Using the DJUA as a ‘defensive play’ isn’t always a good idea though – the long-term uptrend from the year-1946 low proves that, in other words, it is not 100% negatively correlated but it can limit losses in a portfolio relative to the DJIA or the S&P when a portfolio manager MUST BE INVESTED IN THE MARKET pretty much all the time, with only an cash-fund allowance of perhaps 5-7% per cent.

Current Academic Forecasts for the Dow Jones UA

We already know that certain academics are forecasting a more immediate end to the secular-bull uptrend for the DJIA and the S&P 500, Nasdaq 100 etc. based upon cyclically adjusted price/earnings ratio, or CAPE, made famous by Yale University finance professor and Nobel laureate Robert Shiller. The CAPE is currently near an historical peak which reads the most bearish for the stock market than at any other time since year-1880 with only two exceptions – right before the 1929 stock market crash and in the months prior to the bursting of the internet bubble in year-2000. Can the current set-up be proven from taking a look at the Dow Jones Utility Average (DJUA) from an Elliott Wave perspective?

Elliott Wave Insight

No, the Elliott Wave Principle suggests there will be more upside potential before the DJUA signals an end to the secular-bull uptrend for the DJIA, S&P 500 and Nasdaq100 – see fig #1. From an orthodox Elliott Wave standpoint though, the secular-bull uptrend for the DJUA ended already in November 2000 at 418.30 with the following decline/advance to current levels unfolding as the first two sequences of a multi-decennial EXPANDING FLAT pattern, i.e. A-B-C subdividing 3-3-5.

Dow Jones Utilities Average – Quarterly Chart by WaveTrack International

The secular-bull uptrend from the year-1946 low of 11.40 can be seen unfolding into a cycle degree five wave expanding-impulse pattern labelled 1-2-3-4-5. To begin with, it is worth noting that the 5th wave is classified as the ‘extended’ sequence because it is larger than waves 1 and 3. There are also some amazing FIB-PRICES-RATIOs in this pattern. For example, extending cycle wave 1 by a fib. 161.8% ratio projects the terminal high for wave 5 towards 432.40+/-. The actual high traded to 418.30!

The following activity then begins the counter-trend phase of this advance by unfolding into the multi-decennial EXPANDING FLAT pattern. Labelled in super-cycle degree, A-B-C, wave A completed a seven wave double zig zag decline into the Oct.’02 low of 162.50. The following recovery began super-cycle wave B which is itself unfolding into a single zig zag which remains incomplete. We know it is incomplete because of the internal structure of cycle wave C of this zig zag. It requires more upside so that it subdivides into a five wave impulse pattern. But can we ‘proof’ this from using FIB-PRICE-RATIO’s?

Fib-Price-Ratio Answers!

Yes we can. The ‘B’ waves of an expanding flat often trade to higher-highs at the price level intended for the terminal high of the preceding secular-bull uptrend. When the secular-bull uptrend ends short, the ‘B’ wave of the correction compensates by reaching the fib-price-ratio target. This is what we anticipate recurring in the DJUA. For example, extending cycle waves 1-3 of the secular-bull uptrend by a fib. 61.8% ratio projects super-cycle wave B towards 885.10+/-. Also, extending waves 1-4 by an inverse fib. 161.8% ratio projects wave B towards 870.80+/-. This double ‘golden-ratio’ level is the markets ‘harmonic’, it is attracting the price towards it which means the current advance cannot collapse into a secular-bear downtrend until reached sometime over the next few years.

Note that in times of real financial stress, the DJUA collapsed at the same time as all the other indices in 2000-2002, and in 2007-2009 but it tends to provide its defensive role OUTPERFORMANCE at times of lesser importance, like in Q1 2016 (see comments above).

Timing of the end of the Securlar-Bull Uptrend

As for timing the end of a secular-bull uptrend for the DJIA, S&P 500 and the Nasdaq 100, this will be such a major event that we’d expect the Dow Jones UA to also decline rapidly, just as it did in those two previous occasions. The 18.00 and 18.75 year cycles shown at the top of the chart depict a time-horizon anywhere between April ’19 and April ’21. That might seem a big gap to trade in, but it does eradicate the idea from CAPE that a more imminent ‘BLACK SWAN’ event could happen now. We’ll be relying on the final Elliott Wave pattern sequences within super-cycle wave B to help pinpoint the exact timing.

