You are here: Home
Oct 202014
 

Elliott Wave Analysis of ASA Gold & Precious Metals Ltd by Sid from ElliottWavePredictions.com. Click on the charts to enlarge.

As I mentioned in my last post about precious metals and the Aussie/Dollar, ASA Gold & Precious Metals Ltd (ticker: ASA) has long been utilized as a proxy for the precious metals and miners sectors by market professionals. ASA is an investment trust, so it acts very much like a sector ETF. But ASA has existed for far longer than ETF’s, so there’s a nice long history of data to work with.

If one starts an Elliott Wave analysis of ASA in the early 1970′s, an expanding diagonal pattern appears to be underway. In an expanding diagonal, wave 3 must be longer than wave 1, wave 5 must be longer than wave 3, and wave 4 must be longer than wave 2. Additionally, wave 4 must overlap into the price territory of wave 2, and perhaps most importantly (for wave recognition purposes), each wave within an ending expanding diagonal must subdivide into a zigzag.

As you can see on the monthly chart below , all of those requirements are present in the proposed wave count. An updated Hurst Cycle Analysis (using Sentient Trader software) indicates that a large nest of cycle troughs (including the 20 & 40-week, and the very important 18-month cycle) is due between November 22 of this year and April 14 2015.

ASA monthly 10 20 14 1024x528 Elliott Wave Analysis of ASA Gold & Precious Metals Ltd by Sid from ElliottWavePredictions.com

If the above Elliott Wave interpretation is correct, all that is left of the precious metals bear market is a Minute-degree (pink) wave 5 to the downside, as shown on the weekly chart below. In ASA, price must move down to $10.14 or below, because wave 4 (burgundy) of the decades-long expanding diagonal must be longer than wave 2 was. Once that occurs, all necessary subdivisions will be in place, and ASA, along with precious metals and miners should rally strongly for several years. Once Wave 5 of the expanding diagonal gets underway, it must end beyond the extreme of wave 3 (burgundy), which peaked in late 2010 at $36.13.

ASA weekly 10 20 14 1024x527 Elliott Wave Analysis of ASA Gold & Precious Metals Ltd by Sid from ElliottWavePredictions.com

There are several Fibonacci price targets below $10.14 for the end of blue wave 5 (or alternate blue wave C). They range from $6.77 to $9.99, and are shown on the weekly chart above. I’ll be eying round number support at $10. ASA is $11.80 per share at the moment. By the way, ASA is one of several precious metals and mining sector stocks we are tracking for potential purchase within the Eleven-Quarter-System trading model portfolio.

Sid
ElliottWavePredictions.com
ElevenQuarterStocks.com

 Posted by at 2:27 pm
Sep 252014
 

Elliott Wave, Hurst Cycles and Fibonacci Analysis of the Dow Jones Industrial Average (DJIA) by Sid from ElliottWavePredictions.com. Click on each chart to enlarge.

The Dow Jones Industrial Average is down only 2.33% since the Friday September 19 all-time high, but Hurst cycle analysis is already suggesting that a major top is “in”. As I described in my last free post about the DJIA, I base all U.S. stock market cyclic conclusions on Sentient Trader Hurst Cycle analysis starting at the Y2K high, as I believe that to be the last significant turning point in the underlying “character” and “pace” of the U.S. stock market.

As of the close today (9/25/2014), an up-to-date Hurst analysis indicates that the 4.5-yr cycle crested in June, and the 18-month cycle crested in May. The 40-week cycle is due to crest on about October 23, but the 20-week cycle, 80-day, and 40-day cycles all crested within the last few days. So, of the six largest cycles that Sentient Trader software can deduce based on a 14-year price history (2000-2014), five are now pressuring price to the downside. This condition appears to be overwhelming the only remaining larger cycle yet to crest, the 40-week. We therefore are very likely to have seen a major top in the Dow Jones Industrial Average on September 19, in my opinion.

