ELLIOTT WAVE ANALYSIS - Latest Market Commentary
Stock Indices
19th October 2019 - October’s advance in the benchmark S&P 500 from 2855.00 has so far at least, unfolded into a three wave, 5-3-5 sequence ending into Thursday’s high of 3008.00. Not all three wave sequences are zig zag corrections, they can be a more bullish 1-2-1 sequence or even 1-2-3 depending on its proportion measurement. So which is it? The answer will provide clues to the larger picture emerging from August’s lows.### It’s a fact that August’s lows in the Eurostoxx 50 and Xetra Dax indices ended 4-month expanding flat corrections, so the larger picture, without doubt, is very bullish – that applies to U.S. indices too. But the short-term picture could swing another +2.0% per cent higher from here, or decline -5.5% per cent. Should levels remain… Read full summary in our latest report!
Currencies (FX)
19th October 2019 - The US$ dollar index declined again today as it pulls steadily away from the early-October high of 99.66. That high ended a 2nd wave zig zag correction that took 20-months to complete from the Feb.’18 low. Furthermore, the zig zag completed with wave ‘c’ as an ending-diagonal – we know that such patterns are always followed by abrupt, sharp price movements in the opposite direction once completed, so we shouldn’t be surprised### to see such tenacity in the dollar’s current sell-off. Extending the initial down-sequence by a fib. 161.8% ratio projects short-term downside targets for the next few weeks towards 95.87+/-. That’s another -1.5% per cent below Friday’s closing levels – it’s already down by -2.4% per cent. This is a resumption of the US$ dollar’s 7.8-year cycle downtrend that began in early 2017 which means a protracted decline is set to unfold throughout the next year. The Euro/US$’s equivalent short-term upside… Read full summary in our latest report!
Bonds (Interest Rates)
19th October 2019 - The US10yr yield lagged behind the lows of the S&P 500 that formed last August when it traded down from 1.715 to an eventual 3rd wave low at 1.429 but both have since pulled higher. This means their positive correlation remains in-step. The big difference though is that stock markets are trending higher whilst treasury yields are trending lower. How can they be positively correlated then? It’s all about### price-amplitudes. When stocks push strongly higher, treasury yields simply underperform, undergoing modest counter-trend upside rallies – when stocks retrace lower into a correction, treasury yields fall proportionately larger which continues its downtrend. This is the story since the US10yr yield began its five wave impulse decline from the Oct.’18 high of 3.262. Since August/September, the ten-year… Read full summary in our latest report!
Commodities
19th October 2019 - Precious metals remain an interesting and complex story. Gold bugs are rampant and we still receive bullish analyst notes every day. We’ve not seen such sentiment since the peak of 2011. When gold hit its high last month at 1557.29, the COT net speculative long-positioning was over 300,000 contracts. Today’s figure is 253,000 which means there’s been some long-liquidation, but not enough to sustain another run-up like### we’ve seen since last May when gold was trading down at 1266.10. The daily and weekly composite cycles point down from September’s peak lasting through to March 2020 so we’re not expecting too much upside progress until more liquidation has occurred. That said, there’s a short-term upside bias because the decline into October’s low of 1459.00 did unfold into a zig zag corrective pattern. That translates into some sort of recovery before more declines later. We’ve been wondering why silver didn’t break above its July ’16 high of 21.17 whilst gold broke above its equivalent high of 1375.00 by a significant margin. Isn’t silver supposed to outperform gold in during uptrends… Read full summary in our latest report!
