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The NAVIGATOR - SEPTEMBER 2018 - Dow Jones 80-Year Cycle Pinpoints End of Secular-Bull Uptrend - EM Currencies Set For Recovery - US Curve Flattening Reaches Limit

It was this exact time last year, in September ‘17 that we addressed the rising calls for a stock market crash to begin. There are always permanent perma-bears around who repeatedly forecast the beginning of Armageddon, the ‘end-of-times’ and whilst we’re sympathetic to this outcome of financial excess, timing it is of the utmost importance. Last year’s report cited a prolongation of the secular-bull market uptrend lasting into late-2019 basis W.D. Gann’s 90-year cycle. This was corroborated by our ‘Inflation-Pop’ scenario which began from the Financial-Crisis lows of 2009 but extending into the 2020-23 period where developed stock markets aligned with Emerging Markets and Commodities in huge price advances – to this day, these developing Elliott Wave patterns remain incomplete and won’t usher in a new era of price declines until completed.

This month’s edition of the Elliott Wave Navigator report reviews some of the data presented last year amidst renewed calls for a stock market crash. We present new historical evidence of an 80-year cycle present in stock markets dating back to the early 1700’s and how this pinpoints the next cycle-peak in the year 2021.

This month’s report also updates the US$ dollar’s progress, whether its February advance has completed a counter-trend correction within its new 7.8yr cycle downtrend, or if it is capable of extending the run to even higher levels. We take this opportunity to update various peripheral currency pairs, the US$/CAD, US$/MXN, US$/CNY, US$/BRL, US$/ZAR, US$/RUR, US$/PLZ but we’ll also take a look at two other currencies hitting the headlines recently, the Turkish Lira US$/TRY and Argentina’s Peso US$/ARS.

The Federal Reserve is intending to maintain incremental interest rate increases of 0.25% per cent for the foreseeable future with September’s FOMC in focus for the next one. Recent COT data suggests the largest short-positioning in the US10yr T-Note futures contract for 17-years which is a clear sign that speculators are expecting the long-dated yields to rise too. But Elliott Wave analysis otherwise indicates a quite opposite scenario unfolding during the coming months. Ten year yields and the rest along the yield curve are forming important highs, ending uptrends that even data back to historical lows of 2011. This means a ‘regression’ cycle is set to begin, pulling yields lower for several months. This month’s report examines the latest Elliott Wave counts of the US10yr yield together with corroborating evidence from its composite cycle. The report also takes a look at the widely-publicised US02yr-US10yr spread, how its narrowing phase since 2011 has flattened the curve but how this trend is about to change. We complete this month’s analysis with a look at the trend of the Italian ITY10yr yield with a forecast that highlights inherent short-term risk.