From an Elliott Wave standpoint, all of the required subdivisions of an ending contracting diagonal completed on September 19, which, in textbook fashion, concluded with a very slight throw-over of the upper diagonal trendline.

As for Fibonacci price targets, there were a number of significant, large degree targets from 16,690 to 17,455, as shown on the daily chart below. The September 19 top tick of 17,350.64 occurred inside that Fibonacci target cluster.

DJIA weekly 9 25 14 1024x526 Elliott Wave, Hurst Cycles and Fibonacci Analysis of the Dow Jones Industrial Average (DJIA) by Sid from ElliottWavePredictions.com

DJIA daily 9 25 142 1024x528 Elliott Wave, Hurst Cycles and Fibonacci Analysis of the Dow Jones Industrial Average (DJIA) by Sid from ElliottWavePredictions.com

DJIA 240m 9 25 14 1024x527 Elliott Wave, Hurst Cycles and Fibonacci Analysis of the Dow Jones Industrial Average (DJIA) by Sid from ElliottWavePredictions.com

DJIA daily Hurst 9 25 14 1024x574 Elliott Wave, Hurst Cycles and Fibonacci Analysis of the Dow Jones Industrial Average (DJIA) by Sid from ElliottWavePredictions.com

The last chart above is a screenshot of the Hurst Cycle Analysis, as performed by Sentient Trader software, after the close of the market today, September 25, 2015.

One last note: Just because the Dow Jones Industrial Average appears to have finished a terminal upside pattern does not mean that every U.S. and European stock index has put in their respective tops. And many of the Asian indices do not appear to have put in their highs for the year yet. For the complete picture, please join me for my weekend “Counts” webinar, where I show all of my Elliott wave counts and associated Fibonacci price targets for many of the world’ major stock markets, commodities, currencies, and bonds. Hurst cycle analysis is always considered.

Sid
http://ElliottWavePredictions.com
http://ElevenQuarterStocks.com

Sep 252014
 

Elliott Wave and Associated Fibonacci Analysis of the AUD/USD Currency Pair (by Sid from ElliottWavePredictions.com).

The Aussie is nearing a area of strong support.

AUDUSD weekly 9 25 14 1024x526 Elliott Wave and Associated Fibonacci Analysis of the AUD/USD Currency Pair (by Sid from ElliottWavePredictions.com)

AUDUSD daily 9 25 14 1024x526 Elliott Wave and Associated Fibonacci Analysis of the AUD/USD Currency Pair (by Sid from ElliottWavePredictions.com)

AUDUSD 240m 9 25 145 1024x528 Elliott Wave and Associated Fibonacci Analysis of the AUD/USD Currency Pair (by Sid from ElliottWavePredictions.com)

Since Gold and the Aussie are often highly correlated, Gold could easily follow a similar roadmap. Often, the stock “ASA” can be used as a proxy for Gold. See the potential Elliott Wave count and associated Hurst cycle analysis on ASA below.

ASA weekly 9 25 14 1024x528 Elliott Wave and Associated Fibonacci Analysis of the AUD/USD Currency Pair (by Sid from ElliottWavePredictions.com)

Sid
http://ElliottWavePredictions.com
http://ElevenQuarterStocks.com

Sep 152014
 

Elliott Wave & Hurst Cycle Analysis of Silver (XY futures contract), & the US Dollar (DX Index) by Sid from ElliottWavePredictions.com. Click on the charts to enlarge.

By utilizing a combination of Elliott Wave and Hurst Cycle Analysis, I believe silver will put in a significant bottom in about 3 weeks.  As the daily chart below shows, there is a significant cluster of cycle troughs centered around October 8: those being the 40-week, 20-week, and 80-day cycles.  Also, all of those troughs fall within an 18-month cycle trough window.

