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THE ELLIOTT WAVE NAVIGATOR | STOCK INDICES OUTLOOK & FORECASTS FOR 2016

​The last year’s stock market activity can be split into two halves – those that have undergone single-digit declines from the April/May peaks into secondary highs traded in Oct/Nov.’15 and those that have sustained more significant losses. The outperformers are the U.S. with net declines of -1.6-2.0% per cent with Europe’s benchmarks down between -7.7-8.4% per cent. Asian markets (ex-Japan) however have underperformed with benchmark indices traded in Hong Kong and Shanghai down -18.0-29% per cent. This comparative will be important to understand from an Elliott Wave pattern development standpoint because it suggests another sizable decline will unfold during 2016 – this time, the U.S. and European markets are expected to decline by double-digit percentages as part of a rebalancing process of the gains during the last several years – ‘action’ and ‘reaction’. This means U.S./European indices have limited upside potential into the end of 2015, early 2016 – U.S. indices are approaching a terminal uptrend that began from the Oct.’11 lows whilst in Europe, initial declines into the August/September ’15 lows represent only the first phase of a three-wave process of reactionary declines currently in progress.