Tuesday, February 5, 2019

STI Analysis -- Recap 2018 & Looking Ahead 2019

Continued from STI Analysis -- the next peak and trough ? (38)

The 'STI Analysis -- the next peak and trough ?' went until 38 series since start in January 2018, STI Analysis -- the next peak and trough ?.  Its about time to do a recap of what were being blogged so far and what to expect in 2019.


The 1st series started off by looking at past history in search of a pattern to determine when the next peak and trough going to happen.  In the 2nd edition and to reproduce here a pattern was found to explain for the next possible peak and trough.

The pattern showed that since 1984, peak-to-peak appeared in either 12 or 11 years time frame while similarly, trough-to-trough also occurred in the same fashion.  As such, the next peak could either be 11 or 12 years away from the last peak in 2007.  That ends up in either 2018 or 2019.  2018 has gone past and STI did hit a year high of 3641.65 in May but that should not be the peak we are looking for as if that is the case, by now, the economy should or near to enter a recession or crisis level.  Thus, that left 2019 to be the possible of the last STI peak before another economic crisis kicks in.  If that is the case, the trough as described in the picture above, shall be in 2021.  In doing so, the sequence is a 12-11-12 (peak-to-peak and trough-to-trough) pattern since 1984.

Next came the correction at end of January, the correction that lasted almost for rest of the year until Oct 2018 when STI hits the bottom at 2955.68.  In the 4th edition in 10th Feb 2018, when STI closed 3377.24 (9th Feb 2018), based on Elliott Wave analysis, the possible correction could land in 2950.  Believed at that point of time, not many people would believe STI going forward could hit until there from a 3377 level, that is a of almost 430 points or 12.6% drop.  Well, that is Elliott Wave, absolute number is not important as it is all about relative value.  After 8 months, STI reached the value that was projected.  That practically sum up the key analysis in 2018.

Looking Ahead

 Now STI has affirmed hitting the end of correction at 2955.68 on Oct 2018, that is Cycle degree wave 2 (S3C2) of the SuperCycle degree wave 3 (which was mapped out in the past analysis).  What STI is in now is the Cycle degree wave 3 of the SuperCycle degree wave 3.  Technically, the next peak before financial crisis kicks in shall be SuperCycle degree wave 3 but at the moment it seems far stretch and running out of time (should said peak is to happen in 2019).  Thus, the alternate view is end of Cycle degree wave 3 could be the peak before next financial crisis kicks in.  Looking at where STI is now (Cycle degree wave 3) and the time frame (2019), this possibility remains high as of now.  Next, shall look at from Elliott Wave perspective for this possibility.  This time, the analysis will be using the Elliott Wave Calculator that I have developed recently.

Above snapshot is the 3rd feature of the Elliott Wave Calculator -- Degree Calculator.  This is one part of the Degree Calculator as by just inputting value of one of the degree (Minor, Intermediate, Primary, Cycle and SuperCycle), the rest of the degree values will be generated based on Elliott Wave principle.  Taking 1455.47, the low in Mar 2009, the end of of the correction for 2008 GFC as wave 0 of Cycle degree, and Cycle wave 1 at 3549.85 (in 2015) and 3313.61 (in 2010), together with 2528.44 (in 2016) as Cycle wave 2, Cycle wave 3 value was generated.  Now the question is should 3549.85 or 3313.61 be considered as Cycle wave 1 ?  Looking at the Primary degree generated value from the above 2 snapshots and with its (wave 1 - wave 4 values) being filled in according to the actual figure from the chart, it appears that 3313.61 should be considered as Cycle wave 1 instead of 3549.85.  This is because, the Golden Ratio for 3313.61 case for the Primary degree wave is closer to the standard 0.618 : 0.382 (shown above in the snapshot).  This Golden Ratio value is the essence of Elliott Wave relationship among its waves.  So from 3313.61 to 2528.44 STI undergoes a Cycle degree wave 2 correction despite hitting a high of 3549.85 (a value higher than peak of wave 1).  This is possible for Elliott Wave correction in which wave B retraces more than wave A.

The above is the snapshot from the 2nd feature of the Elliott Wave Calculator -- Correction Calculator, to generate the various possible Fibonacci ratio value for an Elliott Wave correction that consists of more than 20 patterns.  Taking 3313.61 and 2521.95 (refer to STI chart for this point) as wave 5 and wave A value for the correction, the list of possibles wave B retracement are listed and at 3549.85, that translates to a retracement of 129.8%.  This value is very close to the 123.6% expected for an Expanded Flat correction pattern.  Next, the value of 2528.44 (the bottom in 2016) is almost 100% in length with reference to wave AB.  That is an acceptable range for wave C in the case of an Expanded Flat pattern.  From pattern wise, a clear 3-3-5 structure can also be seen from 3313.61 to 3549.85 to 2528.44, the standard structure for a Flat correction pattern.

Thus, we do have sufficient evidences to suggest Cycle degree wave 1 (S3C1) ends at 3313.61 and Cycle degree wave 2 ends at 2528.44.