Silver daily 9 15 14 1024x529 Elliott Wave & Hurst Cycle Analysis of Silver (XY futures contract), & the US Dollar (DX Index) by Sid from ElliottWavePredictions.com

A bounce starting as early as October would fit nicely with both the main and alternate Elliott Wave counts, as shown on the weekly chart below. Either way, we should see a rally soon in precious metals that is likely to last at least into the second half of 2015.

Silver weekly 9 15 141 1024x527 Elliott Wave & Hurst Cycle Analysis of Silver (XY futures contract), & the US Dollar (DX Index) by Sid from ElliottWavePredictions.com

So how could precious metals rally while the US Dollar is shooting to the moon? Well, by using the same combination of Elliott and Hurst, it appears that the current US$ rally may end at about the same time as precious metals bottom.  See the chart below for the main and alternate roadmaps for the US Dollar (DX Index).

US DX weekly 9 15 14 1024x526 Elliott Wave & Hurst Cycle Analysis of Silver (XY futures contract), & the US Dollar (DX Index) by Sid from ElliottWavePredictions.com

Sid
http://ElliottWavePredictions.com
http://ElevenQuarterStocks.com

Sep 012014
 

With U.S. stocks in nose-bleed territory, many money managers are smartly on the lookout for investment alternatives.  The Hang Seng appears to be a decent intermediate-term option in my opinion.  By combining Hurst Cycle Analysis and Elliott Wave, I’ve developed the roadmap below.

HangSeng weekly 9 1 143 1024x527 Sids Technical Take on the Long Term Expectations for the Hang Seng Index ( HSIX / HKHI )

Since the October 2011 (Burgundy B) low, which, by the way, was the US stock market low since Y2K when priced in Gold, the Hang Seng Index has been moving to the upside, but in overlapping fashion.  Both the upside and downside waves have been built in “threes”.  Because Hurst cycle analysis (using Sentient Trader software) isn’t expecting a crest of the 42.4-week cycle until around late November of this year, the Hang Seng looks like a decent bet for upside continuation until then.  My Elliott Wave interpretation for the Hang Seng is therefore that of an ending contracting diagonal, which, if correct, will have the Hang Seng rallying from now until late November, reaching a temporary, black wave 3 top at about 26842, where blue wave C will equal blue wave A times 1.382.

At that point though, watch out for a quick drop (in 3 waves) during late Q4-2014, and Q1-2015 to just about 23750.  That should create another nice buying opportunity, as the 5th wave of the ending diagonal would need a final 3-wave rally lasting all the way into early-to-mid 2016, with a final target of 30145, where primary wave C (burgundy) will equal the length of primary wave A.  Notice that the 30145 target would allow the Hang Seng to retrace the 2008 crash by slightly more than 90%, a requirement of wave B of a “flat”.

Then, (post mid-2016), if this interpretation is correct, the Hang Seng should essentially crash, as ending diagonals are typically deeply and quickly retraced.

Sid
http://ElliottWavePredictions.com

Jul 112014
 

Elliott Wave and Hurst Cycle Analysis of the U.S. Stock Market by Sid from ElliottWavePredictions.com.  Click on the charts twice to enlarge.

Many Elliotticians (including myself) regard the Y2K peak in stocks as the Supercycle wave 3 top.  Supporting evidence includes the record-high RSI reading at that peak, as shown on the quarterly DJIA chart below.   While many times, RSI readings reach their extreme at the wave 3 (burgundy: 1987), and show divergence at the end of the 5th wave (burgundy: 2000), I’ve found that if the 5th wave is extended (as it was from 1987-2000), the RSI will reach its extreme at the end of the 5th wave, as it did in Y2K. The significance of the 2000 high cannot be overstated, as panic buying pushed price action into a parabolic mania from 1995 into the Y2K top.  The year 2000 was also the high in U.S. stocks (still today), when priced in gold.

