Elliott Wave Technician Blog

Elliott Wave Structure of the Spanish Stock Market

2017-11-03T11:41:00.000-07:00

Here is an extract from our Elliott Wave Technician November 2017 Investment Newsletter.

As a proxy for Europe we publish our Elliott Wave Analysis of the Spanish Stock Market which reveals a triangle structure spanning nearly 20 years.

Monthly chart of the Spanish Stock Market

Technical analysis of the Spanish Stock Market. Source: Elliott Wave Technician

A long term boom in the Spanish Stock Market ended in 2000. Since then a large contracting triangle has been evolving which we have labeled as Elliott Wave 'B' marked in blue color on the chart.

The initial large decline down from the top in 2000 into 2002 is labelled as wave “A” marked in blue color. Notice that the ultimate 2012 low was more than 70% lower then the Spanish stockmarket's all time high in 2007.

A rally out of the 2002 bottom in wave “B” marked in blue color is topping.

The Spanish stock market is now entering a large Elliott Wave 'C' decline. The target of the ‘C’ wave down should be well under the low of 2012 and take multi years to play out. We expect the Spanish real estate market to collapse as well.

The implications of collapsing stock- and real estate markets will have dire consequences for the Spanish banking system.

Money and banking restrictions are coming, and like in Greece, expect to wait in long lines outside the banks in order to take out a small amount of your own money.

We expect civil war like conditions in certain regions like Catalonia as the display of negative social mood plays out during the bear market.

A return to the Peseta and an exit from the European Union is likely in the coming years.

Geir Solem

Elliott Wave Technician
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Elliott Wave structure of the British Pound

2016-11-02T09:53:00.000-07:00

The average life expectancy for a fiat currency is around 27 years, Approximately every 30-40 years the monetary system breaks down and needs to be redefined.

The British Pound Sterling also known as the pound (GBP) is so far the most successful reserve currency in the world and is the oldest currency still in use.

Prior to WWI, the United Kingdom had one of the world's strongest economies, holding 40% of the world's overseas investments. However, after the end of the war the country was very indebted and lost the reserve currency status to the US dollar.

See our comparison of the former reserve currencies of the world here.

Technical analysis of the British Pound Sterling. Source: Elliott Wave Technician

GBP has been declining for about a decade. The Elliott Wave structure is a large A, B and C correction since 2007 marked in blue colour on the chart above.

Wave 'A' down ended in early 2009. A large sidewave correction that we have labeled as wave 'B' ended in the middle of 2014. Since then the GBP has been declining in wave 'C'.

GBP declining in wave ‘3’ of 'C' down. The decline will take the British Pound towards parity with the USD in a few years.

Geir Solem

Elliott Wave Technician
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Long term Elliott Wave structure of the Taiwanese stock market

2016-01-07T08:59:00.000-08:00

Here is an extract from our Elliott Wave Technician December 2015 Investment Newsletter. We cover all major markets in Asia, which looks interesting in a long term perspective as they are ending larger bear markets.

As a proxy for Asia we publish our Elliott Wave Analysis of the Taiwanese stock market which reveals a triangle structure spanning 20 years.

Technical analysis of Taiwan stock market. Source: Elliott Wave Technician

A complete large contracting triangle which we have labeled as Elliott Wave 'IV'.

The Taiwanese stock market is in the beginning of a large Elliott Wave 'V'. We have labeled the rally that started in 2008 as Elliott Wave '1' of 'V'. It is not clear if the correction in wave ‘2’ is complete, so further downside from current levels is possible.

However, the next big move should be a continued long term rise in wave '3' of 'V'.

Geir Solem

Elliott Wave Technician
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The stock market is expensive compared to corporate bonds

2015-11-30T10:54:00.001-08:00

The value of corporate equity compared to corporate bonds is very overvalued.

Source Federal Reserve Economic Database

The data are quarterly, and include the 2nd quarter of 2015.

Our conclusion is that stock prices and valuations are very expensive rigth now.

