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20141015 Extended Report EW-Compass

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ELLIOT WAVE
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  16 th   OCTOBER 2014 (data through 15 th   October 2014) recent weakness is only modest and seen as a mild correction within the ongoing uptrend. Trading down to 84.47 has attempted idealised downside targets to 83.95 forecast in last week’s report, and so this could be ending the dollar’s decline already. Meanwhile, the Euro/US$ has mirrored this pattern by extending its counter-trend upswing from last week’s low of 1.2500. The initial upswing unfolded into an intra-hourly zig zag pattern to 1.2792 but this was insufcient to complete a fourth wave rally as a higher attempt is necessary based upon R.N.Elliott’s  guideline that requires a retracement to ‘fourth wave preceding degree’. The Euro/ US$ has now extended this upswing to a session high of 1.2888 – this is still a little short of upside targets to 1.2958+/- but at least enough to qualify the guideline. {continued on next page} expansion, or a 3 rd -of-3 rd -of-3 rd  wave downward price decline. And this is exactly how the pattern has developed. This 3 rd -of-3 rd -of-3 rd  wave appears exhausted as it approaches the 1820.00+/- level, so we expect a temporary upward rally to begin the necessary 4-5-4-5-4-5 sequences that must ultimately follow so that an ultimate conclusion of the larger ve wave impulse  pattern ends during the next couple of weeks. Using our proprietary b-price- ratio models, completion is projecting down to 1784.00+/-. Meanwhile, it is noteworthy that the small-cap Russell 2000 is outperforming the S&P during this latest sell-off. Downside targets for the completion of a zig zag unfolding into the decline from the June high of 1213.55 held important support at 1040.00+/-. This  places a shorter-term positive into the market for the next several days. In Europe, the Eurostoxx 50 is working its way lower towards downside targets at 2805.00+/- whilst the equivalent levels for the Xetra Dax are to 8170.00+/-. In Asia, the Hang Seng is preparing to catch up with Wednesday’s declines – next downside targets are to 22230.00+/- whilst in Japan, the Nikkei has found some short-term support at 14500+/- but the larger downtrend remains dominant. CURRENCIES  ( FX ) – Weaker-than-expected U.S. retail sales and Empire State index announced Wednesday highlighted the  fragility of the U.S. economy at a time when Europe is slowing down and emerging markets are already in decline. The US$ dollar consequently traded lower but this decline was already part of a counter-trend  pattern that began earlier, from last week’s high of the US$ dollar index at 86.74. This Summary STOCK   INDICES  – The latest batch of U.S. statistics released during Wednesday’s session showed further weakening of the economy with September’s retail sales coming in lower than expected, down -0.3% per cent whilst N.Y.’s Empire State index declined to 6.2 this month from an almost ve-year high of 27.5 in September. This is now hovering slightly above the zero line that indicates growth – but for how long remains to be seen. Our benchmark S&P 500 index responded by  falling over -3% to a low at 1820.00, its largest one day decline since the high  formed at 2019.26 last month. It was almost inevitable that such an acceleration was about to unfold because the initial decline from the 2019.26 high had begun as a series of 1-2-1-2-1-2 sequences – these are the precursor movements of step-like lower highs and lows that occur prior to price- Summary »  ........................................................................... page 1 S & P 500 – Daily » - Count #1  ........................................... page 3 S & P 500 – 360 mins. » - Count #1  .................................... page 4 Russell 2000 – Daily - »  Count #1  .................................... page 5 Nasdaq 100 – Daily - »  Count #1  ...................................... page 6 EuroStoxx 50 – Daily - »  Count #1  ................................... page 7  Xetra Dax 30 – Daily - »  Count #1  ................................... page 8 FTSE 100 – Daily - »  Count #1  ............................................ page 9 Hang Seng – Daily - »  Count #1  ..................................... page 10 India CNX Nifty 50 – Daily - »  Count #1  ..................... page 11 NIKKEI 225 – Daily - »  Count #1  .................................. page 12 US$-Index – Daily - »  Count #1  ..................................... page 13 EUR vs. USD – Daily - »  Count #1  ................................. page 14 USD vs. YEN – Daily - »  Count #1 ................................ page 15 AUD vs. USD – Daily - »  Count #1  ................................ page 16 US 10 » YR  Yield – Quarterly - Count #1  ........................ page 17  DE 10 » YR  Yield – Daily - Count #1  ................................ page 18 Gold – Daily - »  Count #1  ............................................... page 19 Silver – Daily - »  Count #1  .............................................. page 20 Crude Oil »  (NYMEX) – Daily - Count #1  ..................... page 21 » TABLE OF CONTENTS {click on TOC text!} THE ELLIOTT WAVE PRINCIPLE   1  WaveTrack Internatonal GmbH  Kanalstr. 14 80538 Munich Germany Phone: +49 (0)89-21 02 07 11 Fax: +49 (0)89-92 18 52 45 E-Mail: services@wavetrack.com www.wavetrack.com  »  {continued} Big news for the US$/Yen – the dollar’s decline from the late-September high of 110.08 has extended an initial three wave  pattern into a ve wave sequence with consequences of changing the direction of the larger trend from upwards to downwards. Primary wave ①  that began a multi-year advance from the Nov.’11 low of 75.56 is now deemed as completed with much more downside potential for the weeks ahead. The  Aussie/US$ dollar continues to range-trade between 0.8652-0.8900 but is unlikely to extend higher at this time. Its developing  ve wave impulse decline from the July high of 0.9506 remains incomplete with ultimate downside targets to 0.8376+/-. BONDS  ( INTEREST   RATES ) –   Wednesday’s weaker-than-expected U.S. Retails Sales and lower N.Y. Empire State index triggered a collapse in long-dated yields with the US10yr taking the biggest hit, down 31bps on the day to 1.920% while the US30yr yield plummeted over 24bps to 2.730%. With the US10yr extending well beyond our downside targets of 2.183%, this is no longer ending primary wave ④  within the uptrend in progress from the July ‘12’s low of 1.377%. Instead, the extent of this decline isolates the preceding upswing of the last two years as a three wave  pattern, in which case, it now becomes  possible for yields to continue their declines during the next couple of months, even extending so that the historical lows are broken to the downside. In our latest report, we re-examine the long-term pattern of the US30yr yield decline from its historical high that formed in year-1981 at 15.190%. This suggests a break below the existing July ’12 low of 2.438% is possible but only modestly with targets to 2.190%. This would equate to a brief break into new lows for the US10yr yield towards 1.310%. More assessment is needed, but such a decline would at least synchronise with the current downside targets for the DE10yr yield that retains downside targets to 0.536%. Shorter-term, the DE10yr is expected to test 0.638% but then begin a counter-trend rally to 0.895%. COMMODITIES  –   Gold prices turned higher during the late U.S. trading session after posting some modest losses in overnight trading. The early weakness was inuenced by downbeat economic data  from China – the ination rate in September declined to 1.6% per cent year-on-year which is the lowest rate since 2010. But as the U.S. session opened, all that changed. September’s U.S. Retail Sales declined by 0.3%, the Empire State manufacturing index recorded a sharp 21 point drop to 6.2 in October and the producer price index fell by 0.1% in September. Stock markets consequently sold off, the US$ dollar declined and this was enough to pull gold higher, breaking overhead resistance at 1238.00, triggering short-covering in the  process to a high of 1249.75. Prices trimmed those gains late on, to 1240.00 but from an Elliott Wave perspective, the high at 1249.75 lies within the