Elliott Wave Bull Market Projection

 U.S. Equity prices have continued to remain strong, as the expected ongoing correction scenario posted in January did not materialize. The long term bull market, however, remains intact as expected into 2022.  Below is the favored Elliott Wave Count and projection for the remainder of the bull market. Although Intermediate Wave (2) was shallow, wave (4) is expected to be sharp to set the market up for the final top.

 

Long term price targets are derived from the previous bull markets of Cycle wave V of Supercycle Wave (III) and Cycle wave I of Supercycle Wave (V).

Crude Oil's Secular Bear Market

 Back in March 2020, amidst a crashing stock market and outright fear amongst speculators, the primary concern was deflationary pressures as the global economy went into recession. Oil prices went negative in April 2020, and many pundits were speculating oil would "never recover". While not published here, I was expecting a recovery in oil and that has now occurred. Now, all the talk is of inflation concerns. Just as occurred last spring the markets are once again poised to fool the greatest number, and reverse back into a deflationary trend. Below I present a long term Elliott Wave Picture in Crude Oil Prices. From the July 2008 Bull Market top, oil declined over 95% to a low in April 2020, and staged a throw-over of the lower trendline connecting the 2008 and 2016 lows. From that low oil has staged an impressive rally back to the 2018 wave (4) highs, as well as the 50% price retracement from the 2008-2020 decline, a common stopping point for price in Elliott Wave Analysis. Also of note is it has been a Fibonacci 13 years since the 2008 peak. It is fitting that the timing of the cycle wave V high and the cycle wave b high are separated by a Fibonacci number of years. 

Given my longer term deflationary thesis in equities and global markets, I do not see oil beginning a new secular bull market. It now appears oil has completed its bear market rally from the 2020 lows, and is apt to continue it's secular bear market. The above notwithstanding, oil could hold up relatively well until the anticipated peak in equities in 2022. Updates will be posted periodically.

A Potential Bear Market Fractal

It is anticipated the final peak for Supercycle Wave (V) and thus the Grand Supercycle Bull Market will occur in 2022. While it has long been widely held amongst Elliott Wave Practioners that Supercycle Cycle Wave (IV) ended in 1932, and a Cycle Wave I Bull Market occurred  from 1932-1937, I present an alternative in which the entire period from 1929-1949 was a barrier triangle. If correct, this interpretation would explain the failure of the bull market to top in 2000 or 2007, as that period from 2000-2009 would be labeled as an expanded flat correction for Cycle Wave IV, with Cycle Wave V, Supercycle Wave (V), and Grand Supercycle Wave III terminating in 2022.

The projected timing is derived from time ratios of the durations of wave a of (IV) relative to the durations of wave b-c-d-e of Supercycle Wave (IV) as a basis for determining the duration of ensuing waves (b), (c), (d), and (e) of Grand Supercycle Wave IV

Under this scenario, wave (a) would last a Fibonacci 8 years, wave (b) would last a Fibonacci 13 years, wave (c) would last a Fibonacci 13+1 years, wave (d) would last a Fibonacci 13-2 years, and wave (e) would last a Fibonacci 8+1 years. Even assuming a margin of plus or minus 2 years for Fibonacci Durations, the internal wave duration discrepancy from a Fibonacci number of years of the entire structure balances out. Finally, the entire Grand Supercycle bear market would last a Fibonacci 55 years from 2022-2077. 

An Ongoing Correction

Happy New Year. The Intermediate Wave (2) Correction that began on September 2, 2020, despite new all-time highs in the stock market, is still ongoing and has taken the form of an expanded flat. The lack of an impulsive wave structure from the October low supports this interpretation. 

All expectations are for the market to trace out 5 minute waves down into the intermediate wave (2) low sometime in the first quarter. Should the duration of Intermediate Wave (2) equal Intermediate wave (1), timing symmetry points to a low on February 15, 2021. Additionally, on a closing basis, wave c of (2) would be equal to 161.8% of wave a of (2) at 26,401.46. Previous price targets surrounded the 50% and 61.8% retracement range between 22,600- 22,800. While this is still feasible based on Elliott Wave guidelines, it is less likely due to the expanded flat structure of the correction. Nevertheless developments will be monitored closely. Minor wave c is apt to be sharp, in keeping with typical c waves of flat corrections. 

When Intermediate wave (2) completes, Intermediate wave (3) should carry the stock market to new all-time highs. As previously stated, a final top for the bull market is not expected until 2022. 

Intermediate Wave (2) Correction Underway

The Stock Market traced out an extended first wave into the end of April. This has had the effect of extending the entire Intermediate Wave (1) rally since the Primary wave 4 low on March 23, 2020. Intermediate Wave (2) is now due, and should retrace between 50% and 61.8% of the entire rally, as illustrated on the chart below. A 61.8% retracement would also line up with the previous minor wave 2 low, which is a feasible target given that minor wave 5 was relatively short in price. Hence, expect the Dow Jones Industrial Average to find support between 22,600 and 22,800 on a closing price basis. In terms of time, a 50% time retracement of Intermediate wave (1) up from March 23 falls on November 23, 2020.

Of note is the fact that minor wave 3 is shorter in price than minor wave 1, and minor wave 5 is shorter than minor wave 3. It is therefore reasonable to assume this will also be the case for Intermediate waves (3) and (5). This is consistent with the assertion that momentum will wane for quite some time into the final top of the bull market in 2022.

Precious Metals Update

 With all the bullish sentiment prevalent towards Gold and Silver and linear extrapolations out there. It appears to this analyst that both metals are topping out and continuing the bear market that began coincident with the peak in the rate of U.S. inflation in January 1980. Gold moving above the 2011 high was not expected, but it appears to be double topping with that high and staging a dramatic downward reversal into a continuation of the secular bear market that should, if my thesis is correct, draw prices below the 2001 lows at $256.60 and Silver Below the 2001 lows of $4.03. 

Potential Important Timing Symmetry

The Stock Market as measured by the Dow Jones Industrial Average has rallied over 37% from the    lows of Primary Wave 4 in March. Elliott Wave Analysis suggests the rally from the March 23 low at 18,591.93 should take the market to new all-time highs above the February 2020 high. The current rally should represent at a minimum, the first intermediate wave up of that Primary wave 5, and possibly only the first minor wave of Intermediate wave (1) of the final stages of a centuries long Grand Supercycle bull market. The above notwithstanding, on an intermediate term basis the stock market has completed 5 waves up and is thus due a 3 wave correction.

Potential timing for the low of the imminent corrective wave 2 may be demonstrated from the time symmetry of the cycle degree wave lows of 4/28/1942, and 12/6/1974. A total of 11,911 days elapsed between those two significant lows. The low of the upcoming correction will not be of similar degree as the cycle degree wave lows of 1942 and 1974, but more similar to that of 12/4/1987, a Primary degree wave low. The timing symmetry that is being illustrated does not precisely match wave degree lows, as the upcoming low is only of intermediate or even minor degree, but nevertheless this potential time symmetry is worth pointing out. Should the market recognize such timing, a low would be implied on 7/14/2020. 11,911 Days from 10/19/1987, the absolute closing low of the crash of 1987, is 5/29/2020, too soon to indicate a low. 11,911 days from 12/4/1987, the orthodox low of Primary Wave 4 of Cycle Wave III, is 7/14/2020. It is possible the market could recognize both sets of symmetry, where 5/29/2020 marks the high of wave 1, and 7/14/2020 marks the low of wave 2. The market will dictate the correct answer.