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Stock Indices | FX | Interest Rates | Commodities - EW-NAVIGATOR

Despite persistent anxiety surrounding world economies, U.S. stock markets have extended their upward momentum from the February lows. So much so that the benchmark S&P 500 index is now approaching last year’s highs. The big negative seems to be the Federal Reserve and the IMF’s downbeat assessment of the global economy, with growth being revised downwards, once again. This is maintaining the bearish sentiment following January/February’s sharp declines, mostly reflected in European stock indices where prices are trading nearer the February lows than last year’s highs.

But from an Elliott Wave perspective, we are beginning to see a pattern harmonisation between all the global indices in our portfolio. The result is a very bullish outlook for most of this year, and throughout the next, into 2017.

The first clues came when Emerging Market indices reached multi-year downside targets in January. Then, after a wobble in mid-February, U.S. stock markets also formed important lows (refer, bullish Update Alert! S&P, February 5^th – DJ Transports, Feb. 13^th – Bovespa, March 1^st – MSCI EM index, March 12^th). Since then however, recoveries in Europe have only traced-out into three price-swing patterns, creating disharmonisation in triggering an overall bullish assessment and leaving open the lingering possibility of additional declines to lower lows. But in the last week, key European indices have begun to recover again, adding another wave sequence into the advance. This subtle change has the potential to turn the pattern development into a very bullish scenario. This would then re-synchronise Europe with other majors, including many commodities – it means that a uniform end to corrective declines that began from the mid-2015 highs ended in February ’16.

Looking further ahead, original upside targets for the S&P 500 towards 2229.43-39.02+/- can be raised to much higher levels, towards 2766.19+/- so as to synchronise with other major EM indices. Such levels will take more than a year to complete but it confirms a major uptrend began from the February ’16 lows.

Shorter-term, the February upswing for various stock indices and commodities are approaching a terminal high in completion of a five-wave impulse pattern. This is expected to end into end-April, early May. A counter-trend decline can then get underway.