ELLIOTT WAVE ANALYSIS - Latest Market Commentary
Stock Indices
16th January 2021 - Friday’s declines in key benchmark U.S. indices have traded low enough to heighten ‘reversal-signatures’ that go some way in confirming an end to multi-month advances. The US$ dollar index bottomed a couple of days ahead of the S&P 500’s high of 3824.50 earlier this month and there was still uncertainty over whether indices would stretch just that little ###bit higher ahead of next week’s U.S. Presidential inauguration. But that seems a diminishing prospect basis Friday’s late sell-off. It’s just not possible to include Friday’s decline into the ending-diagonal pattern that lifted the S&P 500 futures higher from the early-November lows – it’s now traded too low far for that. If it were somehow to swing back higher, breaking the highs, it wouldn’t be a diagonal pattern anymore and the chances of that are remote given the three wave sequences within each of its impulse waves. So all this means… Read full summary in our latest report!
Currencies (FX)
16th January 2021 - The US$ dollar index found its legs on Friday having retraced some of the early-month advances from 3-year lows of 89.21 earlier last week with another strong push higher. This is going a long way in confirming the 89.21 low as ending the March ’20 five wave impulse decline that began from 102.99. It heralds an end to the risk-on period that has### lasted the last ten months whilst opening the way for a multi-month corrective rally that summons a period of risk-off right across the other asset classes too. Composite cycle analysis depicts the dollar’s rise lasting longer than mid-year whilst upside targets are towards 95.50+/- or about +7% per cent higher. There is no trigger for this event to occur – all the fundamental news like increasing COVID-19 infection rates, secondary lockdowns, mutations are already factored in but changes in direction often begin like this, quietly – only later do analysts build a… Read full summary in our latest report!
Bonds (Interest Rates)
16th January 2021 - President-elect Joe Biden detailed his $1.9tn stimulus package on Thursday with the most important aspect of his plan being the impact in the government bond markets. To fund the package, the Fed will need to increase debt issuance which ultimately results in higher inflationary pressures, putting pressure on the central bank to wind down its bond-buying programme### and potentially even increase interest rates earlier than expected. Such events would normally send yields higher, and they have been rising but that could now change, at least for the next few months. Despite better-than-expected quarterly earnings figures from several investment banks, stocks slipped lower which in turn, pulled the US10yr yield lower to 1.092. This is not yet enough to confirm an end to intermediate wave (1)’s uptrend that began from August’s low of 0.500 but regardless, upside potential is seen as limited. A period.. Read full summary in our latest report!
Commodities
16th January 2021 - The intensified bullish research notes that have prevailed during the last several months in the aftermath of last August’s peak at 2072.12 have diminished significantly, as you’d expect when price declines have lasted over 5-months now. One or two bullish analyst notes do still crop up – the latest is Standard Chartered who’s interns predict gold will trade### above $2000 this year. That’s not a statement that predicts a break above the highs, just a reattempt close to it, again, another indication of the muted bullishness that prevailed at the highs. From an Elliott Wave perspective, August’s decline is labelling this downswing as a double/triple zig zag pattern where targets remain towards 1660.00+/-. That certainly seems possible, especially if the US$ dollar is beginning to show signs of turning higher now. Silver’s higher beta than gold maintains its volatility which itself commands the volatile fluctuations in the gold/silver ratio. Since trading down this month from 27.94, silver has underperformed to the downside having previously outperformed during December’s advance. January’s high at 27.94 ended minor wave b.’s rally within intermediate wave (4)’s contracting/symmetrical-triangle pattern – wave c. has since begun to develop lower now with targets towards 22.80+/-. In the energy sector, OPEC left its 2021 forecasts…Read full summary in our latest report!