Geir Solem

Elliott Wave Technician
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Milton Friedman - Illegal Immigration - PT 2

2015-10-12T07:58:00.000-07:00

We present part 2 of Economist Milton Friedman's view on illegal immigration.

Source LibertyPen

Geir Solem

Elliott Wave Technician
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Milton Friedman - Illegal Immigration - PT 1

2015-10-06T13:00:00.001-07:00

See Economist Milton Friedman's view on illegal immigration.

Source LibertyPen

Geir Solem

Elliott Wave Technician
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Dr. Copper Say Stock Market Collapse Coming

2015-08-24T07:02:00.001-07:00

Copper often leads other markets. That's why the red metal is called Dr. Copper.

Copper continue to follow our forecast to a tee. Here is an updated weekly chart of Copper with the larger Elliott Wave structure:

Source Elliott Wave Technician

As you can see from the long term Elliott Wave structure, copper topped in 2011, and since then, a large decline has been in progress with a target of USD 1 - USD 1.25 area on the chart. We have labeled the end of the wave down as (a) marked with blue colour on the chart.

If Dr. Copper is rigth a large stock market crash will follow the price collapse of Copper.

Geir Solem

Elliott Wave Technician
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Greek Deposits dwindling

2015-04-21T10:19:00.000-07:00

When Greece imposes capital controls, the run on Greek banks will already have taken its toll. Deposits have already declined sharply since late last year.

Source ECB, Barclays Research

The Greek banks are replacing these lost deposits with emergency funds (ELA) from the Bank of Greece, who is in turn borrowing from the Eurosystem via Target2. With these banks increasingly dependent on central bank support, valuations are collapsing as the need for more bailouts becomes imminent. This is especially the case when Greece defaults on its bonds which are widely held by Greek banks.

Nearly 70% of Bundesbank's assets are in TARGET2 claims - a half a trillion euro exposure to periphery nations' central banks. What will the Germans do once they realize that a large portion of their central bank's assets could be at risk? A Grexit will reveal the TARGET2 exposure in all its glory !

As Greece imposes currency controls, depositors in other periphery nations are likely to also begin moving capital out of their domestic banking system. Portugal, Spain, and Italy are vulnerable. Such actions will of course end up increasing TARGET2 imbalances further, putting more of Bundesbank's balance sheet at risk.

Geir Solem

Elliott Wave Technician
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Greek Stockmarket - The feast of the bears continues

2015-02-25T07:50:00.000-08:00

This is an update to our earlier Elliott Wave analysis of the Greek stock market which has followed our forecast to a tea and declined steadely over the years.

Another substantial decline is coming that will take the market well under the 2012 low. We label the coming waterfall decline as wave 3 of the final wave 5 marked in blue colour.

Technical analysis of the Greek stock market. Source: Elliott Wave Technician

We think that current decline of the Greek stock market in wave "5" could last until June 2016.

As we have said many times before, "This has implications for the Greek banking system. Will a another collapse of the Greek stock market to new record lows put the banks in a similar situation as banks in Cyprus or even worse, and will Greece exit the Euro ?"

Geir Solem

Elliott Wave Technician
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The Stock Market of Russia - Elliott Wave Update

2015-01-16T11:21:00.000-08:00

This is an update to our former forecast 'The Stock Market of Russia - Collapse is imminent' published 3rd of April 2014. It was a bold forecast, let us take a look at how it played itself out so far.

Here is an updated chart of the RTSI Index which represent the Russian Stock Market in USD.

Weekly chart of the Russian Trading System Index with technical analysis and Elliott Wave count. Source Elliott Wave Technician

Back in our April 2014 forecast we wrote the following,

"The Russian Bear is back and will soon show his anger in full force. A large wave

"(2)" rally topped early 2011, since then the Russian stockmarket has displayed a number of "1" and "2" waves of different degrees of trend.

Currently a small rally up to the horizontal resistance line marked in red color on the chart is topping.

The next should be a devasting decline in wave "3" of "3", most likely with large price gaps as the stock market of Russia collapse.

