Can AI Perform Elliott Wave Analysis on STI ?

After developed the AI Trading System app, was curious can AI perform Elliott Wave analysis on historical chart to provide a pretty accurate wave count.  So, got a historical chart of STI starting from 1987 till present from Yahoo Finance.  Upload that chart image onto those AI chatbot (Copilot, Deepseek, ChatGPT, etc) and see what can they make of it, can they provide the Elliott Wave count.

The above is the STI historical chart from Yahoo Finance.  Technically, Singapore stock market started in 1966 but unfortunately, Yahoo Finance only have data from 1987 as the earliest.  Any serious implication for the missing data from 1966 to 1987 ?  Well, that difficult to affirm since we don't know during those periods, how STI behaved that could affect the wave count.  Thus, we could only do with starting point from 1987.

STI historical chart from 1987 till now. doing a top down approach, looking from SuperCycle degree of Elliott Wave, can make out the wave count of the above, obeying the rules and violations of Elliott Wave and also adhere as much as possible to the guidelines. provide also detail of the sub level Cycle and Primary degree wave count so they are inline with the SuperCycle degree count

The above is what being asked by me to each of the AI chatbot (Copilot, ChatGPT and Deepseek).  While all three are enable to give an Elliott Wave count in the SuperCycle degree from the above chart, all three responses are different from each other.  The initial response from these AI chatbot unfortunately raised doubts on the validity of the wave count.  Refer here for the detail exchange between me and ChatGPT regarding the wave count.  Was able to rebut successfully whatever the AI has suggested until I suggest my wave count to it to see whether that is valid.  Read the detail exchange and you can see that.

The above is what the wave count that I've suggested to the AI chatbot and you can read through the exchange log to see how the AI response to this wave count.  All I can say is I totally defeated AI for the Elliott Wave count for the STI.

The below is the detail description of my suggested wave count though the above labeling should be clear enough to understand.

Cycle 1 (1987 to 1993)

Normally, wave 1 is considered as impulse wave that display a sub 5-wave structure.  However, for the case of a diagonal (leading or ending), it displays a 3-wave pattern instead.  This is being labeled primary A-B-C in Cycle 1 above

Cycle 2 (1993 - 1998)

The wave 2 correction coincides with the 1997-1998 Asian Financial Crisis.  For those who have lived through those periods including me would surely recalled several important events.  From early 1990 to mid 1995, Singapore was having a stock market fever, you can easily heard auntie and uncle on the street boast about how easy to profit from stock market.  The stock market fever hit the highest in 1993 when SingTel was listed and making almost everybody can have a share of the stock.  From then on, stock market was like a bubble waiting to get burst and eventually led to the Barings Bank Collapse in 1995 and finally the 97/98 Asian Financial Crisis.  These series of events just sit well to describe the peak in 1993 and the subsequent deep correction of wave 2 till 1998.

Cycle 3 (1998 - 2007)

The recovery from 97/98 AFC was not a smooth sailing one as it soon hit another peak in 1999 and fell into Dot Com bubble burst.  The correction fell even further in 2002/2003 due to SARS pandemic and eventually recover to a fierce rally to the peak in 2007.  This fit the Cycle 3 stage with the peak in 1999 and trough in 2003 being the primary A-B-C of Cycle 3.  Another characteristic of a diagonal wave.

Cycle 4 (2007 - 2009)

What've happened from 2007 to 2009 think most would have known and no need me to get into detail.  The sharp correction again form a 3-wave pattern fit Cycle 4.

Cycle 5 (2009 - present)

This is the tricky part since the recovery of 2008 GFC in 2009.  Instead of a clear and well defined uptrend, STI went into a sideway trend till 2018.  Most people who attempt fitting Elliott Wave count would consider the 2009 as the start of a new impulse wave after the 2008 GFC.  Think it is common since the 2008 GFC is quite a major one.  However, the sideway pattern practically throw that assumption out of the window.  The sideway and complex structure can be explained as a 3-3-5 structure which form the 3-wave of the Cycle 5.  The Primary degree of the 3-3-5 structure (A-B-C) can further look into Intermediate degree as a Triple Three - Zigzag - 5-wave pattern as shown in the above diagram.  This is all agreed upon by AI too.

So going forward into 2026, STI could have a limited upside to complete Intermediate wave 3 which follows a correction for the Intermediate wave 4 before resuming to climb the final part of Intermediate wave 5 and conclude Cycle 5 of SuperCycle 1.  Alternatively, Intermediate wave 3 could have ended and STI is in the Intermediate wave 4 before resuming Intermediate wave 5.  Now, that is not the important part.  The most important, serious and deadly part is what happened after SuperCycle wave 1 ?  In Elliott Wave, SuperCycle wave 2 will follow and wave 2 in nature is a deep correction type, often retracting 61.8% - 78.2% of wave 1.  The starting value of STI in 1987 from the chart is about 800.  If assume, STI can hit 5000 to end SuperCycle 1, a 61.8% to 78.2% correction will see STI lands to between 1150 to 2400 for SuperCycle wave 2.  What's is even deadly is this is SuperCycle degree correction meaning timeframe will span multi decades.  While not expecting having the same timeframe as that of SuperCycle 1, half of that duration will be like 20 years !!!  