This article is an extract from WaveTrack International’s latest monthly institutional Elliott Wave Navigator report.

For institutional enquiries/subscriptions, please visit us @ www.wavetrack.com or contact us direclty via services@wavetrack.com

Currencies (FX) & Interest Rates Video Series | PART III/III | USD 7.8 year Cycle

by WaveTrack International| June 27, 2017 | No Comments

Currencies and Interest Rates Video – Mid-Year 2017 Update!

US$ Dollar in early stages of new 7.8-year cycle |
EURO to rebuff doomsday forecasters |
Commodity Currencies to strenghten

USD Safe-Haven Status

Amongst the world currencies the US$ dollar is quite rightly perceived as a ‘safe-haven’ currency. During times of uncertainty or financial stress, the US$ dollar index strengthens against its G10 trading partners. This was certainly the case during the last two major financial crises. Firstly, when the S&P declined -50% per cent during years 2000-2002 and the secondly, by -57% per cent during 2007-2009. In the first case, the US$ dollar only managed a gain of +8% per cent but +27% per cent during the Lehman-crisis. So there seems no relative ‘amplitude’ guidance for these two events. There are obviously other dynamics that affect its performance.

When the S&P began its new uptrend from the March ’09 low, the US$ dollar began to weaken again as the safe-haven protection was unwound. The dollar nose-dived -18.8% per cent forming a secondary low in May ’11. A huge move – that seems logical enough! But the risk-on/risk-off strategy disengaged afterwards with the dollar gaining a massive +42.8% into this year’s January ’17 peak whilst during the same period, the S&P gained 82.4% per cent. Positive correlation?

The accepted explanation is that widening interest rate differentials and a more robust U.S. economic recovery has led to this strengthening period of the US$ dollar – it has nothing to do with its ‘safe-haven’ status.

From these two exogenous events, we gain a glimpse on how the dollar performs, but is there a way to predict its next major direction? What is its current dominant driver? Is it going to strengthen basis another stock market crash? – strengthen because the U.S. economy is expanding? – or strengthen on further Federal Reserve interest rate hikes? Either way, there’s not much of a case to think entirely in the opposite direction, for a weakening US$ dollar – or is there?

Forecasting Major Inflexion Points

Trading success often means training oneself to think outside the box – knowing when to detach from the herd and run against it – to become the independent free thinker, trader. If you’re familiar with the Elliott Wave Principle (EWP) and Cycle Theory (CT), you already know what I’m talking about. It’s a plain fact that when major inflexion or turning points occur in the markets, the ‘herd’ is stampeding into a canyon with not exit other than that where it came from – it must reverse course. But it’s not obvious to identify these moments – it takes practice and a strong ‘emotive’ but objective conviction that an opportunity is waiting.

How else did Warren Buffet manage to buy cheap Goldman Sachs stock at the bottom of the financial-crisis? He didn’t speculate – he KNEW that an opportunity beckoned because all the characteristic traits were evident in the way investors were reacting – he knew there was emotional panic – he knew values were fifty per cent cheaper than a year earlier – he knew there was a demand for cash. But not all major inflexion or turning points are so obvious – some begin quietly, almost unnoticed which means we have to use tools to identify these, more subtle changes of direction and we can’t think of anything better to use than the EWP + Cycle Analysis.

Elliott Wave – US$ Dollar Index & its 7.8-Year Cycle

It’s hard to dispute the US$ dollar index is unfolding to the rhythm of a 15.6-year cycle which connects peak-to-peak, trough-to-trough – see fig #1. If you showed this repeating cycle to several hundred asset managers, what percentage do you think would liquidate their exposure to the US$ dollar? – especially when you consider the current bullish drivers in place!

