Previously, with only chart started from 1987 and given that 1987 was the big market crash, the famous Black Monday, my assumption was that was the bottom of an Elliott Wave cycle. Now with chart data started from 1980, it was observed that the 1986 low, the market low after the 1985 recession, was even lower than 1987 low. Coupling with the fact that the 1982 low was higher than 1986 low, it pretty much look like the Elliott Wave cycle trough was 1986 instead of 1987. Despite that, the Elliott Wave count still remain the same except wave 1 is 1987 instead of 1989 and wave 2 is 1987 instead of 1990. As such, from 1987 till 1994 was wave 3. Why 1986 as an Elliott Wave cycle trough make more sense ? 1985 was Singapore first recession since independence in 1965 and as such the market reaction to the recession (1986) is a very high possibility of being trough. High possibility as I still do not have data of STI since day 1 in 1966 till 1980 to confirm. Moreover, there were global stock markets crash in the 1962 and 1973-1974 (refer here) prior to the 1986, hence given that time frame, it is more than enough to fit in 2 Elliott Wave cycle from 1966 (the year Singapore stock market started) to 1986.
While the overall Elliott Wave count till present still remain the same, that is STI is still within the Elliott Wave cycle which started in 2009, the 1986 trough now bring some more possibilities if we do a time frame Fibonacci sequence analysis or pattern mapping.
Pattern Mapping
First EW cycle : 1986 - 1998 (12 years) -- previously was 1987 - 1998 (11 years)
Second EW cycle : 1998 - 2009 (11 years)
Third EW cycle : 2009 - 2020 (11 years) / 2021 (12 years) ???
Peak-to-Peak from 1 EW cycle to another : 11 - 12 years
Trough-to-Trough from 1 EW cycle to another : 11 - 12 years
There is even a more interesting findings if I just look at the year of peak and trough and the below figure illustrates that.
Pattern Mapping
First EW cycle : 1986 - 1998 (12 years) -- previously was 1987 - 1998 (11 years)
Second EW cycle : 1998 - 2009 (11 years)
Third EW cycle : 2009 - 2020 (11 years) / 2021 (12 years) ???
Peak-to-Peak from 1 EW cycle to another : 11 - 12 years
Trough-to-Trough from 1 EW cycle to another : 11 - 12 years
There is even a more interesting findings if I just look at the year of peak and trough and the below figure illustrates that.
1) The duration from peak to trough was consistently 2 years
2) The duration of trough to peak is having a pattern of 10, 9
3) The duration of peak to peak is having a pattern of 12, 11
4) The duration of trough to trough is having a pattern of 12, 11
Pattern 1 (red)
1) Peak-to-Peak duration takes the pattern form of 12,11,11 then the next peak is 2018
2) Peak-to-Trough duration consistent at 2 years then the next trough will be 2020
3) Trough-to-Peak duration takes the patter form of 10,9,9 gives next peak at 2018, matches point 1
4) With points 1 to 3, the next trough will be at 2020 and that give the trough-to-trough pattern of 12,11,11
Pattern 2 (green)
1) Peak-to-Peak takes the pattern form of 12,11,12 and that will bring us the next peak to be 2019
2) Peak-to-Trough pattern of 2,2,2,2 will bring us the next trough to be at 2021 with 2019 as the peak
3) Trough-to-Peak pattern of 10,9,10 will bring us the next peak to be 2019, matches point 1
4) With points 1 to 3, the next trough will be at 2021 and that gives us the Trough-to-Trough pattern of 12,9,12
From consistent pattern point of view, we derive at 2 possible scenario for the next peak and trough. Given the Elliott Wave analysis previously that we are in wave 3 of the Elliott Wave cycle, the time frame for the above 2 scenarios to happen remain highly possible. That is to say we could have a recession around the period 2019 - 2020.
Fibonacci Sequence
Previously, I used 1985 as the starting point to test it out on Fibonacci sequence but now given that 1986 was a trough, I tried it out with the Fibonacci sequence to see anything interesting relationship can be found.
