Barron s 2015 Forecasting Challenge pictorially answered in New-Wave Elliott

Transcription

1 January 9, 2025 Barron s 2015 Forecasting Challenge pictorially answered in New-Wave Elliott 1. What will the Dow Industrials return in 2015, including dividends? A. Negative min initial plunge before a major bounce is 10,570, a similar to ~30% crash in 1929 & A possible 2/3 initial plummet to 5,500 B. Zero to 10% C. 10.1% to 20% D. 20.1% or higher Figure #1 Dow Jones Supercycle Channel Bull Diag II vs. much larger Bear Diag II Page 1 of 13

2 2. Which Equity Market will fare best in 2015? A. US S&P 500 B. Emerging Markets should triple in price over the next 12 months C. Europe Stoxx 50 index D. Japan Topix Figure #2 Emerging Markets in a Wave II bounce back near the high 3. Which S&P sector will be #1? A. Health care B. Consumer staples C. Energy D. Technology E. Financials In the weekly chart of West Texas crude a minimum bounce to $80 is required to overlap wave i in addition to filling in all the gaps in the chart with the topmost at Page 2 of 13

3 Figure #3 Continuous Contract West Texas Light Sweet Crude 4. What will be the year s biggest financial surprise? A. Oil Prices (West Texas Intermediate Crude) surge and end year at $90 a barrel or higher. Upside above shows min B. S&P finishes in the red (excluding dividends) see chart below Page 3 of 13

4 Figure #4 Big Picture Bear Market since 2000 & 1 st downside target ~1150 C. Fed decides not to raise short-term rates. D. Gold finally comes to life, ending year at $1,400 or higher, (min $1,550) E. JP Morgan opts for a corporate breakup F. None of the above. Page 4 of 13

5 Figure #5 Big Picture Gold Spot Price vs. UGL (prices on L-axis) 5. Activists will successfully target which company? A. McDonald s B. Pfizer C. Franklin Resources D. Google E. IBM F. None of the above. (in a market collapse there are few takeovers, however if one of these is sitting on a wad of cash it s possible as there s bound to be a credit crunch far more severe than in 2008) Because of the dramatic rise in value of its inventory of Gold & Silver coins, Franklin Resources is a possibility. 6. Where will the price of Oil finish 2015? It s now about $56 a barrel. A. Under $50 B. $50 to $65 C. $66 to $90 D. Above $90 Although it s not clear that Oil (WTI) will finish the year above $90, it will likely exceed $105 in the interim. See WTI chart above 7. Which company will agree to be taken over? A. Twitter B. BP C. Anadarko Petroleum Page 5 of 13

6 D. Kellogg E. AMC Networks F. none of the above. Although unlikely, when a stock is beaten down severely, the q ratio value of assets could rise substantially higher than the market price. 8. What will happen at Berkshire Hathaway as the company celebrates Warren Buffet s 50 th anniversary as its leader? A. Buffet decides to step down as CEO B. Class A stock rises 15% or more C. Company finally reveals Buffet s likely successor as CEO D. Berkshire finds new elephant-size acquisition ($30bn > incl. debt) E. None of the above. Warren Buffet will likely work till the day he dies, it s what he does for fun. 9. Which losing stock in 2014 will fare best in 2015? A. Amazon.com After the initial plunge, in Depression those stocks which allow consumers to save money or spend less on essentials fare best. B. General Motors C. Wynn Resorts D. Transocean E. Coach Page 6 of 13

7 Figure #6 Amazon.com helps to save money on necessities in recession minor degree The Amazon chart showcases New-Wave Elliott, showing a total absence of 5 th waves except in corrections. As you see above, after Minor wave (iv) the 5 th morphs magnitude to become Intermediate Wave i, longest of waves (i)-(v) the 5 th is always the longest after it morphs magnitude each of these is a semi-log step or 2x the previous magnitude, until we get to Supercycle Degree which leap-frogs Cycle degree by two semi-log steps likewise the Intermediate v th becomes Primary wave Which CEO will be gone by the end of 2015? A. Twitter s Dick Costolo B. Pepsi s Indra Nooyi C. IMB s Virginia Rometty D. GM s Mary Barra E. Goldman s Lloyd Blankfein of all industries Financials take the biggest beating in a market collapse, and rather than deal with the incremental stress, he s most likely to retire. See Financials Diag II below largest of any index to indicate a proportionally long, downside trajectory. Page 7 of 13

8 Figure #7 Dow Jones Financials Index must drop below 120, the 2009 low 11. Name the best-performing member of the Dow industrials (including dividends) Worth 2 points. Exxon-Mobil after oil stocks have been so beaten down in 2014, their price in dollars must rise proportional to the Dollar s loss in purchasing power given constant demand & supply dynamics. Although consumers adjust their behavior to save money, this takes time. Oil should bounce to between $100 and $115 a barrel before plunging only 50% Page 8 of 13

9 Figure #8 Exxon Mobil after an initial drop to the area of $80 will likely bounce above $102 Page 9 of 13

10 12. Name the worst-performing member of the Dow industrials (including dividends) Worth 2 points. JP Morgan Chase will likely take a big hit with a spike in loan defaults especially in commercial real estate, the reasoning is similar to why Goldman s Lloyd Blankfein would be most likely to retire. Figure #9 JP Morgan Chase will likely drop below $12, the 2002 low Page 10 of 13

11 13. Which winning industry group form 2014 will fare worst in 2015? A. Airlines B. REITs are big losers in a market collapse as many apartments go vacant and commercial Real Estate has a huge amount of debt up for refinancing in , for which there will be no liquidity. A good part may have to be liquidated at steep discounts. Given plunging revenues and profits, REITs ability to maintain the dividend become questionable. Below you see the inverse Real Estate Industry reversing the absolute minimum upside is the high of wave C, to correspond with the 2009 trough in stocks. C. Semiconductors D. Biotech Figure #10 SRS vs. DRV (L y-axis) two inverse Real Estate ETFs Page 11 of 13

12 14. What will happen in Washington? A. Obama, GOP reach deal to cup corporate tax. B. Jeb Bush and Hillary Clinton both emerge as front-runners. C. Economy loses steam, real GDP growth averages under 2% through the 3 rd Q. D. Congress, Obama agree on significant immigration bill. E. None of the above. 15. Where will Apple stock end 2015? It trades last week at $112 A. Under $100 B. $100 to $200 C. $121 to $141 D. Above $140 Figure #11 Apple Inc. initial drop to $70, bottoming just above $5 at the trough 16. Where will the 30-year T-bond end 2015? It now yields about 2.82% A. 2.5% or lower B. 2.51% to 3% C. 3.01% to 4% Page 12 of 13

13 D. 4.01% or higher 17. Tiebreaker: Where will the Dow industrials finish in 2015? The index topped 18,000 last week. A likely round-trip back to the area of 10,570 To view the updated Public Stockcharts, click here. They contain the optimal Bear Market portfolio in weekly increment candlesticks, all showing Elliott s a-b reversal top and bottom. Eduardo Mirahyes Page 13 of 13