USD Index – Monthly – Currencies Composite Cycle – (C) WaveTrack International

The recent in-depth survey conducted by Bank of America/Merrill Lynch which included 213 respondents with $645bn assets under management highlighted some interesting facts. When asking asset managers what is the ‘most crowded trade’, the answer was the Nasdaq for the first time in five months – it overtook the US$ dollar which has headed the list on an average basis for the last several years. It reached a mid-30’s per cent peak earlier in the year on a scale where +50 to -70 has contained the US$ dollar index price for the last 13-year period. That’s historically overbought by any measure and yet the market savvy asset managers sensed this. But what they don’t know is that a far greater directional change is at hand.

Multidisciplinarity – Elliott Wave and Cycle Theory

The alternating 15.6-year cycle is composed of a near-centrally translated 7.8-year interval from peak-to-trough-to-peak etc. That means the last cycle-trough traded in March ’08 was due to peak next in Q1/Q2 2016. It was a little late which is due to the fact that the centrally translated rhythm is not exact but its close enough if backed up by Elliott Wave analysis. The March ’08 advance is labelled as a corrective upswing, a zig zag or double zig zag pattern. Using WaveTrack’s proprietary fib-price-ratio model for this pattern, extending the first zig zag into the March ’09 peak at 89.62 by a fib. 61.8% ratio projects a terminal high for the secondary zig zag to 103.77+/-. January ‘17’s high at 103.82+/- traded within 5 pips of this number, then responded lower afterwards. It has been declining since. See fig #2.

USD Index – Weekly

These two disciplines, Elliott Wave and Cycle Theory are confirming the US$ dollar ended its 7.8-year advance which encompassed the financial-crisis and U.S. economic expansion. But this is changing now. We (unfortunately) don’t have a crystal ball to determine why the US$ dollar should begin a new 7.8-year cycle decline – we can, of course, hypothesise, just as you can too, but from my experience, the outcome can often be totally different. So many times in the past have we saw a different fundamental/economic reason unfold than we thought and yet still validating the Elliott Wave analysis. One thing for sure though, there’s plenty of room for fund managers to catch up on the larger downtrend later, even if their current outlook is somewhat restricted.

The Next 6-Months – New CURRENCIES & INTEREST RATE Mid-Year Video

In the meantime, the US$ dollar’s medium-term trend along with many other major crosses and pairs are updated in our latest MID-YEAR CURRENCIES and INTEREST RATE video. This is the 3rd and final video in this TRILOGY series which includes Stock Indices/Equities and Commodities. This PART III video commentary examines the major US$ dollar crosses including cycles for the EURO/US$, Elliott Wave analysis for STLG/BRITISH POUND against the DOLLAR, the EURO and the YEN, how the commodity currencies are set to continue like the AUSSIE DOLLAR and its performance against the KIWI – the CANADIAN DOLLAR and several ASIAN FX pairs that make up the ASIAN DOLLAR INDEX. The video also updates the MEXICAN PESO, BRAZILIAN REAL, SOUTH AFRICAN RAND, RUSSIAN ROUBLE, POLISH ZLOTY and CHINA’S RENMINBI/YUAN.

This is probably the most comprehensive, most accurate ELLIOTT WAVE FX analysis ever conceived – there are 56 charts and tables + a downloadable .pdf. Even if you’re trading short-term CURRENCY set-ups, this video is an ‘absolute-must’ in giving perspective to your existing strategies. Don’t delay, order you video and accompanying .pdf charts NOW! Just follow the links below and we’ll see you soon!

Most sincerely,
Peter Goodburn
Founder and Head Elliott Wave Analyst
WaveTrack International

CURRENCIES and INTEREST RATES Table of Contents: 56 charts
• US$ Index and Cycles
• Euro/US$ and Cycles
• Stlg/US$
• US$/Yen
• US$/CHF
• AUD/US$
• NZD/US$
• US$/CAD
• Euro/Stlg
• STLG/Yen
• Euro/Yen
• Asian ADXY
• US$/IDR
• US$/ZAR
• US$/BRL
• US$/RUB
• US$/CNY
• USD/MXN
• ZAR/US$
• GBP/ZAR
• US$/BRL
• US$/RUB
• US$/PLZ
• US 30yr Yield
• US 10yr Yield
• US 10yr TIPS Break Even Inflation Rate
• DE 10yr Yield
• JPY 10yr Yield

How can you order the new CURRENCIES and INTEREST RATES video forecast?

