Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock and Financial Markets Walking a Dangerous Inflation/ Deflation Tightrope

Stock-Markets / Financial Markets 2009 Aug 19, 2009 - 07:48 AM GMT

By: Joseph_Russo

Stock-Markets

Best Financial Markets Analysis ArticleTiming, Perspective... When it comes to engaging financial markets, timing is everything.  When and where does one enter or exit, what are his or her objectives, and what frame of reference does one use to make such decisions.  Answers to the above are essential prior to committing speculative funds against any given timeframe or set of objectives one may consider.


The most important aspect to answering these questions is to clearly identify one’s timing objectives, and then adhere to best practice disciplines to carry out those objectives.  In doing so, it is essential that one ignore all ancillary noise, which may or may not conflict with the objectives disciplinary protocols in use.

In developing strategies from which to engage, there are many perspectives and tactics one may adopt.  Timeframes can swing from secular trends lasting decades to sell-offs and price-spikes lasting only an hour or two.  In the middle reside cyclical trends that can last for years followed by intermediate, near-term, and shorter-term trends, which populate the balance of the time horizon landscape.

... the Majors and where key battle lines are drawn
No doubt, the 40% - 50% rise in equities from the March lows have turned the majority of participants bullish over the near-term.  What does this bullish price action tell us about the balance of time-horizon perspectives?  Well for one, the short-term trends have been bullish since March, and so have the near-term trends.  Given the V-spike run-up, the intermediate-term trend looks promising but must still prove itself, while the cyclical and secular trends remain severely clouded.

$USD Dollar Index
Since so many assets are valued in $USD, we view this index as the mother of all majors.  Given the $USD has lost approximately 95% of its purchasing power at its lows in 2008, we can calculate that at its peak, this index (if it existed at inception) would have scaled the 1500 level at par value with a single dollar.  Today, it remains in serious trouble below the 80-level, with a hyperinflationary downside price target of 41, which is another 50% haircut from current levels.  Since inception and as historically proven with all other fiat currencies, the $USD was born at full value into a preordained secular bear market leading to its inevitable collapse and ultimate replacement.  This current world reserve currency unit is the benchmark from which most assets are valued, trade deals negotiated and future business plans considered.  It has become increasingly obvious that most major market values react (inversely) to changes in the value of this waning reserve currency, meaning that further devalued dollars will raise the underlying value of whatever types of assets that are priced in such units of measure.  In kind, a stronger currency unit will reveal the true weakness in such asset values, or at least adjust their true values against their worth in stronger “dollars”.  Currency devaluation (inflation) is one of the most egregious and illusionary taxes a government or central bank can impose upon its people.    

DOW JONES INDUSTRIALS
The long-term secular uptrend in the DOW has fractured severely.  From this perspective, the cyclical trend remains down, as does the intermediate trend.  The near-term and shorter-term trends are up but meaningfully extended.  Just above current levels, resides seven years worth of price congestion resistance.  The area below the key 7500 support level contains a very thin 3000-pt range lacking any record of congestive support above the 4000 level.  Whereas the 80-level marks a tightrope for the $USD, the 7500 level marks a critical battle line for the Dow. 

GOLD
From the previous inflationary highs of 875 printed back in the late 1970’s, Gold continues to insist upon establishing a trading floor above those previously recorded highs some 30-years ago.  Upon its first endeavor north of 875 and beyond 1000, it fell back hard through a thin zone of no support until it reached the 700-handle.  Testing the upper end of this congestive band of support near 700, Gold retraced the 200-pt thin zone and has held steady above its former price ceiling of 875, which is precisely where we place the first battle line for Gold.

NASDAQ 100
If one considers the 14-year gentle rising trendline from the 500 level in 1995 to the 1200 level in 2009 as part of an ongoing secular bull market, we suppose they would be technically correct.  More pronounced is the 10—year downtrend connecting the 1999 and 2007 highs.

There is no doubt that something went severely wrong given the 80% crash following the aftermath of the tech bubble high in 1999.  Bottom line is the secular trend remains seriously fractured.  The 5-yr cyclical bull from 2002-2007 has also been seriously breached.  We have illustrated three battle lines drawn for the NDX.  The two thick blue lines create upper and lower converging trendline boundaries to a large pennant pattern.  These two long-term boundaries identify an ever narrowing (and soon to vanish) margin of support and resistance.  We view the tightrope for the NDX along the third rising internal trendline trajectory drawn in red.  Post 1998, this line has only been breached twice, once amid the bear of 2002, and recently amid the bear of 2008.  We note with green arrows how the NDX has bounced off this tightrope of support on five different occasions.  At present, it remains in bearish mode beneath it despite its rapid attempt to back-test and reclaim trade above it.  Remember, timing and relative perspective are everything. 

For those who wish to obtain a visually graphic, easy to understand actionable guide to the various disciplines and real-time actions needed to achieve a broad array of objectives at every level of market engagement, look no further than Elliott Wave Technology’s PLATINUM publication.  Those with only a short-term, near-term, or intermediate-term focus may select from the below list of PLATINUM’S three subsidiary sister publications.

Trade the Supercycle IV -Wave

To safely speculate on, and effectively trade the endless array of unfolding subdivisions forthcoming in SC-IV, one may subscribe to any of our premium advisory services.

The express focus of Elliott Wave Technology’s Near Term Outlook is to provide equity index traders with actionable guidance over the near and medium term.

Position Traders Perspective provides actionable guidance for the long haul, while our Day Traders Perspective assists short-term traders in executing proprietary methodology for capturing price moves of short duration.
Elliott Wave Technology’s PLATINUM 500 CHALLENGE:

In our effort to serve and empower as many individuals to trade profitably amid the sharks on the street, we will soon be announcing the availability of $500 PLATINUM service coupons.  We shall award these incredibly generous service coupons to select individuals who apply and qualify for entry.  We will let those interested know when entry applications for the challenge become available, and shall announce further details of the PLATINUM 500 CHALLENGE as they develop, so stay tuned.  If you are interested in pre-qualifying, send us an email containing “PLATINUM 500 CHALLENGE” somewhere in the subject line or body of the email.  We will place your email address on our secure list of PLATINUM-500 applicants, and keep you apprised of further developments and qualification criteria.  

Until then,

Trade Better / Invest Smarter...

By Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology
Email Author

Copyright © 2009 Elliott Wave Technology. All Rights Reserved.
Joseph Russo, presently the Publisher and Chief Market analyst for Elliott Wave Technology, has been studying Elliott Wave Theory, and the Technical Analysis of Financial Markets since 1991 and currently maintains active member status in the "Market Technicians Association." Joe continues to expand his body of knowledge through the MTA's accredited CMT program.

Joseph Russo Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in