Note also, neither Copilot nor Deepseek initial response is what I've suggested SuperCycle wave 1 in a leading diagonal structure !!!

For those still don't quite understand how serious the SuperCycle correction is, take a look at Nikkei 225.  Nikkei 225 hit a peak of about 38,000 in 1989 and hitting the lowest point of the correction in 2009.  That is 20 years period.  Then it takes another 15 more years till 2024 to finally move above 38,000.  STI SuperCycle 2 correction could easily follow that trajectory !!!

While the above SuperCycle 1 wave count could still be invalidated depend on how STI will move to invalidate it as described by the AI chatbot, it would be wise to mentally prepare for a SuperCycle 2 correction.  Once get caught on the wrong end and you'll be done for multi decades.

STI Analysis with Ichimoku AI System -- Part 4

Continue from STI Analysis with Ichimoku AI System -- Part 3

Before the analysis, let it known that the app has been upgraded to v2.4 since the last analysis.  Features were added to be able to fine tune the AI model's parameters to improve the prediction capability.  Another is ability to switch between various final prediction strength.

After hitting an all time high of 4,005.18 on 28th Mar 2025, STI fell to an intra-day low of 3,372.38 on 9th Apr 2025 and rebound from there to close 3,823.78 on 25th Apr 2025.  That is a recovery of 451.4 points or 13.38%.  Naturally, people would suggest a buy.  Is that really so ?

Above is the AI model prediction for any buy signals since the sell off.  Like seen from the snapshot, not a single buy signal being predicted despite the 13.38% rebound.  The last buy signal predicted was Aug 2024. The predicted probability for the buy signal still largely stay below that of sell and hold signals.  Why ?

Above is the re-prediction by adding in other technical indicators (RSI, ADX, MACD, BollingerBand, EMA and OBV) along Ichimoku signals.  It is very common people use several technical indicators together to provide better confirmation of signals as different technical indicator focuses on different aspect of technical analysis, some on trending and some on momentum and so on.  Unfortunately, there is still not a single buy signal predicted despite the 13.38% rebound.  We can see more buy signals generated (both strong and weak) compared with just Ichimoku signals only but still not a single buy signals since the rebound.  The only bright side is the probability of sell signal has lowered than in previous case but the probability of buy signal still lying below that of the sell and hold signals.  Why ?

Above is the prediction from the AI model after making several tweaks to it.  Model's parameters were tune to focus solely on precision and recall in making prediction.  The buy threshold was lowed to the minimum to relax the condition for the model to predict buy signal and the prediction strength is set to weakest so that any slight buy predicted can be caught.  Still, from the snapshot, not a single buy signal despite the 13.84% rebound despite the model now is capturing more buy signals than the previous 2 cases.  This is a way to force the model to predict a buy signal which should not be encouraged as this will introduce unwanted noise to the model to train and highly predict the incorrect outcome.  The buy signal probability is increasing compared to the previous 2 predictions but still below that of the sell and hold signals.

From human eye the strong rebound clearly entice into thinking of buy signal but this is the opposite from the AI prediction.  Why ?

Singapore GE2025 will be held on 3rd May 2025.  Wait, don't get me wrong, am not going to talk about politics in this STI analysis.  Just that in the politics world, I have the perfect classic example to illustrate my point.  Since not having any political propaganda, will go direct and straight to the point.  Go to the Straits Times Facebook page, look at the comments of any of the political reporting, be it on the PAP or any opposition parties.  You can easily find a dozen of comments that have the following nature.  "This MP has been working very hard for the past 5 years, vote him/her", "This MP is very friendly and helpful, vote for him/her", etc.  Firstly, let be known that it is the primary responsibility of the elected MP to work hard and help the residents in the ward, they are being paid to do so.  Do you not work hard in your company when the company pay you the salary ?  Friendly is a subjective thing, so not going deep into it.  Next, how to you know if an opposition candidate is voted in to be the MP of the ward, he/she will not be as hardworking, friendly and helpful (or better) than the existing one ?  Do you dare to put your neck on the chopping board to affirm your stance ?  This is weakness in a human being psychology, a psychological pitfall to be exact.  One will only make conclusion on what they have seen or experienced (the result) and not think of the possible outcome (or result) that they have not seen or experienced.  As such, they only make biased conclusion.  To make a even more powerful example, Singapore since PAP took to power in the 50s has been government of the day uninterrupted till now.  When asked stance of opposition parties forming the government of the day or a coalition government, you will likely get the response of "Do not think opposition parties are good", "PAP has records" and so on.  Again, not a single day since 50s Singapore has been under the government of another political party other than PAP, how to you know opposition parties can't do the same or even better job than PAP ?  You have not seen the result doesn't mean it is a negative.  This is the typical psychological pitfall that majority will fall into.  Even the more acute to psychology like people who majored in psychology or the professor who teach psychology in university cannot avoid falling into this pitfall.