The implication of increasing negative social mood will be terrible, expect a more agresive and assertive Russian government, the current conflicts will escalate, chaos, destruction and further economic deterioration will follow.

The economic deterioration will soon hit the core European countries like France and Germany with full force."

Our forecast is playing itself out well so far and is unchanged. We expect the decline to continue in the Russian stock market priced in USD, as well as further deterioration in the core European countries like France, Italy and Germany.

Geir Solem

Elliott Wave Technician
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Debt Explosion

2014-12-04T09:50:00.001-08:00

Global debt-to-GDP has continued its upward rise, even as slowing growth and persistent disinflation (both logical side-effects of rising debt) detract from the ability of major economies to service those debts in the future.

*Data based on OECD, IMF, and national accounts data. Source: Buttiglione, Lane, Reichlin, & Reinhart. “Deleveraging, What Deleveraging?” 16th Geneva Report on the Global Economy, September 29, 2014.

An ugly set up for the future !

Geir Solem

Elliott Wave Technician
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Velocity of Money fading

2014-11-03T05:46:00.000-08:00

We showed this graph about a year ago. Money velocity is still falling, and now it indeed look like a "Deja vu" of the period 1918 to 1945.

Source Federal Reserve Board

The velocity of money from 1900. And as the graph over shows, in deflationary periods velocity can slow even more than it has recently.

When money velocity is rising, it usually means the economy is expanding. When money velocity starts to fall as we saw after 1918 it usually means the economy is slowing down or even worse contracting.

Much of the developed world is at the very the end of a 60-year-long Debt Cycle. This time the cycle is longer than previous ones due to the reckless economic policy measures by the central banks and governments using enormous credit expansion to finance over investment and over indebtedness. This has prolonged the cycle and at the same time has left the Western world uncompetitive. The culmination of decades of borrowing is upon us.

Geir Solem

Elliott Wave Technician
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The Greek Stock Market - Feast of the Bears

2014-10-17T13:28:00.000-07:00

This is an update to our earlier Elliott Wave analysis of the Greek stock market which has followed our forecast to a tea and declined steadely during the year.

Technical analysis of the Greek stock market. Source: Elliott Wave Technician

We think that current decline of the Greek stock market in wave "5" could last until June 2016.

This has implications for the Greek banking system. Will a another collapse of the Greek stock market to new record lows put the banks in a similar situation as banks in Cyprus or even worse ?

Geir Solem

Elliott Wave Technician
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Corporate Debt Bubble in the United States

2014-09-10T09:33:00.001-07:00

The worlds largest non-financial corporate credit bubble has been developing in the United States since the mid 20th century. It has already reached historical epic proportions.

Source Board of Governors of the Federal Reserve System. Click on the above image for larger picture.

The largest credti bubble the world has ever known ! What happens when the bubble burst and the borrowers can not repay the loans ?

Find out what the world will look like by subscribing to Elliott Wave Technician Investment Newsletter here.

Geir Solem

Elliott Wave Technician
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Elliott Wave Analysis of Hong Kong Stock Market

2014-08-27T05:18:00.000-07:00

A long term look at the Hang Seng Stock Market Index in Hong Kong. A 10 year bear market ended in 2009. Since then the index has been displaying a number of one and two waves.

Monthly chart of the Hang Seng Index with technical analysis and Elliott Wave Count. Source Elliott Wave Technician

A larger rally in the Hang Seng Index that we have labelled wave '(3)' of a wave '5' is in the early stages and should last multi years.

Some Elliott Wave labelling related to the even larger structure of the Hang Seng Index is omitted from the chart.

Geir Solem

Elliott Wave Technician
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Federal Reserve Stress Index at historical low

2014-07-07T09:56:00.001-07:00

A bull market in complacency is developing...

Source Federal Reserve Bank of St. Louis

What will trigger the next debt crises ? Another shock is coming. Very likely an even deeper liquidity crises than we saw back in 2008.