1986 + 1 = 1987 -- Famous Black Monday global market crash
1986 + 2 = 1988 -- ???
1986 + 3 = 1989 -- ???
1986 + 5 = 1991 -- ???
1986 + 8 = 1994 -- ???
1986 + 13 = 1999 -- dotcom high
1986 + 21 = 2007 -- peak before Global Financial Crisis
1986 + 34 = 2020 -- a possible market trough in my analysis
While not all the Fibonacci sequence gives us significant stock market events, some of the significant one were linked to it. The year 2020 pop up and that give us a very interesting point there.
Given all the analysis so far, the year 2018 - 2021 all point to some significant market events (peak, trough, recession, etc) going to take place. With an engineering mindset, I decide to do some reverse engineering work, that is using one of those years as starting point and do a minus Fibonacci sequence to see what other significant market events happen.
2018 - 1 = 2017 -- ???
2018 - 2 = 2016 -- market low after the high in 2015
2018 - 3 = 2015 -- market high before the China fear kicked in
2018 - 5 = 2013 -- market sell off due to fear of US Fed tapering
2018 - 8 = 2010 -- ???
2018 - 13 = 2005 -- ???
2018 - 21 = 1997 -- Asian Financial Crisis started
2018 - 34 = 1984 -- market peak before the recession in 1985
2019 - 1 = 2018 -- one of the possible market peak in my analysis
2019 - 2 = 2017 -- ???
2019 - 3 = 2016 -- market low after the high in 2015
2019 - 5 = 2014 -- ???
2019 - 8 = 2011 -- Japanese tsunami that triggered global markets sell off
2019 - 13 = 2006 -- ???
2019 - 21 = 1998 -- Asian Financial Crisis trough
2019 - 34 = 1985 -- Singapore first recession after post-independence
2020 - 1 = 2019 -- one of the possible market peak or recession year in my analysis
2020 - 2 = 2018 -- one of the possible market peak in my analysis
2020 - 3 = 2017 -- ???
2020 - 5 = 2015 -- market high before the China fear kicked in
2020 - 8 = 2012 -- ???
2020 - 13 = 2007 -- market peak before Global Financial Crisis
2020 - 21 = 1999 -- dotcom high
2020 - 34 = 1986 -- market trough due to 1985 recession
2021 - 1 = 2020 -- one of the possible recession year in my analysis
2021 - 2 = 2019 -- one of the possible market peak or recession year in my analysis
2021 - 3 = 2018 -- one of the possible market peak in my analysis
2021 - 5 = 2016 -- market low after the high in 2015
2021 - 8 = 2013 -- market sell off due to fear of US Fed tapering
2021 - 13 = 2008 -- Singapore recession year due to Global Financial Crisis
2021 - 21 = 2000 -- dotcom high
2021 - 34 = 1987 -- ???
While not able to find some consistency in the reversing engineering work, it did however highlight some important/significant events that was linked by the Fibonacci sequence.
To sum up, based on the the data that I have (1980 till present), the analysis so far pointing to we are still in the Elliott Wave cycle that was started in 2009 and some significant events should be happening in the year 2018 - 2021 with a high possibility that the current Elliott Wave cycle could be ending either in 2019 or 2020, that is a peak at either 2018 or 2019, a recession year either in 2019 or 2020 and a trough at either 2020 or 2021.
I have heard a lot of analysis, comments and reports saying current bull market is ageing or overstretched. Well if you take the scenario that 1987 is AFC, 2007 is GFC so on a 10-year period 2017 should be another crisis then saying current bull market is ageing or overstretched might be correct. However, from my analysis unfortunately, the current bull market is yet to reach the ageing or over-stretched stage. It is only when in wave 5 then we can conclude we are at the end of the bull market.
Further analysis will be carried out if I have data from 1966 to 1980.
Further analysis will be carried out if I have data from 1966 to 1980.