So back to the main focus.  It is this psychology pitfall that when you see STI rebound strongly from sell off and entice you to the buy signal.  You cannot see the outcome of what you've not seen, that is not a buy signal.  In AI, AI model was fed to historical data to train them to recognize pattern and sequence by computing on all the perspectives and eventually make the final prediction based on possibility of the possible outcome.  It is the possibility of the possible outcome and not the simply True or False of the outcome.  The AI model has already shown prior to the sell off that sell signals has been predicted since Sept 2024 without a single buy signal being predicted in between.  With the psychological pitfall, one would not believe as STI kept scaling higher and higher despite all those sell signals and guess what next ?  In fact, here, the AI model is being fed with 20 years of historical data (yes, typical Singapore KS style) meaning starting from year 2002 (since the start of the test data above is 2022) till 2021.  During these periods, STI encountered the peak and trough of 2003 SARS, 2007-2009 US subprime crisis, the uncertainty from the Euro debts crisis from 2009 - 2014, the peak and trough in 2015-2016 due to concern of China economy and the latest 2020 Covid-19 pandemic.  There are more than enough samples for the model to be trained and learned of the market peak and trough to make a reasonable prediction as of now.

In the politics world, you don't have the luxury of the AI to assist you in analyze comprehensively all the possible outcomes (what you can see and experience and what you cannot see and experience) and hence you are being dictated by the psychological pitfall of the majority for the future, it is quite a sad thing unfortunately.  However, in the financial world, you have a tool in AI that can compensate that and why you choose to ignore it and instead continue to believe in your own eye ?

STI has rebounded strongly but there is no predicted buy signals, don't rush into it, wait in patience for one !!!

Background and Historical Facts

1. Around 2H2024, in an attempt to use the SkillsFuture credit before it expires in Dec 2025, I was snubbed by the snobbish SMU from attending the Ichimoku Technical Analysis course as I didn't attend the Basic Technical Analysis course conducted by them.  Despite reasoning that I'm not novice to technical analysis and am able to even use Elliott Wave to analyze stock market, they still continue the snub.

2. Around end Jan 2025 when China's Deepseek AI shocked the world with its performance, I was inspired with it and couple with feeling unjustified and anger from the snobbish SMU's snub, decided to embark on a journey to develop an Ichimoku AI System to predict when to buy or sell in stock market.

3. Around mid Feb 2025, with the assist from Deepseek given the fact programming is not my major but I do possess the basic essential knowledge of programming (well few years ago, I did develop an app to calculate Elliott Wave), I have completed the automation version of the Ichimoku system.  This has provided me the platform to develop the AI version.

4. By mid Mar 2025, the first version of the Ichimoku AI System has completed and was able to predict buy and sell signals with average or slightly above average accuracy.  That was used in the post dated 27th Mar 2025 to predict STI direction.

5. In order to increase the accuracy and performance of the AI prediction, additional features and enhancements were made that led to v2.3 of the app being completed in first week of Apr 2025 to carry out the 2nd analysis on STI (this post)

6. Pass the first real test in predicting STI crash in the 1st week of Apr 2025.  Prediction of selling signals started at least 5 months prior to the crash.

7. App upgraded to v2.4 after modifications made to be able to fine tune AI model's parameters to provide better prediction in Apr 2025

STI Analysis with Ichimoku AI System -- Part III

Continued from STI Analysis with Ichimoku AI System -- Part II

STI closed 3,540.50 on 7th Apr 2025 and as of now 8th Apr, STI still below 3,540.50.  With reference to the first AI prediction posted on 27th Mar 2025 (refer here) and part II on 6th Apr 2025 (refer here), it was stated the AI system has been predicting Sell signals for STI since Sept 2024, be it Strong or Weak signals, without a single Buy signals in between despite STI climbing higher and higher.

The above snapshots were what happened as of 7th Apr 2025 close.  With not much difference from those AI predicted Sell signals, the only difference was STI has dropped sharply since 4th Apr 2025.  The above was the AI model used to predict Buy and Sell signals for STI.  There wasn't any Buy signals since Sep 2024 with Buy probability stayed at rock bottom during these period while the Sell probability was at elevated level throughout.

The above snapshots were obtained with the AI system working on another model and only predict Sell signals.  Nothing much has changed from the 6th Apr 2025 post.  It was mentioned in the 6th Apr 2025 post that the first Strong sell signals started on 14th Nov 2024 at STI 3,738.16 and given STI at 3,540.50 at 7th Apr 2025, this has obviously dropped below the level the first Strong signal was being predicted by the AI system.  

As mentioned in previous post, should there isn't any Buy signals predicted during these periods and with STI fell below the 3,738.16 level, this is a proof that the AI system has been making the correct prediction since Sep 2024 (or Nov 2024) with the Sell signals despite STI scaling higher and higher.  This concludes the Ichimoku AI System has passed its first real test in predicting buy and sell signals and it has giving warning signs at least 5 months before the actual crash now !!!

The next test for the Ichimoku AI System shall be to predict Buy signals in which STI recover from the ongoing crash.  The same criteria will be applied, that is, continuous Buy signals without a single Sell signal in between even if STI further decline and the confirmation shall be STI recover to break above the level of the first Buy signal being predicted.

