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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 you views, queries and comments.

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We’re sure you’ll reap the benefits. Don’t forget to contact us with any Elliott Wave questions. Our EW-team is always keen to hear your views, queries, and comments.

Visit us @ www.wavetrack.com

Stock Indices Video Outlook 2023

by WaveTrack International| December 28, 2022 | No Comments

Stock Indices Video Outlook 2023

2022’s CORRECTION RESUMES IN 2023!!

Highlights

2022’s CORRECTION RESUMES IN 2023!!

This exact time last year (December 2021), Elliott Wave analysis identified the end of 1st waves within post-pandemic five wave uptrends, the final bull market of the greater secular-bull uptrend that originated back to the financial-crisis lows. A deep 2nd wave correction was forecast for 2022, predicting decline of between minus -30% to -40% per cent.

At the same time, 70% per cent of mainstream investment brokers and analysts were telling their clients the benchmark indices would rise in 2022 between 5% to 15% per cent. So how did we do? It turns out that the benchmark S&P 500 declined from its Jan.’22 high into October’s low by minus -28% per cent and the Nasdaq 100 from its Nov.’21 high by minus -38% per cent! Lucky guess? – absolutely not, but down to the application of what R.N. Elliott described by applying the principle of ‘Nature’s Law’ – action/reaction as a Universal Principle. So what can we expect in the coming year, for 2023?

Double-Digit Inflation

Rising inflationary pressures continued to dominated financial markets during 2022 with U.S. headline acceleration peaking into a mid-year high of 9.1% whilst elsewhere, in Europe, peaking at 10.6% in October.

Geopolitical tensions are triggering high energy costs. While supply-side disruptions are also distorting consumer prices. The end result is that almost half of countries worldwide are seeing double-digit inflation rates or higher – see fig #1 (courtesy of elements.visualcapitalist.com).

Fig #1 – Double-Digit Inflation – Source: by courtesy of elements.visualcapitalist.com

With new macroeconomic forces shaping the global economy, the infographic shows countries with the highest inflation rates (using data from Trading Economics). As the table below shows, countless countries are navigating record-high levels of inflation. Some are even facing triple-digit inflation rates. Globally, Zimbabwe, Lebanon, and Venezuela have the highest rates in the world.

As price pressures mount, 33 central banks tracked by the Bank of International Settlements (out of a total of 38) have raised interest rates this year. These coordinated rate hikes are the largest in two decades, representing an end to an era of rock-bottom interest rates. Where do we go from here? Find out more in our latest Elliott Wave Stock Indices Video Outlook 2023!

New Stock Indices Video Outlook 2023 – PART I/III

This STOCK INDICES Video Outlook 2023 is like nothing you’ve seen anywhere else in the world. It’s unique to WaveTrack International, how we foresee trends developing through the lens of Elliott Wave Principle (EWP) and how its forecasts correlate with Cycles, Sentiment extremes and Economic data trends.

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

Contents Stock Indices Video Outlook 2023

Charts: 95 | Video: 2 hours 11 mins.

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Elliott Wave Commodities Update

by WaveTrack International| November 29, 2022 | No Comments

Main Drivers for Commodities are Inflation, Interest Rates and US$ Dollar – Inflation Peak, Rising Interest Rates, Peak US$ Dollar Major Headwinds – Base Metals Completing July’s Counter-Trend Rallies, Heading Lower Now – Precious Metals Bottoming with Short-Term Downside Risk – Energy forming Interim Lows, Heading Higher into Year-End

Commodities Prices – 3 Main Drivers

The main drivers for commodities prices are inflation, interest rates and the US$ dollar.

