Sunday, February 26, 2023

STI Analysis -- the next peak and trough ? (114)

Continued from STI Analysis -- the next peak and trough ? (113)

FTSE STI closed 3,282.30 for the week ended 24th February 2023, the third consecutive week of decline since hitting the peak of 3,408.19 on 30th January 2023.

Magenta -- STI Positive

From the chart doesn't look bright.  The decline for the past 3 weeks could be the start of Intermediate wave ((c)) of Primary wave 2 or Intermediate wave ((a)) of Primary wave 1.  The difference between these 2 cases is for the later, it will have more to drop.  However, there is a very slight possibility that the dip for the past 3 weeks is just a minor pull back in the Minor degree meaning for both the cases short term wise, there is still upside (limited only).  

Green -- STI Negative

For this scenario, pretty straight forward, the downside remains intact and given that it is still the Primary wave A of Cycle wave (C), there will be more downside to come and the worst still quite far away. 

The above is the overall picture of the Elliott Wave count for both the positive and negative scenario in the SuperCycle, Cycle and Primary degree perspective.


Won't be surprise this economy situation still yet to be on the mind of Government and economists.  This is not because it will not be happening but rather these people are just so data oriented that they basically lose the instinct to smell out possible risk.  Stagflation consists of 3 thorny components -- inflation, high unemployment rate and slow or stall in economic growth.  At the moment, apart from inflation, the other 2 components have yet to occur.  However, that doesn't mean going forward they will not be occurring.  Should global inflation continue to stay at elevated level at prolong duration leaving Central Bankers with no choice to maintain at elevated interest rate level, this could trigger the other 2 components to start.  

Japan after like 4 decades of deflation finally move out of that all thanks to global inflation.  Without the global inflation, Japan probably still suffering from deflation despite all the policies being rolled out for the past 4 decades.  Stagflation is something (can boldly said) no one has ever experienced that so far and all the knowledge are nothing but pure academic.  Even solutions to rectify that are purely theoretical too.  In deflation, Japan already suffered for the past 4 decades, stagflation shall be another of it that can last for few decades.  Should stagflation occurs eventually, whatever measures government and central bankers roll out are nothing but trial and error type.  There isn't a 10 year series of modern answer for the Government of the day to tackle stagflation, remember this !!!

While stagflation should it eventually happen is a systemic risk which can't be prevented, the impact could be lessen should one now start to prepare for it.  When wait for data to finally confirm, it will be too late already. 


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