Background and Historical Facts

1. Around 2H2024, in an attempt to use the SkillsFuture credit before it expires in Dec 2025, I was snubbed by the snobbish SMU from attending the Ichimoku Technical Analysis course as I didn't attend the Basic Technical Analysis course conducted by them.  Despite reasoning that I'm not novice to technical analysis and am able to even use Elliott Wave to analyze stock market, they still continue the snub.

2. Around end Jan 2025 when China's Deepseek AI shocked the world with its performance, I was inspired with it and couple with feeling unjustified and anger from the snobbish SMU's snub, decided to embark on a journey to develop an Ichimoku AI System to predict when to buy or sell in stock market.

3. Around mid Feb 2025, with the assist from Deepseek given the fact programming is not my major but I do possess the basic essential knowledge of programming (well few years ago, I did develop an app to calculate Elliott Wave), I have completed the automation version of the Ichimoku system.  This has provided me the platform to develop the AI version.

4. By mid Mar 2025, the first version of the Ichimoku AI System has completed and was able to predict buy and sell signals with average or slightly above average accuracy.  That was used in the post dated 27th Mar 2025 to predict STI direction.

5. In order to increase the accuracy and performance of the AI prediction, additional features and enhancements were made that led to v2.3 of the app being completed in first week of Apr 2025 to carry out the 2nd analysis on STI (this post)

6. Pass the first real test in predicting STI crash in the 1st week of Apr 2025.  Prediction of selling signals started at least 5 months prior to the crash.

STI Analysis with Ichimoku AI System -- Part II

Continued from STI Analysis with Ichimoku AI System -- Part I

Since the last analysis on 27th Mar 2025, additional features and couple of enhancements were made to the app to improve its prediction accuracy.  As such, the app has upgraded to v2.3 (previous was v4 and renamed to v2.2).

Noticeable features are the inclusion of 2 AI Prediction mode.  In the previous version, the AI could only predict Hold, Buy and Sell together.  In this new version, 2 additional prediction modes were added -- predict only Buy signals and predict only Sell signals, to provide additional accuracy in predicting buy or sell signals.  Another feature is the inclusion of other Technical Indicators such as ADX, Bollinger Bands, EMA, MACD, OBV and RSI to provide additional confirmation to the Ichimoku signals on trend and momentum.  This can improve the accuracy of the AI prediction.

As for enhancement, Threshold, Buy Accuracy and Sell Accuracy were added to fine tune the AI model in its training and testing on historical data to make better prediction on the real dataset.

Above is the app doing the 3 classes AI prediction on STI.  As can seen from the 2nd screenshot and quite similar to the analysis done on previous version on 27th Mar 2025, Sell signals have been flashing since Sep 2024 despite STI climbing higher and higher.  

Above is switching the AI Prediction mode to Sell only meaning the AI model only predict Sell or no Sell signals using the same threshold, TA signals and AI model.  For the same period from Sep 2024 till now, more Strong Sell signals appeared than previously.

Next, the AI model was switched to one that is much better in doing binary prediction and maintaining the same threshold, this time with no additional Technical Indicators needed (just pure Ichimoku signals), the Strong Sell signals appears around the same period as previous analysis

Now, looking at another perspective, this time look at the AI model predict Buy only signals.  Using the same AI model and threshold setting, the above shows the Buy signals from the AI.  Looking at around end Aug 2024 to mid Sep 2024, there were Strong Buy signals predicted during the time STI hit a trough and rebound.  Thereafter, practically no Buy signals, not even a Weak Buy signals were predicted till now when STI was climbing higher and higher.  That pretty much matches the Sell signals prediction.  What's worrying is looking at the Buy signal prediction probability, it just sink lower and lower as STI climb higher and higher and hit rock bottom.

The above displayed the detail date at which Strong Buy, Weak Buy, Strong Sell and Weak Sell are being predicted and their respective STI closing value for that day.  The snapshot indicates that the Strong Sell signal on 14th Nov 2024 at STI 3,738.16 is the series of Strong Sell signals that lasted till today.  Now if STI going forward fell below 3,738.16 without a single Strong Buy signal being predicted in between, this will further strengthen the proof that the accuracy of the AI prediction.  The AI prediction has given warning at least 5 months earlier for the selling off we are seeing today !!!

Background and Historical Facts

1. Around 2H2024, in an attempt to use the SkillsFuture credit before it expires in Dec 2025, I was snubbed by the snobbish SMU from attending the Ichimoku Technical Analysis course as I didn't attend the Basic Technical Analysis course conducted by them.  Despite reasoning that I'm not novice to technical analysis and am able to even use Elliott Wave to analyze stock market, they still continue the snub.

2. Around end Jan 2025 when China's Deepseek AI shocked the world with its performance, I was inspired with it and couple with feeling unjustified and anger from the snobbish SMU's snub, decided to embark on a journey to develop an Ichimoku AI System to predict when to buy or sell in stock market.

