As STI continued to search for bottom that raise the possibility of another scenario from happening apart from the Scenario 1 and 2.1 mentioned previously. Technically, the new scenario is not a new one but rather an old scenario in my past analysis. It was actually the first scenario that came to my mind when STI entered correction in February (STI Analysis -- the next peak and trough ? (IV)). I'll shall denote this as Scenario 3 now.
The blue-colored Fibonacci Retracement level is for both Scenario 1 and 2.1 in which STI is in Primary degree Wave 3 Intermediate degree Wave 4 correction. The red-colored Fibonacci Retracement level is for Scenario 3. In this scenario, STI is in Primary degree Wave 3 Intermediate degree Wave 2 correction.
I have rule out that possibility in STI Analysis -- the next peak and trough ? (VII). It was a mistake and perhaps certain degree of over confidence as there isn't any violation in that wave count to invalidate it. I should only invalidate a possible wave count only when there is violation of Elliott Wave rules. Hence, this possibility is reinstated as Scenario 3.
For Scenario 3, Intermediate Wave 1 completed at 3,611 in end January with the Minor degree wave count of 1,2,3,4,5 noted in green. As of now it is in Intermediate degree Wave 2 correction, the norm according to guideline is a 61.8% pullback which is around the 2942 level. However, a 38.2% at 3198 or 50% at 3070 pullback cannot be ruled out just that the possibility of that happening is different than the 61.8% case.
The chart above showed three yellow regions, R1, R2 and R3. Those 3 regions at the moment should be closely monitored as they hold significant meanings.
Region R1
1) 50% Fibonacci Retracement level for Scenario 1 and 2.1, possible bottom
2) 38.2% Fibonacci Retracement level for Scenario 3
Region R2
1) 61.8% Fibonacci Retracement level for Scenario 1 and 2.1 but could signal these 2 scenarios going to be invalidated. This is because Intermediate degree Wave 2 correction did an almost 61.8% Fibonacci Retracement and for Intermediate degree Wave 4 to have the same magnitude of deep correction is very very rare in Elliott Wave
2) 50% Fibonacci Retracement level for Scenario 3
Region R3
1) This is where Scenario 1 and 2.1 can be confirmed invalidate due to violation of Elliott Wave rule that wave 4 cannot overlap into wave 1.
2) 61.8% Fibonacci Retracement level for Scenario 3
Should STI turns out to be Scenario 3 rather than 1 or 2.1, this will be the best case. In Scenario 3, STI will have a full length of Intermediate degree Wave 3, 4 and 5 to go follows by Primary degree Wave 4 and 5 and that is a very huge upside. Should it be Scenario 1 or 2.1, STI will only have a bit more upside for Primary degree Wave 3 (Intermediate degree Wave 5) follows by Primary degree Wave 4 and 5. That upside is definitely much smaller than Scenario 3 before the next big correction (end of Primary degree cycle started since 2009).
Global markets have been on the selling side (apart for US at the moment) mainly due to the trades war between US and China, Europe, Mexico, Canada, India, Japan, etc. While most will use the direction of stock market to conclude on the impact of trades tension since stock market is a forward indicator of 6 to 9 months. What you see in the divergence of global markets performance is perhaps only the surface meaning. Common sense will tell you stock market can never go up or come down forever, the direction will reverse. Hence, on the surface the uptrend in US market probably tell you US has the advantages in the trades war but the underlying rational is never a good news for the long term. On the other hand, the correction for rest of the world stock markets might signal they will be hit by the trades tension but in the long term, the underlying will be a different meaning and that is not a bad news. Better know how to differentiate the difference between surface news and underlying news.