boundaries for the completion of a counter-trend upswing that began from the recent low of 1182.90. But this does represent a maximum in order to maintain a more immediate downtrend sequence that began from the July high of 1345.30. Should gold otherwise extend higher, it would signal a continued advance towards 1307.45+/- as part of a multi-year descending triangle pattern that began a corrective upswing from the June ’13 low of 1180.04. Silver is key to watch for any sign that current strength would extend in this manner – but at the moment, it remains weak and still underperforming gold with the ratio currently trading at 71.14. Silver spike briey higher during Wednesday’s session to 17.82 but could not break any meaningful overhead resistance. It pulled back on the close to 17.42. Meanwhile, Crude Oil continued lower as latest report of rising U.S. production and increasing supplies depressed markets amidst the stock market sell-off. A session low traded to 80.01, a two-year low but mostly in line with our recent forecasts. This ended a 3 rd   wave low within the larger ve wave impulse decline in progress from the  Aug.’13 high of 112.24. A 4 th  wave corrective upswing can now begin and last the next few weeks – upside potential to 89.62 prior to a continuation lower into year-end targets between 77.28+/-, max. 70.43+/-. *** THE ELLIOTT WAVE PRINCIPLE 2  WaveTrack International GmbH  Kanalstr. 14 80538 Munich Germany Phone: +49 (0)89-21 02 07 11 Fax: +49 (0)89-92 18 52 45 E-Mail: services@wavetrack.com www.wavetrack.com  « »       »   g 1 S & p 500 – Daily - Count #1 EW-ANALYSIS  – This daily chart depicts cycle wave C that began from the Oct.’11 low of 1074.77. It is unfolding into a ve wave expanding-impulse sequence, subdividing into primary degree, ① - ② - ③ - ④ - ⑤ . Wave ③  that began its advance from the Nov.’11 low of 1158.67 recently completed its 3 rd  wave, labelled intermediate wave (3), at the mid-September high of 2019.26. Intermediate wave (4) is now in downward progress and is projected to an idealised downside area at 1690.00+/-, derived by a b. 38.2% retracement of wave (3). This counter-trend decline is modelled around a developing zig zag pattern labelled a-b-c in minor degree. Cutting this 2019.26-1689.80 range by a b. 61.8% ratio, a ‘golden-section’ cut projects interim support levels to 1808.84+/- for the nalisation of minor wave a. This level could be exceeded but this would then ordinarily allow a deeper upswing for minor wave b. S & P 500 – DAILY -  COUNT #1 « »       »   THE ELLIOTT WAVE PRINCIPLE 3  WaveTrack International GmbH  Kanalstr. 14 80538 Munich Germany Phone: +49 (0)89-21 02 07 11 Fax: +49 (0)89-92 18 52 45 E-Mail: services@wavetrack.com www.wavetrack.com  « »       »   g 2 S & p 500 – 360 Mins. - Count #1 Intermediate wave (4) declines from the mid-Sep.’14 high of 2019.26 continue to work lower. The idealised pattern is expected to unfold into a single zig zag labelled a-b-c in minor degree with ultimate downside targets to 1689.80 and interim levels for minor wave a. towards 1808.84. Minor wave a. must subdivide into a smaller ve wave impulse pattern, and its initial decline can be seen unfolding into a series of step-like 1-2’s, three in total. Last Thursday’s decline from the high of 1970.36 began what we term as the ‘price-expansion’ phase, the 3 rd -of-3 rd -of-3 rd  wave sequence, a necessary function that develops within a developing expanding-impulse pattern. This is itself subdividing into a smaller ve wave pattern and we expect it to complete soon with one more dip towards target levels of 1820.00+/- but then begin a counter-trend rally, heading back to the 1880.00+/- level, the exact levels are dependent on the current 3 rd  wave low. Extending the 1-2-1-2-1-2 sequence by a b. 161.8% ratio projects a potential completion for minor wave a. at lower levels at 1784.21+/-. S & P 500 – 360 MINS. -  COUNT #1 « »       »   THE ELLIOTT WAVE PRINCIPLE 4  WaveTrack International GmbH  Kanalstr. 14 80538 Munich Germany Phone: +49 (0)89-21 02 07 11 Fax: +49 (0)89-92 18 52 45 E-Mail: services@wavetrack.com www.wavetrack.com  « »       »
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