3. Around mid Feb 2025, with the assist from Deepseek given the fact programming is not my major but I do possess the basic essential knowledge of programming (well few years ago, I did develop an app to calculate Elliott Wave), I have completed the automation version of the Ichimoku system.  This has provided me the platform to develop the AI version.

4. By mid Mar 2025, the first version of the Ichimoku AI System has completed and was able to predict buy and sell signals with average or slightly above average accuracy.  That was used in the post dated 27th Mar 2025 to predict STI direction.

5. In order to increase the accuracy and performance of the AI prediction, additional features and enhancements were made that led to v2.3 of the app being completed in first week of Apr 2025 to carry out the 2nd analysis on STI (this post)

STI Analysis with Ichimoku AI System -- Part 1

 After v3 of the Ichimoku AI System (refer here), I continued to enhance and improve the AI prediction and now the app has upgraded to v4.  In v4, other technical indicators like RSI, OBV and ADX are used together (or has the option to be used together) with the Ichimoku signals to improve the AI prediction.  There are also additional features added to fine tune the threshold to  improve the prediction too.  So now, am using this v4 to analysis STI.

This is how v4 looks like with those additional features.  STI was analyzed from 27th Mar 2022 till 27th Mar 2025, a 3 years period.  Well actually till 26th Mar 2025 as data only available till then.

This is the zoom version of the chart showing the predicted buy & sell signals.  The bottom plot is added in v4 shows the probability of the buy, sell and hold signals predicted by the AI model.  Why probability ?  Simple, as mentioned in previous post on the v3, AI is not to take over the control of human's decision making but assist them,  AI prediction is never just True or False as it relied on data being fed into for it to train to learn the pattern and then make the prediction based on what it has been trained.  It will output the prediction based on probability of will or will not happen.  Thus, able to look into the probability being predicted by AI is nevertheless a great way for us to eventually make the final decision.

A coin with 2 sides meaning each has 50% of 1/2 the probability of appearing when you toss.  In this Ichimoku AI system, we are dealing with not 2 but 3 classes, Hold, Buy and Sell.  This means each class has a probability of 1/3 to occur.  The AI prediction produces very interesting result for these past few weeks (up till 26th Mar 2025).  Sell signals (be it strong or weak) are flashing as early as September 2024 despite STI climbing higher and higher.  Well the most common first reaction upon seeing this definitely is the AI prediction is not working.  Sure ???  Now, look at the bottom probability chart, from Sept 2024 onwards, the probability for Sell signals is on the high side, easily surpass 0.5 while both the buy and hold signals are kept low below 0.35.  As mentioned before for a 3 classes system, each class has a probability of 1/3 to happen and now both the buy and hold are kept below the 1/3 probability during these periods.  Don't think this is something one can easily ignore.

For this analysis, I made use of RSI, OBV and ADX indicators together with Ichimoku and the above shows the respective chart for each of the indicator.  The RSI, ADX and OBV don't look like being oversold to the extend STI will drop next.  In fact, looking at them and with the knowledge of them, it does look like STI is biased towards the upside rather than the downside.  However, do remember that most technical indicators are laggard meaning it will not predict what will happen next and it only shows when it has already happened.

The above is the new features that were added to v4 of the app.  It is the Classification Report and Confusion Matrix of the AI model performance.  In another word, it is a metrics to determine how accurate the AI has made the prediction.  This is something I can tell you any commercial AI software will not show you and these are the most important metrics to determine how good the AI prediction is.  

First talk about the Confusion Matrix.  It basically a plot of True vs Predicted.  The diagonal line which was circled in the above represent the True Predicted probability.  For a very good performance, this diagonal line must have the highest number compared to the off diagonal rows and columns.  The off diagonal rows and columns represent the False Positive and the False Negative of the prediction.  The higher the number in these cell just tell you the prediction is pretty mess up.  Mentioned before, a 3 classes system the probability for each to occur is only 1/3.  In the above, the diagonal row are all having value more than 1/3 in particular the Buy-Buy sell is having a 0.58 value.  0.58 in a 3 classes system is like almost 88% probability in a 2 classes system.  Image the 2 sided coins with say Head is having a 88% chance of appearing, do you still bet on getting a Tail ?  Now, the Sell-Sell prediction is having a 0.44 probability and that translate to about 67% probability in a 2 classes system.  So, is the AI prediction of the sell signals since Sept 2024 till now incorrect ??  

Next look at the Classification Report, focus on the F1-score, F1-score is the combine of the Precision and Recall performance (for those wondering what are those for, please search and read up yourself).  The overall F1-score for accuracy of the prediction is 42% and that translates to 70% accuracy for a prediction of a 2 classes system (70% accuracy of predicting head or tail of a coin toss).  

Now, are those sell signals since Sept 2024 till now something that you can blush away because STI has been climbing higher and higher during these periods ?