Geir Solem

Elliott Wave Technician
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Gold - Elliott Wave structure

2014-06-19T09:39:00.000-07:00

A year old triangle in gold is in the latter stages. Here is a daily chart with a detailed view of the Elliott Wave count inside the triangle. A rally in wave 'e' is in progress.

Click on the above image for larger picure. Source Elliott Wave Technician

The labelling of the larger Elliott Wave structure of Gold is removed from the chart. When the triangle is complete, we expect a large move in the price of Gold.

Geir Solem

Elliott Wave Technician
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The stock market - Latin American opportunity

2014-05-07T09:50:00.001-07:00

This is an update of our article "The stock market - Asia will continue to outperform Latin America" posted the 30th of January 2014.

We expect a long term opportunity to arise in the Latin American stock market over the next year or so.

Source: Elliott Wave Technician. Click on the above image to get a larger picture.

The stock market of Asia xJapan has been outperforming Latin America the last few years as we predicted back in 2010 when the Ratio broke out of a bullish wedge.

We expect Latin America to bottom relative to Asia when the Ratio reach our target of 1.5 which represent solid resistance.

The coming year is a window of opportunity to buy the emerging Latam stock market at bargain prices.

The private market as well as the grey market, during bear markets in emerging countries, are usually possible to buy into for extremely low prices as the crowd as well as investment managers think these markets are worthless.

Subscribe to our investment newsletter and see the Elliott Wave structure of Emerging Latin Ameria.

Facebook - Elliott Wave count

2014-04-15T05:56:00.000-07:00

Facebook display a complete Elliott Wave structure in 5 waves up from the last major bottom in September 2012. The Elliott Wave count is marked with blue color on the weekly chart under.

Weekly chart of Facebook with technical analysis and Elliott Wave count. Source Elliott Wave Technician

The rally lasted more than one and a half year so the correction in progress should last at least a few more months if it is going to be in proportion to the rise.

On the technical indicators both RSI and #b displayed clear negative divergence at the recent top of wave "5" compared to the previous top of wave "3". The divergence is marked on the chart with a red line connecting the two tops. It is typical of a 5th wave to end with lower momentum then wave "3" .

A common initial retracement is were wave "4" bottomed or around USD 45.

A more interesting question is if this complete a one larger degree Elliott Wave structure as well. If so then the initial retracement is USD 18 - 20 were the larger degree 4th wave bottomed. If you want to know if we believe this is the case, subscribe to our investment newsletter.

Geir Solem

Elliott Wave Technician
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The Stock Market of Russia - Collapse is Imminent

2014-04-03T11:43:00.000-07:00

The Russian Bear is back and will soon show his anger in full force. A large wave
"(2)" rally topped early 2011, since then the Russian stockmarket has displayed a number of "1" and "2" waves of different degrees of trend.

Weekly chart of the Russian Trading System Index with technical analysis and Elliott Wave count. Source Elliott Wave Technician

Currently a small rally up to the horizontal resistance line marked in red color on the chart is topping.

The next should be a devasting decline in wave "3" of "3", most likely with large price gaps as the stock market of Russia collapse.

The implication of increasing negative social mood will be terrible, expect a more agresive and assertive Russian government, the current conflicts will escalate, chaos, destruction and further economic deterioration will follow.

The economic deterioration will soon hit the core European countries like France and Germany with full force.

Geir Solem

Elliott Wave Technician
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Energy and Natural Resources at Historical Low Valuations

2014-03-24T08:27:00.002-07:00

Price to book ratio of MSCI World Energy / MSCI World give a relative valuation of the energy and natural resources market.

Source Barclays, U.S. Global Investors

We are approaching 1999 / 2000 relative price levels, but remember that the ratio can still decline further before it turns up.

Geir Solem

Elliott Wave Technician
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Copper Collapse in Progress

2014-03-12T15:03:00.000-07:00

Copper often leads other markets. That's why the red metal is called Dr. Copper. See our previous forecast for Copper on this blog posted 21st of Februarry 2014 and 8th of October 2013.

