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Wednesday, November 16, 2016

Elliott Wave Update 16 November 2016

Note the top alt count, wave [i] of 5 of (5). That implies decline then new stock market high in wave [iii] of 5 of (5).
According to Elliott Wave International (click on my links to the left to become a FREE Club Elliott Wave International member) negative sentiment is reaching extremes in a few asset classes which portends a relief rally for each eventually. Again, according to EWI via Trade-Futures Daily Sentiment Index (DSI), the Euro is at 7% bullish. The last 5 days of bond bulls has been below sub 10% (with 2 days at 4% each). Gold is sitting around 6% bullish and silver is around 12% bullish.  These extremes only suggest a relief rally in each asset class is coming near, not at what price. Wave pattern can help predict when the relief will arrive.

The stock market is not yet above 50% bulls in the DSI. One would expect that a major all-time top would occur at an even higher DSI level although the sentiment extremes can often diverge majorly from a wave three peak in a pattern because wave threes are almost always the strongest waves thus garnering the strongest DSI extreme readings. So perhaps the stock market will hit its peak in DSI and price and sentiment in all classes will hit extremes (with stocks being a bullish extreme of perhaps 70-80% DSI) at nearly the same time.

This situation would in theory lead to major reversals in stocks (down), bonds (prices up, yields down), Gold, silver (prices up) and dollar (down), Euro (up). These things usually do not all turn at the same time but you get the picture that perhaps we are reaching an inflection point.

The main concern of this blog is of course stocks since that best reflects overall social mood patterns better than any other we mentioned.  Keep an eye that perhaps that only wave [i] of 5 of [5] is peaking and that the market has many more gyrations and weeks of wave undulations to go through.
Couple of more squiggles for bonds?
Same applies for dollar. Couple of more squiggles up for now?
Gold is due for a rally. Again, a couple of more squiggles lower, then rally?  Major support is coming into play.

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