The above snapshot is the 3rd feature inside the Elliott Wave Calculator -- Degree Calculator.  This is another part of the Degree Calculator in which by inputting value for the Main degree (wave 1 - 5), the sub level degree of wave 1, wave 3 and wave 5 can be generated (in the form of wave 1, 2, 3, 4, 5).  Using 1455.47, the low occurred in Mar 2009, the end of the correction for the 2008 GFC, 3313.61 being the wave 1 value and 2528.44 being the wave 2 value, the subsequent wave 3, 4 and 5 values were generated.  The of interest at the moment is the Cycle degree wave 3 (S3C3) value which was 5534.911 as shown in the above snapshot.  From 2528.44 to 5534.911, this is Cycle degree wave 3 and at sub-level it is the Primary degree and highlights from the above snapshot also.  By filling in those actual figures that have happened overwriting the generated one (2528.44, 3611.69 and 2955.68), the wave 3 - 4 values were generated as shown.  Again 3611.69 was taken as peak of Primary degree wave 1 (S3C3P1) instead of 3641.65 mainly due to the Golden Ratio relationship.  The interest part highlighted in blue is the Primary degree wave 3 (S3C3P3), 5387.986 as was generated.

Again using the Degree Calculator with wave 0 being 2955.68 and wave 5 at 5387.986, the in between wave 1, 2, 3 and 4 values were generated as shown in the above snapshot (one of the capability of the Elliott Wave Calculator -- count backward).  The sub-level of Primary degree is Intermediate degree and the interest part as of now is the Intermediate wave 1 of Primary degree wave 1.  Intermediate degree wave 1 (S3C3P3I1) was calculated to be 3707.32 and the in between values in the sub wave 1 (Minor degree) after filling in the actual happened value (2955.68, 3192.88 and 2993.42 -- Minor 0, 1 and 2), was generated for Minor wave 3 and 4.  The interest part here is the Minor wave 3 (S3C3P3I1M3) (3601.514).

The above snapshot is the S3C3P3I1M3 calculation.  A recent peak occurred at 3250.27 after STI hit 2993.42 toward end of 2018.  Taking that into account as S3C3P3I1M3m1, the Minute degree wave 1 of the Minor wave 1,  the rest of the Minute wave 2, 3, and 4 were generated.  The sub-level from the above snapshot is the Minuette degree for each of the Minor wave.  Sub wave 1 from above is the Minuette degree 5-waves for S3C3P3I1M3m1 (2993.42 - 3250.27).  Let see those generated value is how close to what has happened past few days.  As this is Minuette degree, the wave structure can only be seen from hourly chart as shown below.

From the above hourly chart, a 5-wave can be mapped out from 2993.42 to 3250.27 and how this compared to the generated values by the Elliott Wave Calculator.

S3C3P3I1M3m1mm1 : 3102.85 (Actual) vs 3108.29 (Calculated) -- difference +0.18%
S3C3P3I1M3m1mm2 : 3019.02 (Actual) vs 3037.30 (Calculated) -- difference +0.61%
S3C3P3I1M3m1mm3 : 3209.12 (Actual) vs 3223.161 (Calculated) -- difference +0.44%
S3C3P3I1M3m1mm4 : 3173.46 (Actual) vs 3152.153 (Calculated) -- difference -0.67%

All differences came in +/- less than 1% and these values were obtained from top-down approach breaking down the higher Cycle degree into Primary, Intermediate, Minor, Minute and Minuette.  To get generated results so close to the actual happened values only signifies the analysis so far is on the right track. 

Whether S3C3P3I1M3m2 going to end (either still ongoing or already done at 3153) at 3134.138, S3C3P3I1M3 at 3601.514, S3C3P3I1 at 3707.32, S3C3P3 at 5387.986 or the ultimate S3C3 at 5534.911 as generated by the Elliott Wave Calculator, we just have to find out in 2019.  

In case, most still can't believe STI can hit 5534.911 given now it is only at 3184.56, that is 2350.351 points or 73.8% away, just have to remember Elliott Wave is all about relativity and not absolute.  Given the correct time frame for the respective wave degree it will reach its destination regardless of upside or downside.

Added 15th Feb 2019

Modification was done to the Degree Calculator so that at lower degree level, it is able to display either sub-wave 1, 3 or 5 instead just sub-wave 1 in the initial version.  This modification gives a lot of flexibility, clarity and ease in analyzing.  Below is the new snapshot after the modification.

As shown, the Degree Calculator generated Minor degree wave 1 to be 3256.345 and after modifying to 3192.88 as M1 and 2993.42 as M2, the recalculated value is shown below.

The Intermediate degree wave 1, S3C3P3I1 was 3627.968 as compared to earlier analysis of 3707.32 as the new calculation caters for a wave 3 extension (as shown in the above snapshot) for the Intermediate degree.  Other than that, the rest of the calculated value like S3C3P3I1M3 which is ongoing is a first iteration value from the Degree Calculator, the precision could be within +/- 2.5% of the eventual actual figure.  However, looking at present STI value, the M3 = 3479.897 (provided no wave 3 extension) doesn't seem to be impossible to reach within 1 month (a time frame for Minor degree wave).  However, should a wave 3 extension going to happen in M3, that calculated value shall be higher as shown below.

The "W3 Ext" checkbox is ticked and the recalculated value is 3537.317.  Whichever is the case or any other Fibonacci ratio value for M3, one thing is clear is the trend of STI.

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