DJIA quarterly 7 13 14 1024x528 Elliott Wave and Hurst Cycle Analysis of the U.S. Stock Market by Sid from ElliottWavePredictions.com

Since 2000, stocks have generally been moving in a sideways, boom and bust pattern.  Rather than attach European data going back centuries to the beginning of the DJIA to develop a combined ultra-long-term count, it appears to me that because the 1929-1932 correction was a 90% crash that lasted only 3 years, it was most likely a wave 2 within a larger 5-wave impulse.  It seems unlikely that it was a wave 4 at very large degree because of the extreme depth and brevity of the move.  Wave 4′s typically retrace the entirety of the preceding 3rd wave by 30 to 50%.  Not 90%.  Also, Wave 4′s are typically long-lasting sideways affairs (like triangles), while wave 2′s are more likely to be sharp and deep (like zigzags or double zigzags).  I’m therefore counting what I see with my own eyes, with over 100 years of data to look at, and have labeled the 1929 top as supercycle wave 1, and the 1932 bottom as supercycle wave 2.

Using R.N. Elliott’s trendline system, I’ve connected the extremes of supercycle wave 1 (1929) and 3 (2000), and have placed a parallel copy at the extreme of wave 2 (1932).  R.N. Elliott found that wave 4′s will typically challenge that trendline, using it as support before a 5th wave to the upside ensues.  I therefore believe that supercycle wave 4 is still underway, as price hasn’t even moved into the lower half of that trend channel yet.

The topping pattern since the Y2K top can be one of two Elliott Wave patterns in my opinion.  My main count is that the 2000-2009 period was an “expanded flat”, and because price did not move into the lower half of the supercycle Elliott trend channel, I’ve labeled 2000-2009 as cycle (teal) wave A within what will likely end up being a long-lasting ABC “flat” for supercycle wave 4.  Cycle wave B of that flat has been underway since March 2009, and may have topped a few days ago (July 3).  B waves are typically accompanied by low volume, and continue higher on lousy fundamentals.  Those characteristics have certainly been present ever since the 2009 low.  Wave C of the flat would be next, and should move down in 5 waves, likely ending below the 2009 low, completing an expanded flat for supercycle wave 4.  However, a new low below the 2009 low is not required, as a more rare “running flat” is also possible.  As long as Central Banks around the globe continue colluding to debase their currencies, I find it quite easy to accept that wave C may not be able to take out the 2009 low (using nominal pricing), as the value of the fiat measuring unit (the US Dollar, in this case) may continue to be forcibly shriveled.  If wave C ends above the 2009 low, but moves down from near current levels in 5 large waves, supercycle wave 4 will go down in history as a running flat.

The pattern I find second most likely since Y2K is that of an expanding wave 4 triangle.  Edwards and Magee referred to this pattern as a “megaphone”, or “broadening top”  This happens to have been the exact pattern seen in stocks from 1966-1974, but that was at one lesser degree of trend.  It is therefore possible that supercycle wave 4 is carving out a larger fractal of the most recent cycle-degree wave 4 pattern.  If the expanding triangle interpretation is correct, Wave D of the triangle is likely finished, or very nearly so, and wave E must take the form of a crash to below the 2009 low next, moving downward in a massive and aggressive ABC.

A closer-up monthly chart of the topping process since January 2000 in the DJIA is shown below.  Notice the broken RSI trendline, followed by the RSI most recently testing the underside of the broken trendline.  This is textbook RSI behavior before a breakdown.

DJIA monthly 7 13 14 1024x527 Elliott Wave and Hurst Cycle Analysis of the U.S. Stock Market by Sid from ElliottWavePredictions.com

Now for a new idea.  I’ve been incorporating Hurst cycle analysis along with Elliott Wave now for almost a year now thanks to Sentient Trader software.  This allows me to combine the expected Hurst cycle peaks and troughs, even at small degree, with Elliott Wave, and its associated Fibonacci price targets.  The combination of these two tools is quite powerful, as Elliott Wave/Fibonacci is great for projecting how far price movements will go, but is lacking in its ability to project how long it will take for price to get there.