Central Banks have maintained their aggressive pace of interest rate hikes with one or two exceptions. The Reserve Bank of Australia pulled back on its 50bps basis point incremental increased from June to September with only 25bps basis points in the last two meetings. The Reserve Bank of Canada hiked rates by 100bps basis points last July but has since pulled back to 50bps increases in October. The U.S. Federal Reserve have maintained their 75bps basis point increases since June but is hinting it may slow down to 50bps in the next December meeting. Inflation pressures have eased off a little in the U.S.. This is giving rise to peak inflation expectations. However, the big question related to commodity prices is whether this year’s hikes have already dented the world’s economic growth prospects? See fig #1.

Fig #1 – Central Banks – The Race to Raise Rates – Source: Refinitiv Datastream

CPI/Eurozone Inflation

In Bank of America’s latest Global Fund Manager Survey, a massive 92% per cent of fund managers predict stagflation in 2023 – see fig #2 . That means persistent inflationary pressures but at the same time economic stagnation. Central Banks are set to keep hiking during the first quarter of next year in an attempt to bring inflation down. Even if this means sacrificing the global economies. And this combined with more COVID lockdowns in China is creating strong headwinds for commodities into year-end though Q1 2023.

Fig #2 – FMS – Stagflation Call for 2023 – Source: BofA Fund Manager Survey

Commodities and Energy

We can see the effect in Base Metals like Copper – see fig #3. Prices have declined a lot over the past year. Precisely, down -35% per cent into July’s low although a recovery since means it’s down now by -20% per cent. However, that’s still massive, and it hasn’t finished yet. July’s recovery has unfolded into an Elliott Wave corrective zig zag pattern ending into the mid-November high. It’s now preparing for another big downswing which is forecast ending sometime into the end of Q1 2023, or beginning of Q2. That’s confirming what most fund managers expect – stagflation.

Fig #3 – Copper – Daily – Source: WaveTrack International – www.wavetrack.com

Commodities and Energy

The energy markets are also showing big declines for Crude and Brent oil next year. Although there’s the prospect of good gains before the next declines begin. We’ll be taking a look at these contracts later.

If there’s good news on the horizon, it has to be in Precious Metals. Last month’s report identified a major low in Gold, Silver, Platinum and the Gold Miners. This is still the case. However, there are some downside risks before year-end. This is dependent on whether the US$ dollar undergoes one last push to a modest higher-high, or if September’s high has already peaked – see fig’s #4-5.

Fig #4 – US Dollar Index – Daily – Source: WaveTrack International – www.wavetrack.com

Fig #5 – US Dollar Index – Daily – Count #2 – Source: WaveTrack International – www.wavetrack.com

Either way, the Gold Minders have been confirmed putting in a major low and are already trending into a new multi-year uptrend – See GDX Gold Miners index fig #6.

Fig #6 – GDX Gold Miners Index – Weekly – Source: WaveTrack International – www.wavetrack.com

WaveTrack’s EW-Commodities Report has been released. Get more insights about trading opportunities in our latest EW-Commodities Outlook report and video update!

FANG+ Rallying Higher from October Low

by WaveTrack International| November 16, 2022 | No Comments

FANG+ Rallying Higher from October Low as Expanding Flat Pattern – Completion Due Year-End but then Declining together with Global Indices as Final Sequence of 2022-2023 Counter-Trend Decline – Downside Targets Considerably Lower

FANG+ Rallying Higher

This month’s report updates several technology stocks which themselves are components of the FANG+ index. We’ve selected 6 FROM 10 components that best illustrate the varying divergences of trend. The analysis begins with a take on the pattern developing in the benchmark FANG+ index. And, then moving on to the equities – Amazon Inc., Apple Inc., Facebook/Meta Inc., Microsoft Corp., Netflix Inc. and finally NVIDIA Corp. See fig #1.

Fig #1 – NYSE FANG+ Index

FANG+ Analysis from an Elliott Wave Persepective

From an Elliott Wave pattern perspective, we can order these equities into two groups. Those stocks that have already formed a major low and the second group which are set to continue this year’s declines into Q1 2023.

The Fang+ index has lost Twitter since Elon Musk’s takeover with Microsoft taking its place. The weighting is the same 10% for each equity, 10 in all equating to 100% per cent.

