adapting to high volatility in a non-trending environment? Maybe.

Can this underperformance trend be reversed?

Yes, it can. But first, it’s important to understand the real reason for underperformance. It doesn’t necessarily lie in the re-evaluation of bottom-up equity research consumed – it lies in the ability of individual fund managers to extricate themselves from the instinct of herding. This is imperative in an environment that is much more volatile than in previous decades. ‘Herding’ is the tendency for individuals to mimic the actions of the larger/aggregate group.

As Albert Phung explains: ‘There are a couple of reasons why herd behaviour happens. The first is the social pressure of conformity. You probably know from experience that this can be a powerful force. This is because most people are very sociable and have a natural desire to be accepted by a group, rather than be branded as an outcast. Therefore, following the group is an ideal way of becoming a member. The second reason is the common rationale that it’s unlikely that such a large group could be wrong. After all, even if you are convinced that a particular idea or course or action is irrational or incorrect, you might still follow the herd, believing they know something that you don’t.

It’s only natural that a majority get engulfed within the ‘group-think’, more now than ever because of the sheer amount of information that we consume via e-mail, social media and financial news providers. But it’s a trap! When markets are trending, yes, an established momentum of optimism occurs, probably but not always, resulting in outperformance of the index. But when markets come to a point of ‘exhaustion’, usually when few expect it to, then human instinct clicks in. Once benchmark indices trade lower, in any meaningful way, equities invariably follow lower too. During these declining phases, even though many equities may match the index in percentage terms, the fund manager that is herding is likely to get caught-up in executing at levels of stress when the equity is momentarily underperforming because everyone else is doing the same thing at the same time!

And there’s been plenty of those severe pullbacks in the stock markets over the last few years. Taking the S&P 500 index as a benchmark, there’s been three such sell-offs during the last 18 months alone – minus -9.8% per cent in September ’14, -12.4% per cent in July ’15 and more recently -14.4% per cent last November ’15. This excludes the larger decline of May ’11, -21.6% per cent and a few others in-between.

So how can we extricate ourselves from getting too caught up in herding?

One answer lies in the practice of de-herding – becoming more independent in thought and process. This doesn’t mean becoming a fixed ‘contrarian’, but at important inflexion points, yes, it becomes an essential quality to adopt. To do that, it is important to rely on some ‘anchors’ that will support us during stormy times. These anchors are certain laws that define financial markets that in turn, govern the price development of all indices and equities. These laws reverberate causing certain repetitions of market behaviour – this allows them to be monitored, tracked and even used to forecast future price development. These laws become very apparent through volatile times, like the period of the financial-crisis. The lows in March ’09 were predictable basis these laws. It takes time though, to build a ‘belief’ system in these anchors and everyone will be different in their assessment of such knowledge. But to those that can withdraw from the financial ‘noise’, great benefits await!

The anchors/laws are as follows:

  • Market price activity alternates in periods of ‘action’ followed by ‘reaction’, ‘trend’ and ‘counter-trend’
  • Historical price activity has a direct relevance/impact to its future development – know the past and the future becomes predictable
  • Price activity forms recognisable ‘patterns’ that repeat over and over again
    These patterns form in a specific sequence and are not random events
    Varying patterns are limited to 13 basic formats that encompasses all market activity
  • These patterns form consistently and repetitively throughout many time-series – they can be observed spanning many decades or evolving within several minutes (fractal in nature) of price activity
  • Pattern size/amplitude of price development is governed by its relative association within its peer/corresponding group – this means it is hierarchical in nature, forming larger/aggregate patterns with self-similar components and sub-components
  • The size/amplitude of price activity/patterns can be measured using specific Fibonacci-Price-Ratio (FPR) measurements – these often produce accurate target levels calculated into the future

Most important of all, once an understanding of these laws/principles is obtained, it must be practiced – but only belief can instil its effectiveness. Fear must be overcome and that only visits us during times of extreme stress, when peer sentiment is wreaking havoc! But that is precisely the time to become the contrarian! A good example of this was when Warren Buffet began to buy equities, specifically, the banks near the lows of the financial-crisis in year-2009. Almost everyone else was selling. The outcome we know.

This was an extreme case of bearish sentiment of the time – if it could be reliably measured, it would probably read 80/100, a hundred being the worst case of pessimism or despondency on record (Great Depression, 1932?). There are different magnitudes of this condition too, and it’s opposite, optimism and euphoria. The sentiment measurement will be less in smaller percentage declines/advances. For example, what about the recent event in January/February ’16? Could the low traded in early/mid-February be predicted?