Hurst analysis essentially unveils the “tempo” of the natural underlying “rhythm” of the market.  J. M. Hurst believed that there are numerous “cycles” operating within the market simultaneously, some long-term, some shorter term, and some in-between.  These cycles combine to pressure price to the upside or downside.  The more cycles that are sloping to the upside simultaneously, the more upside pressure there is, and vice versa.

In my experience, at significant trend changes, the market switches gears, and starts marching to a different underlying rhythm than it was prior to the trend change.  Since I am counting the Y2K top was the last significant (supercycle) trend change, I believe that Hurst cycle analysis starting at the Y2K high best measures the underlying “rhythm” within the market at this time.  Below is a screenshot of the Sentient Trader, Hurst Cycle analysis starting at the March 2000 price top in the S&P-500.  I’ve made some additional notations on the chart.

SPX Daily organic Hurst analysis starting at the Y2K top thru 6 27 14 1024x576 Elliott Wave and Hurst Cycle Analysis of the U.S. Stock Market by Sid from ElliottWavePredictions.com

Many economists acknowledge the existence of a naturally recurring, 4.5-year business cycle.  When markets ebb and flow naturally, history shows a tendency toward cycle “troughs” about every 4.5-years.  J.M. Hurst documented this phenomenon in his cycles research many decades ago, and economists like David Stockman often refer to the 4.5-year business cycle still today.  Notice that the Sentient Trader software, when the analysis is started at the Y2K supercycle wave 3 top, places a 4.5-year cycle trough at the 2002 low.  The next 4.5 year cycle trough was in July 2007, just before the late-2007 market peak.  By the way, it is not unusual for cycle troughs to occasionally be placed at price dips that aren’t obvious as large cycle troughs on the charts, especially when there is a very long, strong trend underway (like 1982 though 2000), or when central bank and/or congressional interventions are as prevalent as they’ve been in recent decades.  Case in point:  legislation promoting easy mortgage credit for the masses is widely believed to have largely contributed to the market bubble continuation into the 2007 peak.

Then, the next 4.5-yr cycle trough is placed at the October 2011 low, and not at the March 2009 low.  This is quite interesting, as the October 2011 low was the stock market low since Y2K when priced in gold. This indicates to me that the extraordinary, experimentally huge intervention into the economy by the Fed starting in November 2008 (QE1) may have artificially stopped the stock market from continuing (nominally) downward into its natural 4.5-yr cycle trough in October 2011.

So, if October 2011 was the last 4.5-yr cycle trough, the next large-degree cycle troughs are expected in March 2015 (18-month cycle), and then March of 2016 (the next 4.5-yr cycle trough).  Notice on the chart that the over-arching 4.5-year (53.9-month) cycle crested on 12/31/13, and the 18.1 month cycle crested on 5/31-14.  That means that starting last month, there are two large-degree cycles now applying downward pressure on the U.S. stock market.   The last time this occurred was in early 2010, just before QE1 ended in March of that year.  Interestingly, those events were followed closely by the flash crash of May 6, 2010, a market correction of 15%, and the inception of QE2.

Labeling the October 2011 low as the most recent 4.5-year cycle trough also helps explain some of unnatural price action since March 2009, from an Elliott Wave perspective.  What if March 2011 was the natural end of Cycle (teal) wave A?  See the weekly chart below for the “food-for-thought” depiction.  The labeling does not follow Elliott Wave rules, but attempts to show what the wave count might have been, had the Fed not been distorting the markets by constantly f?/king with the unit of measure.