STI Analysis -- the next peak and trough ? (123)

Continued from STI Analysis -- the next peak and trough ? (122)

Updated 29th April 2024

There is another possible EW count for the negative scenario, denoted by the Red labelling as shown in the above chart.  This wave count put the peak of 2007 as SuperCycle wave ((3)) meaning the correction thereafter till now is SuperCycle wave ((4)).  This correction instead of doing the typical A-B-C, is doing a Double-Three combination (W)-(X)-(Y).  Cycle (W) ended at 2009 low, Cycle (X) is a triangle ended in 2018.  The low in 2020 due to Covid-19 was Primary wave A for the Cycle (Y).  The Cycle (Y) could be doing a triangle giving the Double-Three combination a Zigzag - Triangle combination.  2020 low was the axis A, 2022 was the axis B and now in the C wave of the triangle, which direction is pointing down for STI.

17th April 2024

FTSE STI closed 3,154.69 on 17th Apr 2024, a rebound day after past few sessions of closing in the red.

Magenta -- STI Positive / Green -- STI Negative

 

The last analysis was done in Dec 2023 and the reason for past 3 months of no analysis was mainly due to not much changes in the EW pattern for both the STI Positive and STI Negative scenario.  However, with the movement lately, there seem to be a clear EW pattern being defined. 

Firstly, for the STI Positive scenario (Magenta color) as shown from the above chart, present EW count is in Primary wave 2.  As for the STI Negative scenario (Green color), present EW count is in the Cycle wave (C) of the SuperCycle wave ((C)).  Either of these 2 scenario are pointing to more downside going forward.

 

Secondly, zooming in to the movement since 2021, paying attention in particular to the low achieve in Oct 2022 till now.  There appeared a triangle pattern (3-3-3-3-3) with axes a-b-c-d-e being clearly defined as shown in the above chart.  This triangle pattern in the STI Positive scenario is the Intermediate wave ((b)) of Primary wave 2.  For the STI Negative scenario, it is the Intermediate wave ((b)) of Primary wave A or Cycle wave (C) of SuperCycle wave ((C)).  After the formation of this triangle pattern of the B-wave, what's next shall be the C-wave of the corrective wave in EW, meaning more downside coming in the near term.

In general TA, the breakdown of the lower boundary line would confirm the bearish of STI going forward.  However, for EW, pattern recognizing is a way to detect direction ahead and appropriate measures to be taken before eventually said direction being realized.

There isn't lack of events currently to deduce direction of the stock market especially to the downside.  Geopolitical tension that could lead to war would be one of those but let put it in a more rational way, if a big scale war does erupt, no countries in this world would gain, not even the one that initiate the war.  Thus, this would rather be an impulse effect to the stock markets but not a defining one.  The ongoing stubborn high inflation would be one of those event that could lead to a more catastrophe outcome going forward, leading to stagflation.  Japan suffered 4 decades of deflation and while deflation can't lead to stagflation but inflation could.  A pro long high inflation level couple with elevated interest rate would eventually lead to stagflation despite in the near term economy doesn't seem to suffer.  Stagflation is decades or even century long type of issue which can't be resolve in the shortest possible of time.  Of course there is this unexpected event that could be one of that factor. never rule out unexpected event just like Covid-19 that suddenly appeared from nowhere.

Food For Thoughts

Human psychology effect plays a vital role in stock market cycle, bull to bear to bull and so on.  In fact, human psychology effect practically dictates almost every events in this world.  From few thousands years ago till now, pattern has been repeated over and over again.  One of the most prominent one is none other than politics.  Rises from ashes to dominance and eventually fallen from grace, this pattern repeats itself over and over again in few thousands years of human's history.  That how regimes and dynasties came and went over and over again.  Here in Singapore, there shall be a handling over of leadership role from 3G to 4G next month.  Like it or not, everything is just following the scrip of rises from ashes to dominance and eventually fallen from grace.  1G rose from ashes to build up the nation, 2G propelled the nation to dominance, 3G started the fallen from grace and 4G eventually will lead to the stage of self-destruction of the party and complete the fallen from grace.  Even if EW (a model to describe people psychology to particular event) is to be used to map out the political scene, it will still give the same conclusion.  Nothing more, nothing less, nothing to argue about and nothing to deny, that the true hard fact. 

 

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为何小红点缺乏
是否无勇气拥有
是否缺远见拥有
是否不知怎拥有

还是不想去拥有 

STI Analysis -- the next peak and trough ? (122)

Continued from STI Analysis -- the next peak and trough ? (121)

FTSE STI closed 3,170.76 on 27th Dec 2023

Magenta -- STI Positive

STI experienced an upturn since early December 2023.  However, don't get too carried away as this pretty much the anti direction of the Intermediate wave ((c)) of Primary wave 2 in the STI positive scenario.  The year end window dressing and probably the Capricorn effect might continue to drive STI up in the next few weeks.

Green -- STI Negative

There isn't much change for the STI Negative scenario, STI still in Intermediate wave ((c)) of Primary wave A or Cycle wave (C) of SuperCycle wave ((C)).  While for the STI Positive scenario, the downside might be pretty much limited and shorter duration to reach, this is not the case for the STI Negative scenario.  There is much more downside to go and a much longer time frame for it to achieve.

The above is the larger picture of both the STI Positive and Negative scenario for the past 10 years. 

