Continued from STI Analysis -- the next peak and trough ? (102)
FTSE STI closed at 3,413.69 for the week ended 25th Mar 2022. With past 3 weeks of advanced after dipping to a low of 3,128.06 due to the concern of the Russia-Ukraine war. Such a movement probably drew more optimism from investors.
Magenta -- STI Positive
As mentioned in previous analysis, for this wave count, STI is doing a leading diagonal for the Intermediate wave ((v)) of Primary wave 1. The low of 3,128.06 is confirmed as the Minor wave (iv) of the leading diagonal. The mostly observed characteristic of the leading diagonal is for wave 4 ot overlap wave 1 happened in this case as shown in the above chart. The upward movement since the rebound from 3,128.06 is none other than the Minor wave (v) of the Intermediate wave ((v)). As calculated from the Fibonacci Calculator weeks ago, the expected target is around the 3,550 level, which is like 130 to 140 points from now. Looking at the time frame and the expected target, Minor wave (v) probably has another a month to reach that target (or beyond).
That was the good and optimistic view. However, what's following that shall not be good news especially for investors who are jumping in riding the hype of the optimism of the stock market. After Primary wave 1 is the worrying Primary wave 2 correction, traditionally a deep one. Primary wave 1 started in March 2020 and it is into the 2nd year. Primary wave 2 might not take 2 years to complete but the duration is notable to be in term of year or best case few months (at least 6 months for this case to make the wave count to be more balance).
The above is the better of the not so good news. The worst of the not so good news is if this wave count is found to be incorrect, meaning the STI Negative scenario shall be the one, the correction shall be even be deeper and longer. Thus, those who get caught at the high, better be mentally prepared.
Green -- STI Negative / Orange -- STI Negative
As much as the STI Positive scenario looks pretty convincing to be the correct one, the 2 STI Negative scenarios have yet to be invalidated meaning both of them are at present a silent killer to the stock market. Just look back to the year 2016 to 2018 when STI rebound from low and majority were talking about a new bull market. Then the wave count from 2016 to 2018 was quite similar to Mar 2020 till present, the 5 waves impulses were almost like valid. Then came the US-China trade war and followed by the Covid-19 pandemic. That invalidated the so-called new bull market and that wave count from 2016 to 2018 was just the wave B of the corrective wave.
Until there are rules violation to invalidate the 2 STI Negative wave count, both of them are like a silent killer in the backdrop.
The above is the overall picture of all the possible scenario, both the positive and negative looking at SuperCycle degree perspective.
Something to ponder about. Serious financial crisis that affected globally looking at history if not all but majority are man made or human being induced. The 1920 Great Depression, the 1987 Asian Financial crisis and the 2008 US sub-prime global financial crisis were probably the 3 worse financial crisis since the turn of the 20th century. All of them unfortunately were man made or human being induced. Since the 2008 GFC till now, the world has yet to undergo another man man or human being induced globally affected financial crisis and the time frame is like pointing another one is coming round the corner.
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