The Fang+ index is unfolding similarly to the Nasdaq 100 with some slight variation. Both are declining into a multi-year corrections that began from the Nov.’21 highs. These are developing into double zig zags, i.e. a-b-c-x-a-b-c – see fig #2. We already had a pretty good idea in December ’21. Note, this is almost a year ago, that 2022 would see a severe downward correction in the technology sector because the post-pandemic advance into the Nov.’21 peaks unfolded into an a-b-c zig zags. Implying this was ending the 1st wave of an ending-type diagonal with the necessity of a deep 2nd wave correction to augment the ongoing pattern development of the diagonal. These zig zags were especially evident in the Nasdaq 100 and the XLK Technology indices.

Fig #2 – NYSE FANG+ Index – Daily – Forecast by WaveTrack International

And so, the FANG+’s corrective decline from the Nov.’21 high of 8077.01 completed the 1st wave of the diagonal with a double zig zag downswing declining since as a deep 2nd wave. That double zig zag remains incomplete. As a result, it forewarns of another big sell-off next year. However, during Q1 2023 but not before finishing the current counter-trend rally that began in October and due to finish in December, year-end.

FANG+ What about Apple, Microsoft and NVIDIA?

Equities that fall into this grouping where upside rallies continue until year-end but then decline rapidly during Q1 ’23 are Apple Inc., Microsoft and NVIDIA. In contrast, the others are forming major lows right now. They are set to outperform over the next several months because they’re unlikely to break below recent lows. This applies to Amazon Inc., Facebook/Meta and Netflix.

The latest Bank of America Fund Manager Survey shows the technology sector as the most underweight since 2006. We’d expect that extreme to neutralise a little with a push higher for technology into year-end. See fig #3.

Fig #2 – Bank of America Fund Manager SurveyInternational

Watch the latest amazing EW-Navigator video and get more insights about Technology Stocks trading opportunities US Stock Indices update!

EW-Commodities Update

by WaveTrack International| November 3, 2022 | No Comments

Commodities – Base Metals Mixed – Copper & Lead Higher, Aluminium & Zinc Lower – Precious Metals Bottoming, Beginning New Multi-Year Uptrend – Natural Gas Rebound After Massive Declines – Crude/Brent Oil Continue Counter-Trend Rallies from September’s Lows

Natural Gas Prices – Elliott Wave Forecasts predicted the decline!

Commodities Highlight! European TTF Gas prices have declined by -72% per cent from the late-August high whilst U.S. Natural Gas prices have declined during the same time by -52% per cent. And here we are, seeing core inflationary pressures still rising!

Just today, Eurozone CPI (HICP) inflation for October has come through at an annualised headline rate of 10.7% per cent. The highest ever recorded across the Bloc. As a result, core CPI is rising too, but much lower at 5.0% per cent.

Just last week, U.S. headline CPI was annualised at 8.2%, down from June’s high of 9.1% per cent but with core rising much faster, at new post-pandemic highs of 6.6% per cent.

Inflationary Pressures and Natural Gas Conundrum

Both Europe and the U.S. central banks have blamed Food & Energy as the two key components within CPI that are responsible for elevated inflationary pressures. But if that’s correct, how is it possible for continued inflation rises whilst TTF and Natural Gas prices are plummeting? Is this just a lag? Or some other explanation?

What about Japanese Inflation?

Japan is the world’s 3rd biggest economy. They consume food and energy just like you and me. And yet inflation is only 3% per cent – why? We’re told it’s because there’s government price controls in place. E.g. an aging population with some of the world’s highest savings rates and negative interest rates implemented by the Bank of Japan. Certainly, all contributing factors. But are these able to absorb the huge energy price rises of the last 18-months? We think not. One thing’s for sure, now that TTF/Natural Gas prices have collapsed lower, we should expect inflation to come down now. If not, then data manipulation on a grand scale is where our thoughts lead to next.

How are Central Banks responding to rising Inflationary Pressures?