Food For Thoughts

Global inflation is tapering and there are already talk of Central Bankers starting to cut rate next year.  This in general is a positive news to global stock market.  However, thing is not so straight forward and as easy as ABC.  Inflation still have to monitor carefully and not putting the foot off the pedal.  Inflation still at elevated level despite the taming for the past months.  A little over complacent will jolly well see inflation rebound and stay at the stubborn elevated level.  Have to remember, prolong period of elevated inflation with elevated interest rate will do no good for the economy in the long run and is a time bomb to enter stagflation.

 Tiger Brokers Singapore Invitation Code

Singapore Covid-19

柏杨写了一本丑陋的中国人，Covid-19却写了一篇丑陋的新加坡人

打油诗

主将无能垮三军
左士缺策只砸钱
右士辱人自被辱
左象无计只会泣
右象理人理出祸
左马略识色不分
右马讲据终慢拍
小卒仗权乱闹事
大敌当前夸本领
火烧眉头方才悟
城门紧闭称闭窗
高傲自大多借口
知错不认真懦夫

主动是它的名字
领导者最佳战友
为何小红点缺乏
是否无勇气拥有
是否缺远见拥有
是否不知怎拥有

还是不想去拥有 

STI Analysis -- the next peak and trough ? (121)

Continued from STI Analysis -- the next peak and trough ? (120)

FTSE STI closed 3,076.69 for the week ended 20th Oct 2023.

Magenta -- STI Positive

The selling off for the week broke down from the triangle boundary and highly indicating that wave (e) of the triangle has ended meaning Intermediate ((b)) for the Primary wave 2 has completed.  The subsequence downside shall be Intermediate ((c)) of Primary wave 2.  That is for the blue label of the STI Positive scenario.  The alternate wave count, the purple label should by now be invalidated.  Primary wave 2 typically retracts to 61.8% of wave 1 meaning the fall shall continue to at least 2,687, which is 389.69 or 12.67% fall from 20th Oct 2023 closing.  The fall would not be a straight free fall as it will at least doing a zig-zag pattern with a mini rebound along the way.

Green -- STI Negative

Similar to the STI Positive scenario, the triangle pattern has been broken indicating Intermediate ((b)) of Primary wave A of Cycle (C) of SuperCycle ((C)) has completed.  Unlike the STI Positive scenario, the ending point for the correction still far away.  After Primary wave A, a rebound will be followed for Primary wave B and finally follows by Primary wave C to complete the whole SuperCycle correction which started in 2007.

Food For Thoughts

Global inflation at elevated level less China still the issue for the performance of global stock markets.  Recent data might have shown sign of inflation getting a pause but that is not the outcome that will be good for global economy in the long run.  It is not pause but rather cooling down to the acceptable level in the shortest possible time that is the answer.  As long as inflation remains at elevated level, interest rate will continue to stay high, nevertheless a pause in rate hike.  Prolong period of that will trigger stagflation, a scenario that could take decades or even a century to fully resolved.  A possible way to fasten deflate the elevated inflation is none other than economy recession.  Global economy might not be facing one based on data, inducing one is one of the method to overcome the elevated inflation.  Unfortunately, none of the countries willing to induce one as to them this is a sign of political weakness to the nation government.  With that, global economy is facing the risk of stagflation as days go by.  Selfishness in politics leads to long term suffering in the future.

 

 Tiger Brokers Singapore Invitation Code

Singapore Covid-19

柏杨写了一本丑陋的中国人，Covid-19却写了一篇丑陋的新加坡人

打油诗

主将无能垮三军
左士缺策只砸钱
右士辱人自被辱
左象无计只会泣
右象理人理出祸
左马略识色不分
右马讲据终慢拍
小卒仗权乱闹事
大敌当前夸本领
火烧眉头方才悟
城门紧闭称闭窗
高傲自大多借口
知错不认真懦夫

主动是它的名字
领导者最佳战友
为何小红点缺乏
是否无勇气拥有
是否缺远见拥有
是否不知怎拥有

还是不想去拥有 

STI Analysis -- the next peak and trough ? (120)

Continued from STI Analysis -- the next peak and trough ? (119)

FTSE STI closed 3,189.88 for the week ended 25th Aug 2023.

Magenta -- STI Positive

STI corrected since 11th Aug 2023 for 7 days in a row before staging a rebound in the last 4 days.  This movement could potentially give a clearer picture of which wave count is the one for the STI Positive scenario.  For case 1 where STI is in Primary wave 2, the sideway movement since hitting a low of 2,968.87 could be developing into a triangle pattern for Intermediate wave ((b)) as shown (blue label) in the above chart.  On the other hand, for case 2 (purple label), the sideway movement poses a questionable wave count for this case and could be invalidated going forward.

Green -- STI Negative

For STI Positive scenario, the sideway movement potentially could identify which case should be it, this however, does nothing significant to the STI Negative scenario.  The sideway movement just identified as a triangle pattern (potentially) for Intermediate wave ((b)) of Primary A of Cycle (C) of SuperCycle ((C)).