Could this have prevented underperformance of the underlying index? – Yes, Yes!

The global indices of the world markets are excellent proxies in tracking the overall trends of sector/derivative equites. Know how these perform, trend, and you have a pretty good idea if top-down, your equity is going to suddenly fall off a cliff, or be the defensive king!

Our methodology of using the anchors/laws is commonly known as the Elliott Wave Principle (EWP). It’s dynamic in nature and application – over the last 25 years, we’ve developed a proprietary way of measuring all the patterns identified by its discoverer, R.N. Elliott (1871-1948). This assists in the objective assessment of pattern identification. For example, using these laws, the underlying stock market sell-off in February ’16 was expected to finalise an important low – even though consensus at the time was very bearish with mainstream headlines/analysts calling for continued declines –

o January 29 – This reliable indicator says we’re in a bear market for stocks
o February 12 – JP Morgan Warns Upcoming Recession
o February 25 – Smart-beta guru is now warning of a crash
o February 29 – Investors pull more than $60bn from mutual funds

Contrastingly, major indices were forecast as forming an important low:

WaveTrack Report, February 5 - ‘Despite consensus pessimism throughout the stock market, especially since the banking sector is still working itself lower, there exists signs of an emerging recovery. Should shorter-term overhead resistance be overcome, it would signal a more sustained advance unfolding for the next several months with price targets to last year’s highs, and eventually beyond’. See fig’s #1 & #2 from that report:

01 sp160205a 560pix 440x343 Global Stock Index Tracking

S&P 500 – Daily – 5th February 2016

02 DJ Transp Avg 160205 560pix 440x341 Global Stock Index Tracking

DJ Transportation Average – Daily – 5th February 2016

Start Index Tracking today! Get access to WaveTrack’s bi-weekly Elliott Wave Compass report featuring many short-term updates of various asset classes and three exclusive videos!
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Dow Theory, Elliott Wave & the Golden Ratio Phi – What do they have in common?

by WaveTrack International| March 9, 2016 | No Comments

TradersWorld 62 WaveTrack 341x440 Dow Theory, Elliott Wave & the Golden Ratio Phi   What do they have in common?

TradersWorld Issue #62 – Read WaveTrack’s latest article ‘Dow Theory, Elliott Wave & the Golden Ratio Phi’

The latest edition of the TradersWorld Magazine is hot of the press! The renown publication is again a gold mine of interesting articles, trends and trading ideas. Download your own free copy now. Click here!

On page 86 you find WaveTrack’s new article entitled ‘Dow Theory, Elliott Wave & the Golden Ratio Phi‘. It examines a lesser known aspect of Ralph Nelson Elliott’s study of Dow Theory and it principles and clearly outlines the essential tenets distilled in this process.

Dow’s Divergence Principle is explained in its historcial context as well as illustrated on the basis of the DJ Transportation Average chart. And finally, Peter Goodburn adds a new tenet to the process ‘Fibonacci-Price-Ratios’ as the perfect complement to examine patterns in a smaller time frame. Read the full article here: TradersWorld Issue #62

Interested in Elliott Wave? Get access to WaveTrack’s bi-weekly Elliott Wave Compass report featuring many short-term updates of various asset classes and three exclusive videos!
Read more about the latest Currencies (Forex) Video Update here!
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US Dollar Index – Do Fibonacci Price Measurements Really Work?

by WaveTrack International| March 4, 2016 | 4 Comments

Sometimes, markets unfold in an intricate way that appears incomprehensible to fundamental or orthodox technical analysts. It is in these times when Elliott Wave practitioners can gain an insight into the value of fib-price-ratio analysis.

01 indx160113 440x343 US Dollar Index   Do Fibonacci Price Measurements Really Work?

US Dollar Index – EW-Compass Forecast 13th January 2016 -

In mid-January, we proposed a very delicate pattern structure for the US$ indexan ending contracting-diagonal that began from the Aug.’15 low and was forecast to continue during the next months. Of special importance was the December decline from 100.51 to 97.19 that was seen as wave [a] of the larger 2nd wave. Basis fib-price-ratio measurements, we projected an ultimate low for the 2nd wave towards 95.20 – this was derived from a fib. 61.8% extension of the initial decline to 97.19, a standard measurement for zig zag sequences.

The actual outcome, as can be seen a month later, is quite amazing! The US$ index declined to a recorded low of 95.23 and was immediately rejected!

02 indx160219 440x343 US Dollar Index   Do Fibonacci Price Measurements Really Work?

