Saturday, May 11, 2019

STI Analysis -- the next peak and trough ? (46)

Continued from STI Analysis -- the next peak and trough ? (45)

By now it should not be in doubt that global markets are in a state of correction.  From Elliott wave perspective correction is not just an opportunity to bargain hunt or accumulate but also a state whereby possibilities could be eliminated or firmed up based on wave count rules.  The present STI correction is an opportunity to re-examine all the possible wave counts in the past to determine their validity.

This is the case whereby 2955.68 is considered Primary wave 2 of Cycle wave 3 of the SuperCycle wave 3.  With the latest development of STI hitting 3415.18 before correction and a low of 3253.88 was achieved so far, this has resulted in the Elliott wave calculation of the various degrees to be as shown.

In this wave count, STI is in Minor wave 4 correction and could be done so at 3253.88.  There after shall resume the climb to complete Minor wave 5 or Intermediate wave 1.  From the calculated data this look possible but there are some doubts to it.  Firstly, to achieve an in-sync to the Intermediate degree generated data, the only option is for Minor wave 5 to be extended.  Wave 5 extension is not a rare case as in wave 1 extension but is least common than a wave 3 extension.  So far, not many cases of wave 5 extension have been observed.  The Minor degree could also have a normal wave count without any wave extension but that could end up causing data divergence with higher (Intermediate) degree.

Above indicates Intermediate wave 3 having a length shorter than Intermediate wave 4 which is an invalid EW structure.  Another doubt is the time frame to complete the whole of Minor degree appears to be over-stretched now.  Thus for STI-0 wave count to remain valid, based on current development, the margin of error or invalidity has narrowed down severely.  It has raised the possibility of this wave count to be incorrect after all.

This is the wave count in which 2993.42 is Primary wave 2 and STI is in Minor wave 3.  The correction currently is just the sub-level wave correction for Minor wave 3 (Minute degree).

The possibility of invalidating this wave count has risen as times go by.  Though there isn't an't any EW rules violation, the time frame has over-stretched for a Minor degree structure.

While doubts have risen for both STI0 & STI1 to be remained valid, other possibilities have strengthen their case to be valid.  If both STI-0 & STI-1 become invalid wave count, this means the SupeCycle wave count has to be recounted.

Above is the data of STI starting from 1980 till 2017.  The red-colored labeled indicating presently STI is in SuperCycle wave 3.  This is the basis for which STI-0 & STI-1 are being generated.  Should STI0 & STI1 to be invalid, the SuperCycle recount could turn out to be the one in green color.  The green-colored differs from the red-colored in that the 2009 trough is the end of a previous SuperCycle wave 5 as compared to being SuperCycle wave 2.  The new SuperCycle wave 1 completed in 2015 at 3549.85 and SuperCycle wave 2 completed in 2016 at 2528.44.  STI is in SuperCycle wave 3 now.

Based on the new SuperCycle wave count, the following is being generated by the Degree Calculator.

Note the value of Intermediate wave 1 (3446.133 generated vs 3415.18 actual).  This does make strong case for this wave count to be valid.  Moreover, in past analysis was mentioned HSI is in Intermediate wave 2 correction and STI should not be far away from that.

The above is the generated data after adjusting Intermediate wave 1 to 3415.18.  From 2955.68 to 3415.18, a 5-wave could be mapped out as followed.

From the generated data, a wave 4 overlaps wave 1 rule violation occurs but if it is a diagonal wave, the rule is acceptable and in this case it is a leading diagonal.  From the generated data, this wave count does look valid plus the time frame factor is also appropriate for Intermediate degree.  This scenario at the moment shall be listed as possible case -- STI-2.  Should this is a valid case, the thing to look at is Intermediate wave 2 value.  Obviously, the current correction has not dropped deep enough and probably 3253.88 is just 1/3 of the whole Intermediate wave 2 (Minor wave A).  A rebound going forward shall be Minor wave B follows by another drop to around the generated value above (3112.08) shall complete Minor wave C or Intermediate wave 2.  So, better prepared for some more correction to come.  One factor that raise the possibility of this case is the duration for which SuperCycle wave 2 has completed.  It is too short (less than a year) for a degree like SuperCycle.

Should STI2 is invalid due to the time factor for SuperCycle wave 2, this has raised the possibility of the extreme negative case.  This shall label as STI-N.

This is the extreme negative scenario, the SuperCycle wave count for this case is almost the same as the green-colored STI-2 case.  The only difference is SuperCycle wave 2 correction has not ended at 2528.44 but instead that is the 1/3 point of the SuperCycle wave 2 (Cycle wave A).  STI is now in the 2/3 point of the SuperCycle wave 2 (Cycle wave B) as shown in the figure below.  There after shall be the final drop of SuperCycle wave 2.  STI-N is STI is at SuperCycle wave 2 correction.

From the low of 2955.68 till 3415.18, there appears to be zig-zag like rather than the typical impulse.  As zig-zag in an upward can only appear in correction phase (wave B), this makes the case of STI-N to be a possibility.  In this wave count, STI still in the anti-rally wave B of SuperCycle wave 2.

Wave B can rise as much as 138.2% of wave A and the above shows the possible upper limit for wave B of  the STI-N case.  Should STI able to breakout and move above 3940.029 then STI-N shall be considered invalid.  Meanwhile for the time being, STI-N, the extreme negative case is a possibility.  This is the case probably majority would not want it to be true as the implication is majority will be going to lose money in the stock market again.  The other implication is non-financial related though.  As performance of stock market is strongly correlated to the nation's economy.  To be in a SuperCycle wave 2 since 2015 meaning the health of the nation's economy is definitely not doing well.  How a nation grows its economy is dependable on the policies by the Government of the day.  To be in SuperCycle wave 2 since 2015 also implies that the Government of the day which 70% of the nation endorsed actually fail in its task.  Something probably the 70% of the nation and the Government of the day will refuse to acknowledged due to pride.  However, if it eventually turns out to be in this case, data will not lie.

US stock market is at its last phase of a SuperCycle wave 3 meaning when its commence on SuperCycle wave 4, the nation shall be in recession and that will have impact on Singapore economy.  China stock market has just ended a SuperCycle correction and on a SuperCycle impulse wave count.  However, it will eventually enter into a Cycle degree correction meaning the pull back in its economy will also affect Singapore economy.  It is only when US stock market commence on SuperCycle wave 5 and China stock market resumes on its Cycle wave impulse count then probably can see STI finally end the SuperCycle wave 2 for this STI-N case.

To summarize, STI-0 & STI-1 cases have risen in possibilities of them becoming invalid wave count due to time frame factor.  Another 2 possible wave counts, STI-2 and STI-N on the other hand have emerged due to possibilities rises.  Between STI-2 and STI-N due to their contradicting nature, only 1 is eventually correct and STI 3940 could be the critical level to decide on it.