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

Food For Thoughts

China facing the risk of deflation is not going to disappear in the near future and potentially could develop into one.  Should it enter one, it will be having different impact to global economy compared to Japan past few decades of deflation.  Global inflation might be slowing sign of cooling, it is still at elevated and unacceptable level.  Talk of pausing or even cutting of interest rate is still too early.  Stress again, prolong period of elevated inflation couple with high interest rate can trigger into stagflation.  Stagflation is not something can easily navigate out.  It could take few decades (just like deflation) or even a century period to finally resolve.

Singapore will be going to poll on 1st Sept 2023 for Elected Presidential Election.  While the scale of that is nothing compared to General Election, in certain aspect, it brings out one important factor.  Who will be the next Elected President to safe guard the nation reserve ?  Going forward Singapore economy landscape is not at all rosy (risk of deflation from China and still at elevated inflation which could turn into stagflation), how competent the government can dish out policies to navigate the tough road will in one way or another link to the nation reserve.  Any incompetent policies will only lead to keep on dipping into the nation reserve for aids.  With that, sooner or later, Singapore will be in trouble with its nation reserve.  The Elected President MUST have the courage to challenge the Government and say no dipping into the reserve should it become clear cut that the policies are incompetent.  Rather than keep dipping into reserve, the correct way should be changed another Government with alternate policies.  

Regrettably, majority of the people just vote for the Elected President as if they are polling for a popularity contest.  Just refer to those comments from the Straits Times article and you can tell who these dude are.  These dudes should be named in the Singapore Hall of Shame.  The topics of Elected President being independent and having a close and good working relationship with the Government is nothing but side tracking the most important factor of which of the 3 candidates are the better choice.  The key is can this Elected President sees the economy and policies danger and have that courage to say a NO to the Government when comes to dipping into the nation reserve.  Let me tell you, being experienced in managing finance (Finance Minister or Investment Chief or CEO of an financial institution) doesn't mean they cannot be wrong in seeing the economy and policies aspect.  Their mindset can be trapped and blinded by their experience that they fail to see the risk and danger compared to an outsider.

 Tiger Brokers Singapore Invitation Code

Singapore Covid-19

柏杨写了一本丑陋的中国人，Covid-19却写了一篇丑陋的新加坡人

打油诗

主将无能垮三军
左士缺策只砸钱
右士辱人自被辱
左象无计只会泣
右象理人理出祸
左马略识色不分
右马讲据终慢拍
小卒仗权乱闹事
大敌当前夸本领
火烧眉头方才悟
城门紧闭称闭窗
高傲自大多借口
知错不认真懦夫

主动是它的名字
领导者最佳战友
为何小红点缺乏
是否无勇气拥有
是否缺远见拥有
是否不知怎拥有

还是不想去拥有 

STI Analysis -- the next peak and trough ? (119)

Continued from STI Analysis -- the next peak and trough ? (118)

FTSE STI closed at 3,278.30 for the week ended 21st July 2023

Magenta -- STI Positive

For the past 2 weeks STI closed positive for 8 out of 10 days, staging a rebound since hitting a low of 3,128.70.  It does look a promising sign given the events in particular economic events during those periods were not all on the negative aspect.  However, nothing has changed from the above chart, at least from Elliott Wave count perspective.  STI for the positive scenario still in Primary wave 2 corrective stage.

Green -- STI Negative

Given the fact that the Elliott Wave count from the positive scenario didn't change anything despite the rebound for the past 2 weeks, there is definitely nothing change for the negative scenario.  In this case STI is in the Cycle wave (C) of the SuperCycle wave ((C)).

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

Food For Thoughts

For past 2 weeks, global inflation data showed some promising sign by easing.  However, they are still way above the targeted level of 2%.  Hence, there isn't any reason for Central Banks to lift the pedal off from tightening.  At most they could do a temporary pause to observe for the next step.  As long as inflation stays elevated for prolong period with high interest rate there to stay, the risk of entering stagflation is still very much there.  Apart from this, there is another big risk coming from China.  China unlike rest of the world is not facing high inflation but rather they are in risk of getting into deflation.  Needless to say what will happen should China get into deflation.  Just look at Japan since the late 80s till recently, regardless what policies the Japanese Government rolled out, they couldn't get out of deflation.  They are out now is mainly because global inflation negates that effect and not due to their policies finally working.  While Japan in deflation doesn't hurt global economy much, that cannot be say for China.  China unlike Japan is presently the main net import and export nation for the world.  The deflation status might help US to ease the inflation problem but in longer perspective is never a good thing for global economy. 

 Tiger Brokers Singapore Invitation Code

Singapore Covid-19

柏杨写了一本丑陋的中国人，Covid-19却写了一篇丑陋的新加坡人

打油诗

主将无能垮三军
左士缺策只砸钱
右士辱人自被辱
左象无计只会泣
右象理人理出祸
左马略识色不分
右马讲据终慢拍
小卒仗权乱闹事
大敌当前夸本领
火烧眉头方才悟
城门紧闭称闭窗
高傲自大多借口
知错不认真懦夫

主动是它的名字
领导者最佳战友
为何小红点缺乏
是否无勇气拥有
是否缺远见拥有
是否不知怎拥有

还是不想去拥有