US Dollar Index – Result! 19th February 2016

This testifies to the value of fib-price-ratio measurements that, correctly applied, can sharpen the awareness in terms of pattern/price-convergences. Only too often we see that patterns terminate at important fib-price-ratio support/resistance-levels. This can be an invaluable clue for someone trying to figure out the structure of a pattern.

Get access to WaveTrack’s bi-weekly Elliott Wave Compass report featuring many short-term updates of various asset classes and three exclusive videos!
Read more about the latest Currencies (Forex) Video Update here!
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FX and Interest Rates Video is NOW available!

by WaveTrack International| March 2, 2016 | No Comments

WaveTrack FX Video 440x440 FX and Interest Rates Video is NOW available!

New FX Elliott Wave Video Forecasts for 2016 and Beyond available!

We are pleased to announce the PART III VIDEO release of 2016 ELLIOTT WAVE forecasts is available NOW! This final video in the trilogy series focuses on FX & INTEREST RATES.

When 2016 began, analysts from the bulge-bracket investment banks published various consensus themes such as a stronger US$ DOLLAR, plunging EMERGING MARKETS, continuing downtrends for COMMODITIES and incremental INTEREST RATE increases from the Federal Reserve. How things change!

The year kicked off with a frantic sell-off in stock markets that heightened anxiety to levels not seen since the financial-crisis of 2008/9. Scotia Bank recently reported that a broad-based deterioration in dollar sentiment has pushed the aggregate US$ dollar long position down to $7.6bn, levels last seen in mid-July 2014. In the latest research paper issued by the Netherland’s Bureau of Economic Policy Analysis’s World Trade Monitor, it said that world trade was back to crisis levels as emerging market demand slid back to 2009 levels. Even the committee members of the Federal Reserve have commented in the recent release of the January ‘minutes’ that further interest rate rises may be postponed! As for commodities, so far, mixed fortunes but the precious metals complex has been the star performer with gains in mining stocks of 62% per cent.

In our latest FX & INTEREST RATES video, we’ll be dissecting the latest movements of several main currency pairs, including the DOLLAR INDEX, EURO/US$, STLG/US$, US$/YEN, US$/CHF, US$/CAD, AUD/US$ together with some fascinating ELLIOTT WAVE counts for currency crosses, alternate counts – then on to the ASIAN currencies including the benchmark ADXY index with focus on China’s US$/CNY and others including Brazil’s REAL and South Africa’s Rand. The list is so complete that we’ve dedicated 60-minutes to the currency segment.

The remaining 20 minutes discusses U.S. and European long-dated maturity INTEREST RATES beginning with a look at the 60-year cycle for the U.S. long bond, then Elliott Wave counts for this and the US10yr and US5yr yields. We even plot an Elliott Wave count for the TIPS Breakeven Inflation Rate which has a secret to reveal! Finally, a look at Europe’s benchmark DE10yr yield and whether it can hold from breaking into negative territory.

This is a completely FREE addition to your current subscription of the Elliott Wave Compass report, and we hope you enjoy it. Much of last year’s forecasts are still on track and the content is only available to our subscribers.

There are over 40 chart updates for in this video, lasting around 80 minutes! The main content focuses on the location and progress of the different currencies and the disparate performances from various regions around the world.

Get access to WaveTrack’s bi-weekly Elliott Wave Compass report featuring many short-term updates of various asset classes and three exclusive videos!
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Gold begins Bull Market

by WaveTrack International| March 2, 2016 | No Comments

FXStreet Gold begins Bull Market

FXStreet Interview with Peter Goodburn – Gold Call Manifests

This third follow-up interview by Dale Pinkert from FX Street is called ‘Gold Call Manifests’. Dale informs his viewers that Peter’s call in his previous interview was spot on for a major gold low at $1043. Peter now provides his latest insights that a pullback towards $1163 is possible before completing this first wave up at $1,300. Peter’s call for the US-dollar has two possible paths that lead to the same destination of a move through 100 to 1.0250-1.0350 before a major decline. The bull case in SPX is intact for a target of 2230.

Listen to the full interview at the #FXroom Online TV channel on the two main topics: Gold begins a bull market and why a US-Dollar peak is ahead!

Interested in more market updates by Peter and his Elliott Wave team? Check out WaveTrack’s bi-weekly Elliott Wave Compass report features many short-term updates of various asset classes.
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NIKKEI 225 – Track Record

by WaveTrack International| February 18, 2016 | No Comments

As a part of our Elliott Wave success pattern series we chose this time to show Japan’s Nikkei 225 index which underwent a spectacular reversal-signature during 2015. These patterns allow you to get insights into WaveTrack’s forecasting style and quality.