Fig #1 – Central Banks – Hiking Peak – Source: Bloomberg and IMF staff calculations

Right now, there’s no let up in Central Banks (CB’s) responding to inflationary pressures. Especially, with aggressive hiking cycles expected to continue through to year-end. The number of CB’s hiking have reached a new peak – see fig #1.

This is having a negative impact on sentiment in both financial markets and small businesses in western economies. Even U.S. Federal Reserve officials are recognising the current pace of interest rate increases are likely to impact growth prospects, even causing a recession – see fig #2.

Fig #2 – FED Officials See Recession Risk Rising – Source: FED Board of Governors and Bloomberg

Commodities and the Bank of America Fund Manager Survey

In the latest Bank of America Fund Manager Survey, close to a record percentage of fund managers expect a weaker economy in the next 12-month period – see fig #3. That’s an incredible number because it surpasses bearish sentiment lows of the pandemic, the financial crisis and the post-dot-com crash lows of 2002. In all cases though, a silver lining in the cloud can be found. Notice how on each occasion of these previous lows, the benchmark S&P 500 begins a new bull market uptrend between 0-12 months afterwards.

Fig #3 – Record Low Expectations for Weaker Economy – Source: BofA Fund Manager Survey, Bloomberg

That’s very interesting when we also take a look at how Commodity prices fit into the picture. The current extremes of economic pessimism is interpreted as a contrarian bullish signal within the next 0-12 month period. This certainly fits into the overall picture we see in the Elliott Wave structure of both Base Metals and Energy prices.

Commodities and the CRB Index

The CRB-Reuters/Jefferies index illustrates the point – where the post-pandemic advance has unfolded into a five wave impulse pattern from 101.48 finishing last June at 329.59 – see fig #4.

Fig #4 – CRB Index – Daily – Source: WaveTrack International – www.wavetrack.com

It has since begun a counter-trend downswing, shown unfolding into a corrective double zig zag pattern. This is set for a rebound higher for a month or so, but then continuing its decline until downside targets are reached into the end of Q1 2023, around levels of 202.45+/-. That’s another -25% per cent lower than today’s price levels – it’s already dropped -20% per cent so far this year.

Declines of another -25% per cent are mostly correlated to the Energy markets. Base Metals have already completed most of their corrective declines although there’s still more downside risk too. The exciting area for commodities is precious metals. These are forming major lows with small downside risk this month, New multi-year uptrends are set to begin.

Watch the latest amazing EW-Commodities video and get more insights about s trading opportunities in our latest EW-Commodities Outlook report and video update!

‘SHOCK-POP-DROP’ & ‘INFLATION-POP’ Explained

by WaveTrack International| October 7, 2022 | No Comments

‘SHOCK-POP-DROP’ & ‘INFLATION-POP’Explained!

Almost all commodities ended super-cycle uptrends around the year’s 2006-2008. We define the super-cycle uptrend not from the 1999 lows as is generally considered in the financial industry but from the ‘Great Depression’ lows of 1932. This is because most commodities reached all-time lows at that time. Even lower than levels traded several hundred years earlier and this provides a strong basis for historical Elliott Wave analysis. The subsequent uptrend from the 1932 low unfolded into a five wave impulse pattern into the 2006-08 highs, for benchmarks like the CRB-Cash (CCI) index, Copper and Crude oil – see fig #1.

Fig #1 – CRB Cash Index – Quarterly by WaveTrack International

All price action following those peaks in Commodities around 2006-08 is part of a rebalancing correction to the completion of the Super-Cycle uptrend. This correction is forecast unfolding over the next two decades. Perhaps even a little longer with declining prices over that term. In Elliott Wave terms, the correction can only unfold into three types of pattern or categories, Zig Zag, Flat or Triangle. So far, there’s evidence that confirms a Flat or specifically, an Expanding Flat pattern is taking shape. It consists of three main price-swings, labelled A-B-C subdividing 3-3-5. This is assigned the term ‘Shock-Pop-Drop’ – see fig 2.

