FTSE, DAX, AEX, CAC, SMI,

Size: px

Start display at page:

Download "FTSE, DAX, AEX, CAC, SMI,"

Sherman Logan
6 years ago
Views:

1 FTSE, DAX, AEX, CAC, SMI, Euro Stoxx 50 and Special Opportunities The European Short Term Update SM is service marked and copyrighted by Elliott Wave International and is intended for those persons authorized by Elliott Wave International. Photocopying and further distribution of this information are strictly prohibited. Violators will be traced and prosecuted. The price of this service allows for as many as fifteen (15) business days during the year when this service may not be transmitted due to unavoidable circumstances. The information contained in the service is expressed in good faith, but its accuracy is not guaranteed. [Posted:] Monday [Bottom Line:] Weakness in equity prices signals that wave three of three in some indices has ended and that the process of tracing out waves 4 and 5 of both Minuette and Minor degree is underway. The Elliott Wave Principle is a detailed description of how financial markets behave. The description reveals that mass psychology swings from pessimism to optimism and back in a natural sequence, creating specific Elliott wave patterns in price movements. Each pattern has implications regarding the position of the market within its overall progression, past, present and future. The purpose of Elliott Wave International s marketoriented publications is to outline the progress of markets in terms of the Wave Principle and to educate interested parties in the successful application of the Wave Principle. While a course of conduct regarding investments can be formulated from such application of the Wave Principle, at no time will Elliott Wave International make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. Investing carries risk of losses, and trading futures or options is especially risky because these instruments are highly leveraged, and traders can lose more than their initial margin funds. Information provided by Elliott Wave International is expressed in good faith, but it is not guaranteed. The market service that never makes mistakes does not exist. Long-term success trading or investing in the markets demands recognition of the fact that error and uncertainty are part of any effort to assess future probabilities. Please ask your broker or your advisor to explain all risks to you before making any trading and investing decisions. Elliott W ave International

2 [The Cost of Printing Money] The move lower in gilt futures since the early March top is looking more and more impulsive. We try to isolate ourselves from fundamental considerations, but in regard to interest rate markets, we can t help but notice both the overall deflationary environment that is historically bullish for bonds in contrast with the tremendous governmental financing requirements for places like the U.K. and the U.S., which imply a huge supply of bonds in the future that can only serve to depress prices. There is a concerted central bank and governmental effort afoot to reflate the markets, and given the relatively sizable rallies in many equity indices, some may proclaim that effort a success. And yet, when we look at both the chart of the gilt futures above and the chart of the FTSE 100 immediately below, we notice through the eyes of the Wave Principle that the picture is not so rosy. Specifically, if this reflationary effort is dampening bond prices, then those prices appear to be falling in an impulsive wave. Likewise, if (and I m not taking a position on causality here) reflationary pressures are impacting equity prices, those equity rallies by and large are corrective in nature. We would think that the central banks would want to attempt to push up stock prices in impulsive waves while suffering corrective declines in interest rates. And yet, if we even give them any credit at all, it is to say that the equity rally is corrective (i.e. unsustainable) and the bond decline is impulsive (still more to come!) 2

The various efforts of both the central banks and the IMF are to throw money at this and that problem, which may seem to temporarily subdue the big, bad,

3 The various efforts of both the central banks and the IMF are to throw money at this and that problem, which may seem to temporarily subdue the big, bad, economic collapse. And yet to us, at best these efforts have only bought a small amount of time, but do not figure to change the course of events or the waves. 3

4 [Great Britain FTSE 100 Index] The FTSE 100 continues its Minor wave C rally. The supporting indicators on the daily chart are not showing a potential top just yet. We are skeptical that prices can reach the C= x A target of 4759, but we don t discount the possibility. 4

5 5

6 [DJ Euro Stoxx 50 Futures] The DJ Euro Stoxx appears to need more back and forth trading into still higher highs to complete its wave C. Wave (iv) and (v) of iii (circle) and then waves iv (circle) and v (circle) are needed if our current interpretation is correct. These upcoming fourth waves should slow the recent momentum and set the stage in our supporting indicators for the completion of wave C. We are watching the 2604 level as the wave C = times wave A target. 6

7 7

8 [Germany DAX Index] The DAX presents a very similar picture to the DJ Euro Stoxx 50. Today s correction looks like wave iv is underway. We continue to target 5122 as a potential ending level for the entire rally. 8

9 9

10 [France CAC 40 Index] The CAC analysis is consistent with that of the DJ Euro Stoxx 50 and the DAX indices. Wave (iv) is now underway. Our target for wave C remains

11 11

12 [Switzerland SMI Index] We are maintaining the double zigzag count in the SMI index. Like most regional markets now, the rally is tired (as evidenced in the intraday chart) but not exhausted (as shown in the daily chart.) And so, it is most likely that the rally slows, but does not stop. We expect a top-building process of rallies and declines before the current upwave has completed.. 12

13 [Norway OBX Index] The OBX needs to trace out waves iv and v (circle) to complete its current C wave rally. Like the rest of the region, the period of maximum rally is over as wave iii (circle) of C is behind us. We expect this week to be choppy and relatively directionless in the OBX. 13

[Sweden OMX Index] The OMX briefly exceeded its wave C = A target level of 787, but is now back below that price. The Jurik RSX is set up to diverge from price on this daily chart.

14 [Sweden OMX Index] The OMX briefly exceeded its wave C = A target level of 787, but is now back below that price. The Jurik RSX is set up to diverge from price on this daily chart. Compare this indicator here with some of the other regional indices above. The OMX looks to be close to completing its rally high and initiating a new down leg. This observation is consistent with the fact that the OMX was one of the last indices to begin to rally, as it continued in a sideways choppy range in March while other markets moved higher. These observations are evidence of an overall lack of strength in the Swedish equity market when compared to other regional indices. 14

15 [Russia RTS Index] The RTS is up over 80% from its January low. We suspect that when prices turn lower, the volatility will remain, which will prove problematical for the new Russian bulls. [Edited by Chris Carolan:] Monday Correspondence is welcomed and appreciated, although I cannot always reply to every note ChrisC@elliottwave.com 15

Stocks, Bonds, U.S. Dollar Index, Precious Metals and Special Opportunities Updated Every Monday, Wednesday and Friday (except U.S.

Stocks, Bonds, U.S. Dollar Index, Precious Metals and Special Opportunities Updated Every Monday, Wednesday and Friday (except U.S. Holidays) The SM is service marked and copyrighted by Elliott Wave International