ELLIOTT WAVE ANALYSIS - Latest Market Commentary
Stock Indices
30th June 2022 - The major U.S. benchmark stock indices got off to a positive start earlier this week with upside momentum continuing from last week’s late advance from the mid-June lows. But rising anxieties### over recession fears has switched attention away from inflation into economic stagflation with indices selling off through today’s session. Despite the persistent gloom, it’s important to remember that mid-June’s lows in the S&P 500, Dow Jones (DJIA) and Nasdaq 100 each completed a-b-c zig zags from the November/January peaks. This current upturn is labelled as a corrective x wave rally but Monday’s highs are far too small to complete the entirety of this rally, even though each index has so far rallied into a tiny three wave sequence. Counter-trends are often complex and this one is expected to be the same and although Tuesday’s/Wednesday’s sell-off is causing bearish anxiety, we’d expect it to turn higher again, without breaking to lower lows. Some confidence comes from the fact that Europe’s Eurostoxx 50 completed a short-term zig zag downswing from Monday’s high today whilst the Xetra Dax has trended higher from the mid-June low into a five wave … Read full summary in our latest report!
Currencies (FX)
30th June 2022 - Although there’s evidence of weakening U.S. economic data, in PMI’s, manufacturing as the labour market’s trajectory is faltering, the dollar has been strengthening this week on safe-haven ###buying. The media is reflecting growing anxieties over a possible economic recession with daily reporting of analysis and opinion that a hard-landing is unavoidable as the Federal Reserve maintains its incremental rate-hike expectancy. There’s been a perceptual shift away from rising inflationary pressures with more focus on concerns of a recession – but this latest advance in the US$ dollar index is perfect timing, representing the final sequence within last year’s uptrend. One final push towards upside targets of 106.30+/- and then its done! – the dollar will also end two higher digress of trend that date back to the pre-financial-crisis lows, so this next peak is a big one – it means the dollar... Read full summary in our latest report!
Bonds (Interest Rates)
30th June 2022 - Federal Reserve chairman Jerome Powell said at the ECB’s central bank symposium at Sintra, Portugal that he’s determined to control rising inflationary pressures and will not allow it to take hold### of the economy over the longer term – he added ‘we’re strongly committed to using our tools to get inflation to come down’. Treasury yields have mostly declined from June’s peaks into three wave corrective sequences, especially visible in the US2yr, US5yr and even the US30yr yields ending last Thursday – this isn’t consistent with a larger, corrective yield decline that we were expecting, but they are consistent with a shallower corrective downswing continuing lower over the coming month. The US10yr yield can be labelled as completing a five wave sequence from the high, implying downside continuity once a short-term correction to the upside has completed – that should prevent any break above June’s high – this is being confirmed by the Italian ITY10yr yield which has also declined from June’s high of 4.183% into last Friday’s low of 3.322 – again, this implies downside continuity once a short-term corrective upswing has completed over the next … Read full summary in our latest report!
Commodities
30th June 2022 - There’s a noticeable lack of bullish sentiment and reports/newsletters right now which is not surprising given gold’s decline since reaching the March highs - but from a contrarian standpoint,### this is exactly the type of extreme sentiment needed to begin a new uptrend. Commerzbank reports sizable outflows in ETF’s for both gold and silver whilst others question why gold’s ownership is so low during an inflationary environment. With the US$ dollar about to finalise its uptrend, then turning lower, that should provide an upside boost to gold, triggering 3rd wave upside acceleration. But it’s absolutely critical gold holds above May’s low of 1789.15 in order to secure the current uptrend following a zig zag competition from March’s high. Any break below would precipitate a prolongation of primary wave 4’s correction from the Aug. ’20 high towards that old downside target of 1595.00+/-. Silver is in a similar balancing position. Silver’s expanding flat pattern from the Aug. ’20 high is a picture-perfect completion into May’s low of 20.44 – it has since responded higher in a very positive way, trading up to 22.57 then pulling lower into a corrective pattern to current levels of 20.59 – but it must press higher now, without breaking below May’s low of 20.44 to remain bullish. Any downside break below 20.44 would otherwise suggest silver will continue lower over the next months towards 17.39+/-. In the Energy markets, we’re please to report that... Read full summary in our latest report!