PART III CURRENCIES and INTEREST RATES VIDEO is available now, at only $48.00! (1 hour 50 mins long)

We’ll send you a personal link so that you can watch the video, anytime at your convenience.

And if you’d like to subscribe to the CURRENCIES and INTEREST RATES VIDEO offer, you can receive ALL THREE for $96.00! – that’s a saving of 33% per cent!

• Single Video – $48.00
• Triple Package offer – $96.00 (saving 33%)!

CONTACT US NOW VIA EMAIL – SELECT YOUR PACKAGE

Single Video – $48.00 – PART III CURRENCIES and FIXED INCOME (June ’17)
Triple Package offer – $96.00 (saving 33%)! – PART I – PART II – PART III (June ’17)

PART I – the latest STOCK INDICES video runs for 1 h 50 minutes featuring 46 charts – click here

PART II – the latest COMMODITIES video runs for 1 h 30 minutes featuring 52 charts – click here

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COMMODITIES VIDEO – Precious Metals Soar!

by WaveTrack International| June 19, 2017 | No Comments

NEW Mid-Year Commodities Video – PART II

Commodities Video Series | PART II/III
INDUSTRIALS, ENERGY SET TO RESUME HIGHER – PRECIOUS METALS TO SOAR!

Includes new 6-MONTH OUTLOOK FORECASTS

The grand ‘RE-SYNCHRONISATION’ process of 2016 produced a realignment of major asset classes following divergences over the preceding years from the 2011 peaks. Developed and Emerging market indices synchronised in January/February 2016 by ending major corrections into the lows, then resuming secular-bull uptrend thereafter. But it wasn’t just stock markets that underwent this recycling. Commodities also formed major corrective lows into the exact same time zone which was the reason behind such huge percentage gains that were recorded into the first half of last year.

The grand re-synchronisation was probably the most important even of last year but it was largely unrecognised by the financial community. Mainly, because asset managers are mostly specialising in individual asset classes rather than taking a macro-holistic approach to investment.

Not only that, but when these different asset classes are lined-up together with the help of viewing them through the lens of the Elliott Wave Principle, suddenly we see a glimpse into the future. That realisation is very profound because ‘seeing’ into the future price development of markets can be, is a humbling experience. I’ve witnessed this so many times during my 40-years in trading and yet each new glimpse is as special as all those of the past.

Impulses, Zig Zags & Expanding Flats

What makes the ‘RE-SYNCHRONISATION’ process special is the way it aligns disparate Elliott Wave pattern development into an alignment of ‘POSITIVE-CORRELATION’.

When stock markets peaked in 2007/08, so did commodity markets and when prices collapsed during the 2008/09 financial-crisis, both asset classes formed major lows within just a few months of each other. The recovery phase also saw both trend higher afterwards and that’s where the great puzzle begins.

Whilst U.S. stock markets began new secular-bull 5-wave impulse uptrends, many commodity markets began the same advance but as 3-wave zig zags, or in some cases double zig zags. And these zig zags are simply the second sequence within even larger, multi-decennial expanding flat patterns – yes it all gets a little complicated. But herein lies the hidden path that future price development is taking.

It’s no wonder that during 2011-2016, commodity prices declined rapidly whilst U.S. stock markets trended higher because it was a necessary function in order to allow the 5-wave development of one to play out whilst allowing a 3-wave pattern unfold in the other. In fact, the commodity correction in 2011-2016 realised wave ‘B’ within the zig zag upswing unfolding from the financial-crisis lows whilst the 3rd wave uptrend continued in stocks. The resynchronisation occurred when wave ‘B’ ended last January/February at the same time a minor fourth wave correction completed in stocks.
From an Elliott Wave pattern perspective, they were now realigned in positive-correlation and can both head higher in the next major phase of their respective patterns. But what of 2017?

