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Are US and Emerging Markets Re-Synchronizing? THE EW-NAVIGTOR

IN THIS EDITION: 

STOCK INDICES - This month’s edition of the Elliott Wave Navigator report takes updated look at events and price action following February’s RE-SYNCHRONISATION between U.S. (developed) and Emerging Market indices, a process that ended a 5-year correction in commodity markets, simultaneously aligning with a significant correction in the benchmark S&P index. Particular attention is given to the pattern/price progress of four main subjects: Eurostoxx 50, Nikkei, NBI-Biotechnology and the S&P-XLU Utility Spread/Ratio. Each has underperformed their U.S. and Emerging Market counterparts during the first phase of new uptrends that began last February. But also, each has unfolded into counter-trend patterns during the following 6-month period. This means that larger counter-trend declines originating in the spring of 2015 remain incomplete, with significant downside risks during the next several months. Declines in the magnitude of minus -13% to minus -20% per cent are large enough to cause a meaningful counter-trend decline in the outperformers.

CURRENCIES – The US$ dollar index remains locked within a multi-year triangle corrective pattern that is expected to remain within its boundaries during the next couple of months. This month’s report updates the Elliott Wave pattern process, the medium-term cycles and its connection to commodity currencies such as the Brazilian Real, one of this year’s strongest currencies, and Sterling/British Pound, one of the weakest. Important changes are ahead.

INTEREST RATES – There is a growing chorus of voices that expect a new long-term interest rate uptrend to begin as a result of Central Banks running out of monetary easing policies/ideas. Timing is everything, of course. We take a look at the long-term picture for orientation, but then shorter-term to establish whether long-term uptrends have really begun. An update of the inflation backed TIPS is included with Elliott Wave analysis.