Copper is following our forecast to a tee. Here is an updated weekly chart of copper with the Elliott Wave structure:

Source Elliott Wave Technician

There is no change in our earlier forecast published previously on this blog and repeated under

Copper is in the early stages of a decline in wave "C" marked on the above chart in blue color. Wave "1" of "C" down marked in black color is complete. A corrective rally in wave "2" of "C", also in black color, is complete. Wave "3" down in copper is in progress. Notice that the Bolling Band is expanding and the copper price is tagging the band confirming the down trend.

A possible target of coppers decline is the USD 2 - 2.25 area. Good support comes in at around USD 2.15 at the rising support line connecting the 2002 and 2009 bottoms (not visible on the above chart). This support line will be around USD 2.25 at the end of 2014 and around 2.35 at the end of 2016, but expect a "throw over" of the support.area to make our downside target come true. However, the hight of the "B" wave triangle indicate a target of around USD 2.5.

How the above fits into the larger Elliott Wave structure of copper is excluded in the above chart.

Geir Solem

Elliott Wave Technician
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The Elliott Wave Structure of the Nikkei Index

2014-03-03T08:53:00.000-08:00

Update on the long term Elliott Wave count on the Nikkei Index. The Nikkei Index just hit a mulit decade declining resistance line, and as we expected the Index failed to penetrate.

Monthly long term chart of the Japanese Nikkei Index. Click in the above chart for larger picture.

We think the bear market in the Japanese stock market will resume after a relief rally that is already underway and recommend to short this rally the Nikkei Index. You can use the long term declining resistance line for risk management.

Nikkei 225, more commonly called the Nikkei, the Nikkei index or the Nikkei Stock Average, is a stock market index for the Tokyo Stock Exchange.

The above is an extract from our monthly Elliott Wave Technician Investment Newsletter published 28th of February 2014. You can subscribe to our newsletter at web site elliottwavetechnician.com

Geir Solem

Elliott Wave Technician
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Copper collapse coming ? Update of the Elliott Wave Structure

2014-02-21T12:49:00.000-08:00

Copper often leads other markets. That's why the red metal is called Dr. Copper. The updated weekly chart of copper reveals the Elliott Wave structure:

Source Elliott Wave Technician

There is no change in our earlier forecast published previously on this blog and repeated under

Copper is in the early stages of a decline in wave "C" marked on the above chart in blue color. Wave "1" of "C" down marked in black color is complete. A corrective rally in wave "2" of "C", also in black color, could be complete, or alt. extent into another a,b and correction over the next few months. Wave "2" can not go higher than wave "e" that would invalidate this near term bearish scenario.

A possible target of coppers decline is the USD 2 - 2.25 area. Good support comes in at around USD 2.15 at the rising support line connecting the 2002 and 2009 bottoms (not visible on the above chart). This support line will be around USD 2.25 at the end of 2014 and around 2.35 at the end of 2016, but expect a "throw over" of the support.area to make our downside target come true. However, the hight of the "B" wave triangle indicate a target of around USD 2.5.

An alternate bullish scenario is that the decline in wave "C" is complete with the current 5 wave decline marked in red color. Under this scenario a larger copper rally is beginning..

How the above fits into the larger Elliott Wave structure of copper is excluded in the above chart.

Geir Solem

Elliott Wave Technician
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The End of Low Short Term Interest Rates ?

2014-02-14T10:51:00.000-08:00

The western world is indebted beyond their means. The last thing they need is rising interest rates. Let us take a look at the Elliott Wave structure of short term interest rates represented by US 6 months Treasury Yield, and see what we can expect the coming years.

Short Term Interest Rates Poised to Rise. Source Elliott Wave Technician

6 months US Treasury Yield is displaying a very bullish structure. A decline in yield lasting more than 30 years was completed in late 2011. Since then a rise and decline in wave 1 and 2 of different degrees of trend have taken place. A rise in wave 3 is coming over the next years and should be quite painful.

Geir Solem

Elliott Wave Technician
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