The Next 6-Months

So far, this year has delivered different performances following last year’s impressive commodity gains. Base Metals have undergone counter-trend retracements as has the Energy sector. These are seen co-existing in a shorter-term positive-correlation environment which is largely dependent on how supply imbalances are being worked off. Precious metals ended their corrective declines earlier, last December (2016) and are already resuming larger uptrends established from last year’s lows as geopolitical events have a positive impact.

Just recently however, the Base Metals and Energy sectors have or are approaching the end of these shorter-term corrective phases that began from last year’s peaks. This is happening at the same time that Precious Metals are building a strong platform of support in preparation for the next stage of accelerative advances. From this we can determine that all three commodity sectors are poised to surge higher for the remainder of 2017!

New Commodities Mid-Year Video Forecast

This MID-YEAR 2017 COMMODITIES video takes a look at how these shorter-term realignments fit together across Base Metals, Precious Metals and the Energy complex for Crude and Brent Oil. We show how the ‘RE-SYNCHRONISATION’ process of 2016 dovetails with ‘POSITIVE-CORRELATION’ studies, how these interact and combine to reveal this next stage of major price advances into the second-half of this year, 2017.

We invite you to take this next part of 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 Head Elliott Wave Analyst
WaveTrack International

COMMODITIES VIDEO Table of Contents: 52 charts

• S&P- Hang Seng-MSCI Emerging Markets-Singapore Straits – Correlation  
• S&P 500 - Crude Oil- Copper – Correlation  
• MSCI EM vs. Copper – Correlation  
• Palladium vs. Nasdaq 100 – Correlation  
• Crude Oil vs. Copper – Correlation
• Copper/EM – EW Pattern
• Base Metals Miners – EW Pattern
• Precious Metal Miners – EW Pattern  
• Crude Oil – EW Pattern
• AUD vs. CRB Cash Index – Correlation
• CRB Cash Index – Weekly – Cycle
BASE METALS
• Copper vs. AUD – Weekly – Correlation  
• Copper – Weekly – Composite Cycle  
• Aluminium – Daily  
• Lead – Weekly  
• Zinc – Daily  
• Nickel – Daily  
• XME – Metals Mining – Daily  
• BHP Billiton – Weekly
• Freeport McMoran – Weekly
• Antofagasta PLC – Weekly
• Anglo American – Weekly  
PRECIOUS METALS  
• Silver vs. Copper – Weekly – Correlation
• Gold – Monthly – Composite Cycle
• Gold – Count #1 and #2
• GDX – Gold Miners Index – Weekly
• Newmont Mining – Weekly  
• GoldCorp Inc. – Weekly  
• Amer Barrick – Weekly
• Agnico-Eagle Miners – Weekly
• AngloGold Ashanti – Weekly
• Silver – Composite Cycle and Count #1 and #2 
• XAU – Gold/Silver Miners – Weekly
• Gold/Silver Ratio vs. Silver – Correlation
• Gold/Silver Ratio – Weekly
• Palladium vs. Silver – Correlation  
• Palladium – Monthly  
• Palladium vs. Silver – Correlation
• Platinum – Weekly  
ENERGY / CRUDE OIL
• Crude Oil – Weekly – Composite Cycle
• Crude Oil – Count #1 and #2
• Brent Oil – Weekly

How can you order the new COMMODITIES video forecast?

PART II COMMODITIES VIDEO is available now, at only $48.00! (1 hour 30 mins long)

We’ll send you a personal link so that you can watch the video, anytime at your convenience.

And if you’d like to subscribe to the STOCK INDICES video PART I and up-coming CURRENCIES videos PART III, you can receive ALL THREE for $96.00! – that’s a saving of 33% per cent!

• Single Video – $48.00
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CONTACT US NOW VIA EMAIL – SELECT YOUR PACKAGE

Single Video – $48.00 – PART II COMMODITIES (June ’17)
Triple Package offer – $96.00 (saving 33%)! – PART I – PART II – PART III (June – July ’17)

The latest STOCK INDICES video runs for 1 h 50 minutes featuring 46 charts – click here

PART III for Currencies and Interest Rates will be available in a few weeks’ time (June/July 2017!) – we’re working on it!

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