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Aftermath of the Coronavirus Sell-off Video Update

by WaveTrack International| March 27, 2020 | No Comments

Coronavirus Sell Off - WaveTrack - Elliott Wave Financial Forecasting

Aftermath of the Coronavirus Sell-off – Inflation-Pop Diluted but Still On-Track

The coronavirus sell-off in global stock indices has been described by Goldman Sachs as a ‘Black Swan’, a term for an improbable or unforeseen event. Economist Burton Malkiel who authored the 1973 book ‘A Random Walk Down Wall Street’ said he could not spot a recession on the horizon – he also qualified his remarks by saying that predicting a recession is a very difficult task. So was the coronavirus sell-off really an unpredictable, exogenous event or could the downturn have been foreseen?

Coronavirus – Could it have been predicted?

From an Elliott Wave perspective, yes, the downturn and even its amplitude could have been predicted. Our own analysis was blinded by the fact that various positive-correlation studies indicated a limited risk to a sell-off because of the extent of gains in technology stocks combined with a maturing counter-trend downswing in key commodities like Copper from 2018 highs. But there was evidence that heightened the downside risk which means it was certainly plausible to predict the downturn (see ‘Update Alert!’ e-mail dt. February 25th – ‘Increasing Risk of -20% Decline’). Almost all U.S. and European indices completed A-B-C zig zag advances from their Dec.’18 lows into the mid-February highs – and that was the clue to the coronavirus sell-off. See fig #1.

Coronavirus Sell-Off - SP500 - Daily - WaveTrack International

SP500 – Daily – WaveTrack International

This report updates the S&P 500 and Nasdaq 100 indices which are used as benchmarks for pretty much everything else. The DJ Transportation Average and KBW Banking indices are also updated, giving relevance to the ongoing secular-bull uptrend.

We also update benchmark commodities that are all-so-important in triggering this next but final phase of inflationary pressures – Copper remains on track, heading for record highs as are many other Base Metals – but the coronavirus sell-off in Silver, Platinum and Crude Oil has diluted their participation – but they’ll still have massive gains over the next few years, they just won’t trade to record highs anymore.

Dilution of Inflation-Pop

One of the big ‘take-home’ effects from the coronavirus sell-off is its impact on commodities like Precious Metals and Crude oil. With Silver breaking below its Dec.’15 low of 13.64, that really negates any notion that prices could launch into new record highs during this next but last stage of the ‘Inflation-Pop’ – it’s a similar condition for Platinum too. They will still push dramatically higher over the next few years, but they won’t break to new record highs. Crude oil is similar. Its recent break below the Feb.’16 low of 26.05 to 20.52 has just about negated any chance of it trading to new record highs during the next few years – but it can still test levels towards 99.25+/-.

What this means is the coronavirus sell-off has in some cases, diluted the up-coming advances for several key commodities during this next but last stage of the ‘Inflation-Pop.

That’s not the case for many of the mining stocks though – gold and base metal miners are still forecast to new record highs.

Currencies & Interest Rates

This report also updates the US$ dollar index and several other major currency pairs. In the annual PART III Currencies & Interest Rate report, over 90 charts of different currency pairs/crosses were updated. Many of those forecasts remain unchanged, especially those US$ Dollar/Asian currency pairs which already depicted dollar strength.

There are only modest changes to the US$ dollar index and Euro/US$, more for Stlg/US$ and US$/Yen but this report updates others which have seen severe weakness against the US$ dollar including the Aussie Dollar, Canadian Dollar, Norwegian Krona and Brazilian Real.

Long-dated government bond yields collapsed at the beginning of March. Even though Elliott Wave analysis depicted declines through most of 2019 and into the first quarter of 2020, we didn’t expect the US10yr yield to collapse down to 0.378% per cent! But ‘Update-Alerts’ quickly identified that low as the end of its long-term downtrend, and since, yields have sprung higher to 1.269%. This report examines the trends across varying maturities alongside the latest forecasts for the European DE10yr yield, Italian ITY10yr yield and related spreads.

S&P 500 – End of the Coronavirus Sell-Off

On Friday 20th March, the EW-Compass report commented –

The S&P’s rally from last Wednesday’s low of 2262.00 has so far unfolded higher into only a three wave sequence to Friday’s high of 2497.25… could stretch lower towards 2151.00+/- early Monday/Tuesday this coming week…It now seems inevitable that Monday’s opening will test lower levels before reversal-signatures get triggered. European indices alongside several Asian indices were already completing idealised targets last Thursday – which means the U.S. indices require one additional pull lower before re-synchronising’.

Sure enough, come Monday 23rd March, the S&P 500 put in a major low at 2174.00 which has since triggered a major ‘reversal-signature’. The S&P’s gain since has rallied by +21% per cent, setting some new records.

The outlook now turns very bullish despite many analysts crowding around the idea that the secular-bull uptrend has ended with the beginning of an Armageddon collapse on its way – THINK AGAIN! – the evidence suggests otherwise!

Coronavirus Sell-Off - Bank of America - Bull and Bear Indicator - Souce BofA Global Investment Strategy

Bank of America – Bull and Bear Indicator – Souce BofA Global Investment Strategy

One contributing aspect that supports the idea the coronavirus panic has abated comes from the latest Bank of America/Merrill Lynch sentiment Bull & Bear Indicator – see fig #2. It shows extreme measures of bearishness at a reading of 1.7 – by comparison, the Feb. 2nd 2016 low in major indices produced a reading of 0.0 which as we know, produced a sustainable uptrend afterwards. We all know the risks of interpreting this type of data too literally, but accompanied by Elliott Wave analysis, it offers an insight to what’s ahead.

Update of 2020 Elliott Wave Forecasts

In this latest video/report, we amassed 54 charts updating the major changes from our 2020 annual trilogy series across each asset class, Stock Indices, Commodities, Currencies & Interest Rates together with key Equities from the Mining Sector. These corroborate the next but final stage of the ‘Inflation-Pop’ asset price surge!

We invite you to take this next step in our financial journey with us – video subscription details are below – just follow the links and we’ll see you soon!

Most sincerely,

Peter Goodburn
Founder and Chief Elliott Wave Analyst
WaveTrack International

How to Subscribe:

Contents: 54 charts Time: 1 h 27 mins.

Nasdaq 100
DJ Transportation Average
KBW Banking Index
EuroStoxx 50
Xetra Dax
Ftse 100
Hang Seng
MSCI Emerging Markets
Nikkei 225
BHP Billiton
Freeport McMoran
Rio Tinto
Newmont Mining
Amer Barrick
Anglo Gold Ashanti
Crude Oil
USD Dollar Index
US 10yr Yield
USD 5yr Yield
USD 2yr Yield
Germany 10yr Yield
Italy 10yr Yield


To receive your VIDEO UPDATE please click here to contact us.

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– Next we will send you a PayPal payment request and provide you with the video link & PDF report once payment is confirmed. Please know the reply can take up to 6 hours due to time zone differences. But rest assured we will give our best to provide you with the information as soon as possible!

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We’re sure you’ll reap the benefits – don’t forget to contact us with any Elliott Wave questions – Peter is always keen to hear your views, queries, and comments.

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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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