Fig #2 – ‘SHOCK-POP-DROP’ Flat Expanind Elliott Wave Pattern by WaveTrack International

‘SHOCK-POP-DROP’

The first ‘SHOCK’ phase develops during the financial-crisis sell-off which comes as a complete surprise to financial markets. The second ‘POP’ phase incites recovery, triggers Central Banks (CB’s) to begin an unprecedented act of Quantitative Easing (QE) forcing asset prices higher but later, inducing Rising Inflationary Pressures until the bubble finally bursts. We’ve specifically termed this the ‘INFLATION-POP’ (we’re experiencing this right now!). That leads to the final third ‘DROP’ phase when financial markets collapse under the weight of debt and excessiveness. As a result, we will see overreaching speculation resulting in massive asset price declines, both stocks and commodities comparable in percentage terms to collapses in stock markets in 1837-1842 (-70%) and 1929-1932 (-90%) – see fig #3.

Fig #3 – Dow Jones Yearly Averages by WaveTrack International

The financial-crisis that developed in 2007-09 is simply the 1st phase or wave A of the ‘Shock-Pop-Drop’.
The post financial-crisis recovery is the 2nd phase or wave B of the super-cycle correction which is capable of pushing many commodities into new record highs. This phenomenon is not recognised in conventional fundamental/economic or even technical analysis because analysts see this as part of the previous super-cycle uptrend. But the Elliott Wave Principle (EWP) specifically identifies such price development as the 2nd phase of the multi-decennial correction of the expanding flat pattern.

‘INFLATION-POP’

This 2nd phase of the expanding flat can be broken-down into a three price-swing event, up-down-up until prices reach new record highs. We know markets adhere to ‘fractal’ qualities of subdivision and this is a good example. These three price-swings are known as an A-B-C zig zag, subdividing 5-3-5 and given the term ‘INFLATION-POP’. Because it will undoubtedly trigger a resurgence of inflationary pressures by the time prices reach new record highs – see fig #4.

Fig #4 – ‘SHOCK-POP-DROP’ Zig Zag Single Elliott Wave Pattern by WaveTrack International

There are three price-swings attributed to the A-B-C zig zag pattern. Wave A represents the first phase of the inflation pop and wave C as the second phase. The first phase ended wave A into the 2010-11 highs. The second phase as wave C began from the Feb.’16 lows for Base Metals but extended into the Coronavirus Pandemic lows of March ’20 for energy markets like Crude/Brent oil and for Platinum.

‘RE-SYNCHRONISATION’

The second phase of the inflation-pop began in January/February 2016. At the time corrective declines in developed (stock) markets formed synchronous lows with Emerging Market and Commodity corrections that began from the year-2011 peaks. We termed this as the grand ‘RE-SYNCHRONISATION’ lows. This is why significant price rises have followed. Now, continuing the secular-bull uptrend for stock markets whilst beginning the next but final third phase of inflationary price rises for EM’s and Commodities – see fig #5.

Fig #5 – Copper – Weekly – Track Record by WaveTrack International

Labelled as primary wave C (could be cycle wave C for some other commodities), the second phase of price rises are typically unfolding into five price-swings or waves, 1-2-3-4-5. Over a period of several years, into the culmination of the next cyclical peak due around the years-2023-24. In some cases, this could extend to 2025-27. So far, wave 1 ended its advance in Base Metals having taken two-years to develop into January/February 2018’s highs. This has since given way to a period or regression or correction in wave 2. In Elliott Wave terms this is a necessary function before prices can resume higher in wave 3 and so on. Wave 2 completed into the March/April COVID-19 lows for various Base Metals.