DJIA weekly 7 11 14 with Oct 2011 as cycle A low1 1024x526 Elliott Wave and Hurst Cycle Analysis of the U.S. Stock Market by Sid from ElliottWavePredictions.com

Notice the interpretation of 5-waves down (outlined in red), from the October 2007 high though the October 2011 low.  Notice the timing of QE 1 (Nov. 2008), and the resulting prolonged upward grind for black (intermediate) wave 4, followed by an unnaturally short 5-waves down through the October 2011 low.  From an Elliott Wave standpoint, there are some very fishy goings on throughout the entirely of black waves 4 and 5, when attempting to interpret the nominal price action.  For instance, I remember thinking in realtime that the initial blue wave A up from the March 2009 low had a lousy (pink) wave 3 inside of it, with choppiness at the wave 3 of 3 (point-of recognition) section.  The same thing goes for the following blue wave C starting July 2010.  As a matter of fact, there is a conspicuous absence of strong wave-3 mid-sections within all upside lower-degree waves ever since the March 2009 low.  Also, the blue waves 3 and 5 from August through October 2011 saw price continually trying to pound lower over the 2-month period, and I remember thinking in realtime that there must be some “mysterious force” putting a floor under the market, especially after the July 2011 Fitch downgrade of U.S. debt.

So what does this all mean in today’s market?  This “distortion adjusted” interpretation would allow the upward movement since October 2011 to be counted as a double zigzag, which may have ended just a few days ago (on July 3), or may find a slight and final new high in mid-August (according to the latest Hurst cycle analysis). Note that the expected mid-August peak might also be the extreme of wave 2 within a downward 5-wave impulse starting July 3.

Ultimately, had the dollar not been systematically and dramatically debased since the inception of QE1 in November 2008,  the rise since March 2009 would not have stretched as far as it has in relation to price action prior to November 2008.  Duh.  This makes it very easy to accept the continued labeling of the overall rise since March 2009 (or October 2011!) as a cycle-degree wave B (teal), despite it reaching a fairly elongated 1.618 times the length of cycle wave A (teal), when labeling the nominal March 2009 low as the end of cycle wave A.

So why wouldn’t the Fed just taper the taper, and start printing more heavily again to keep the market moving upward forever? Because this isn’t 2008, 2009, 2010, or 2011. It’s July 2014, and they’ve already “broken the bank” by blowing up the Fed’s balance sheet, and it hasn’t worked. Not for the middle class it hasn’t. So we’re on to them, and their constant lies about the condition of the economy, inflation and employment. Their actions have stolen the expendable income AND savings from the middle class. And without a strong, employed, and spending middle class that doesn’t require sub-prime credit to sustain itself, the house of cards WILL FALL. The recent comments coming from the CEO’s of a number of retailers tell the real tale of what’s ahead.

As ugly as all that sounds, I’m very optimistic about the trading and investing opportunities moving forward. Deep corrections not only allow for fast and highly profitable trades going short, they also set up golden opportunities to invest in great companies at a deep discount when the dust settles.

===============

Please join me for my weekend “Counts” webinar, where I go over all of my long, intermediate, and short-term Elliott Wave counts and associated Fibonacci price targets for many of the world’s major stock markets, commodities, currencies, and bonds.  Hurst cycle analysis is integrated into the analysis of all items. All enrollees will receive access to a recording of the webinar afterwards, whether they are in attendance live or not. All webinar enrollees also receive my “EWP Screenshots” on Sundays and Wednesdays.

For those who speak a language other than English, or don’t have time to view a 2.5-hour webinar, you can receive my long, intermediate, and short-term analysis of the SPX, DAX, Oil, Gold, Bonds, US$, and Euro two times per week via my EWP Screenshots service. Here’s more info about EWP ScreenShots . .

If you are interested in Hurst Cycle analysis, I highly recommend Sentient Trader Software!  Here’s a link to find out more about the same highly beneficial tool I’m using: Starter Bundle – Training Course – FLD Trading Strategy and EOD Trader Edition Monthly Rental.  I also find that the DTN IQ data feed works quite well with Sentient Trader.

Sid
http://ElliottWavePredictions.com

Content Protected Using Blog Protector By: PcDrome.