Sunday, June 2, 2019

STI Analysis -- the next peak and trough ? (47)

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

In the previous analysis, 2 scenarios were mentioned STI-2 and STI-N.

STI-2 describes STI has completed an Intermediate degree wave 1 forming a leading diagonal pattern.  The Elliott Wave Degree Calculator as shown in the last analysis is reproduced as followed

An interesting point is the calculated value of Intermediate wave 2 is 3112.08 and STI hit an intra-day low of 3110.51 on 31st May 2019.  So is 3110.51 the bottom of the current correction ?  From data perspective it does appear so but if looks into the pattern of the Intermediate wave 2 correction, it is a different story.

Pattern wise, no sign of a A-B-C structure was observed and as such, it is impossible to call for a bottom at the moment.  There might be a rebound coming to form the B wave before resume the last leg wave C.  Some points to note on current correction.

1. Last year the Primary wave 2 correction lasted from January to October, a 10-month duration.  While Intermediate degree is the sub-level of Primary degree, the duration of the correction should persist for considerable duration ranging from weeks to months.  It should not exceed the duration of the Primary wave 2 correction seen last year (10-month) but it is also unlikely to end soon.  Since hitting the high of 3415.18 on 29th Apr 2019, it is already 1 month into correction.  With no sign of wave B observed yet, better prepare for few months more for the correction to end.

2. There is no confirmation of wave A has completed yet despite rebound from 3110.51 and that is a worrying sign of this wave count going to be invalidated.  In general wave 2 correction can fall to 78.6% Fibonacci Retracement which is at 3052 and if STI continues the descend till that level without a B wave, a very high probability that this wave count going to be invalidated.

Should STI fail to hold at 3052, this very likely indicate STI-2 going to be invalidated and unless another positive wave count surface, STI going to fall back to the STI-N scenario.  This scenario indicates that the high in 2015 was SuperCycle wave 1 and from then till now STI is in SuperCycle wave 2 correction and there will be more downside to come going forward.

The above wave count is slightly different from the previous analysis.  In previous analysis, it is said that STI still in the B wave of the SuperCycle wave 2 and possible still more upside with a maximum target of 3940.029.  However, if STI going forward fail to hold at 3052, the wave count will be as above.  In this wave count, the B wave of SuperCycle wave 2 has completed in April 2018 and now it is in the C wave.  From the look of the pattern, this could develop into a Flat pattern (3-3-5).  The 5-wave impulse/diagonal of the C wave has completed wave 1 and 2.  The current drop is the wave 3.  This wave 3 will not just breakdown at 3052, it will also move lower than last year low of 2955.68.  Taking a typical wave 2 to be 61.8% Fibonacci Retracement of wave 1, the downside for SuperCycle wave 2 could be around the region 2250.  

The above is the snapshot of the Fibonacci Calculator generating the 5-wave impulse for wave C.  Unless wave C is a diagonal else the end point of wave C as indicating above is 2165.294.  Thus, 2250 is not an impossible target if STI-N is the correct wave count.

At the moment, there is no evidence of invalidating either STI-2 or STI-N scenarios so better prepare for both the scenarios.  The immediate level to look out for is 3052, a level could provide early indication of whether STI-2 still valid.