In early-December, we concluded that the top was in when the Nikkei broke below ‘4th wave preceding’ support at 19250 (futures data). Intra-hourly substructure of this initial five wave expanding-impulse decline pointed to an idealised low at 18365+/- prior to a hefty counter-trend rally.

Nikkei 151216 440x343 NIKKEI 225   Track Record

NIKKEI 225 – 360 mins. – Forecast 16th December 2015

In mid-December, a reversal-signature from a low at 18565 (close to the 18365+/- target range) was identified which implied that the expected counter-trend rally was underway. Upside projections basis our interrelated-market analysis suggested a very deep 2nd wave counter-trend correction to the 1st wave decline from 20060 to 18565 – the most likely target was the 19835+/- resistance area, defined by a fib. 85.4% retracement.

Nikkei 151222 440x343 NIKKEI 225   Track Record

NIKKEI 225 – 360 mins. – Result! 22nd December 2015

Then came the announcement by the Bank of Japan to increase their bond-buying programme and lengthen the maturity of bonds purchased in order to stimulate the economy. The Nikkei’s reaction in fact was intriguing! It spiked higher in an attempt to take out the 20060 high but failed in a dramatic fashion: within the next session it almost returned to the December lows and has since been unable to recover!

This is a fine example to underline the validity of Elliott Wave analysis. As we know due to Elliott’s guidelines and our own long experience, 2nd waves tend to be rather deep –
this is exactly what happened as the Nikkei even exceeded the fib. 85.4% retracement but failed to break the 1st wave’s high. The outlook is clear: despite the possibility of a secondary (but more docile) attempt higher as a smaller second wave, the Nikkei remains poised to the downside.

Don’t forget – our bi-weekly Elliott Wave Compass report features many short-term updates next to the Nikkei 225 of various asset classes.
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KBW Bank Index: U.S. & European Banks – Correction Over? Or Bust?

by WaveTrack International| February 10, 2016 | 5 Comments

In WaveTrack’s May 2015 forecast (May 14th 2015 – this report is available for free via the Research Pool website) the U.S. KBW Banking index highlighted an imminent downside risk for the banking sector. What we witness now has already been predicted nearly a year in advance by Peter Goodburn head analyst and founding partner of WaveTrack International.

02 150514a KBW Banking Index 560pix 440x341 KBW Bank Index: U.S. & European Banks – Correction Over? Or Bust?

KBW Bank Index – May 2015 Forecast! Current levels hit the exact upside targets!

Banking stocks that made headline news once again this week as the price of shares in Goldman Sachs and Deutsche Bank plunged ever lower. Commentators are already comparing these recent declines to those seen during the Lehman crisis of 2009 – but are these declines symptomatic of a new secular-bear downtrend, or are they simply deep corrections within a brighter outlook?

The Update covers the KBW Banking Index as well as Goldman, Deutsche Bank and EuroStoxx Banks charts.

Get access to the new updated report via our partners @
www.researchpool.com

Forex Spotlight: USD forming major peaks vs. Yuan and Rand

by WaveTrack International| January 29, 2016 | No Comments

IRP Journal WaveTrack1 313x440 Forex Spotlight: USD forming major peaks vs. Yuan and Rand

IRP Journal – Issue 9 – Spotlight China

China’s influence on the world economy made recent headlines in a Bloomberg interview with financier and philantropist George Soros. According to Soros (published 17th January 2016 – font page of the Financial Times): “China is the ‘root cause’ for this years global bear market, citing deflation and excessive debt as a key issues. A hard landing for the Chinese economy was ‘practically unavoidable’.” This remark prompted a strong responds from the Chinese government ‘Beijing warns Soros against declaring ‘war on the renminbi’. Read the FT’s shortened online article here:

China mouthpiece warns Soros against shorting renminbi

The term global economy with all its implications becomes now more apparent then ever when we consider that the Chinese Renminbi/Yuan has dropped 5.7 per cent against the USD since last August.

In the light of these recent events Peter Goodburn’s latest forex article on the USD/CNY and the USD/ZAR is especially interesting as he remarks that “China’s stock market continues to trade lower although the recent accelerative decline is in-line with our annual forecasts (see Stock Index video announcement) and shows the implications of this trend for China’s Renminbi/Yuan -USD/CNY as well as the South African Rand. Download the free IRP Journal here to review the full article and Elliott Wave charts WaveTrack has updated to show an independent view on this development:

IRP Journal – Issue 9

Enjoy and stay tuned for more interesting news one Elliott Wave and Financial Markets…

WaveTrack International

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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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