The Precious Metals Difference

The progress of the inflation-pop for precious metals is somewhat different. They too will succumb to the gradual build-up of inflationary pressures which maintains it within the overall schematic. However, its Elliott Wave pattern progress is different. Gold’s long-term five wave impulse uptrend that dates back to the Great Depression lows remains in upside progress despite trading in Aug.’20 to record highs. Industrial precious metals like Silver and Platinum have a different rhythm but are trending higher during the final phase of the inflation-pop cycle, due to peak latest in 2024-2027 – see fig #6.

Fig #6 – Gold – Weekly – Track Record by WaveTrack International

The biggest gains during this next second phase of the Inflation-Pop is expected to be in Equity Miners, both Base & Precious Metal Miners with some multiples of 4:1, perhaps more, measuring from those lows of 2016 – see fig #7.

Fig #7 – GDX – Monthly by WaveTrack International

Get more insights about Commodities trading opportunities in our latest EW-Commodities Outlook report and video update!

EW-Commodities Outlook Oct/Nov. 2022

by WaveTrack International| October 7, 2022 | No Comments

EW-Commodities Outlook – Base Metals & Energy set for Rebound Rally – Precious Metals Bottomed, Beginning New Multi-Year Uptrend

EW-Commodities Outlook covering Central Bank impact on Commodity Prices

There’s been a noticeable pick-up in Central Bank activity over the last month with rate hike acceleration becoming the mandate amongst most of the developed countries across the world. The U.S. Federal Reserve are leading the assault higher with aggressive 75bps basis point increases with expectations of more on the way. Just this week, Chicago Fed President Charles Evans, St. Louis Fed President James Bullard and Minneapolis Federal Reserve Bank President Neel Kashkari said the central bank will need to raise interest rates to a range between 4.50% and 4.75%.

Other Central Banks are not far behind the Fed. However, this lag means the US$ dollar has remained on an upward trajectory, weakening all of the G10 currencies in its wake – see fig #1. And a few Commodities too!

Fig #1 – Central Bank Hikes – Source: Refinitiv Data

British Pound collapsed against the US$ Dollar

Earlier this week, the British Pound collapsed against the US$ Dollar, causing the Bank of England to implement a support mechanism that prevents further declines for the Pound whilst creating a ceiling in long-dated Gilt yields. These emergency measures are also being considered in continental Europe. Japan is already restraining inflationary pressures by holding JGB 10yr yields below a threshold level of 0.25% per cent. Clearly, monetary policy changes in non-U.S. Central Banks will ultimately cause a US$ Dollar peak as they catch-up with inflation pressures. That’s not too far off, at least from an Elliott Wave perspective.

Fig #2 – Recession odds still rising – Source: BofA Global Fund Manager Survey

Recession?

Fears of a global recession have risen over the last month. This is weighing heavily on monetary policy decision-makers, both in the U.S. but more so in Europe – see fig #2. So much so that sentiment has now entered extreme bearish territory, as shown in stock market surveys – see fig #3.

Fig #3 -FMS Asset Allocation – Source: BofA Global Fund Manager Survey

Interestingly though, a majority of global fund managers think inflation has peaked – see fig #4.

Fig #4 -FMS Has Inflation peaked – Source: BofA Global Fund Manager Survey

Ordinarily, surveys like these provide really important information when they’re measuring historical extremes. They’re contrarian indicators. And these suggest risk-assets are currently approaching important lows. That’s something can confirm that from an Elliott Wave perspective.

Stock markets are retesting or modestly breaking below the March/July lows. Although we’re expecting a big turn-around, lifting prices back inside the last 6-month range for a revisit back to August’s highs. Meanwhile, commodities like Copper which completed the first stage of corrective declines last July is expected to resume higher for another month or two. Crude oil, another bellwether of the economy has just completed the first stage of its own correction that began last March and is now about to head higher for another month or two.

And look at Gold! Prices have now declined into long-standing downside targets just above $1600.00 dollars. This ends a 2-year correction from the Aug.’20 high of 2072.00. That’s really exciting when we look at its upside potential alongside Silver and Platinum…

Get more insights in our latest EW-Commodities Outlook report and video update!