Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
Sheffield "Mi Amigo" Memorial Fly Past at 8.45am on 22nd Feb 2019 - 20th Feb 19
Here’s The Real Reason You Stress About Money - 20th Feb 19
Five Online Marketing Predictions that will Matter in 2019 - 20th Feb 19
Has Gold Price Reached Upside Resistance Near $1340-1360? - 20th Feb 19
So Many Things are Not Confirming Stock Market Rally - 20th Feb 19
Forex Trading Management: The Importance of Being Prepared - 19th Feb 19
Gold Stocks are Following This Historical Template - 19th Feb 19
Here’s Why The Left’s New Economic Policies Are Just Stupid - 19th Feb 19
Should We Declare Emergency for Gold? - 19th Feb 19
Why Stock Traders Must Stay Optimistically Cautious Going Forward - 19th Feb 19
The Corporate Debt Bubble Is Strikingly Similar to the Subprime Mortgage Bubble - 18th Feb 19
Stacking The Next QE On Top Of A $4 Trillion Fed Floor - 18th Feb 19
Get ready for the Stock Market Breakout Pattern Setup II - 18th Feb 19
It's Blue Skies For The Stock Market As Far As The Eye Can See - 18th Feb 19
Stock Market Correction is Due - 18th Feb 19
Iran's Death Spiral -- 40 Years And Counting - 17 Feb 19
Venezuela's Opposition Is Playing With Fire - 17 Feb 19
Fed Chairman Deceives; Precious Metals Mine Supply Threatened - 17 Feb 19
After 8 Terrific Weeks for Stocks, What’s Next? - 16th Feb 19
My Favorite Real Estate Strategies: Rent to Live, Buy to Rent - 16th Feb 19
Schumer & Sanders Want One Thing: Your Money - 16th Feb 19
What Could Happen When the Stock Markets Correct Next - 16th Feb 19
Bitcoin Your Best Opportunity Outside of Stocks - 16th Feb 19
Olympus TG-5 Tough Camera Under SEA Water Test - 16th Feb 19
"Mi Amigo" Sheffield Bomber Crash Memorial Site Fly-past on 22nd February 2019 VR360 - 16th Feb 19
Plunging Inventories have Zinc Bulls Ready to Run - 15th Feb 19
Gold Stocks Mega Mergers Are Bad for Shareholders - 15th Feb 19
Retail Sales Crash! It’s 2008 All Over Again for Stock Market and Economy! - 15th Feb 19
Is Gold Market 2019 Like 2016? - 15th Feb 19
Virgin Media's Increasingly Unreliable Broadband Service - 15th Feb 19
2019 Starting to Shine But is it a Long Con for Stock Investors? - 15th Feb 19
Gold is on the Verge of a Bull-run and Here's Why - 15th Feb 19

Market Oracle FREE Newsletter

The Real Secret for Successful Trading

Is It 2016 Again For U.S. Equities, Emerging Markets And Gold?

Stock-Markets / Financial Markets 2018 Jun 11, 2018 - 05:42 AM GMT

By: Avi_Gilburt

Stock-Markets

Bears seem to be roaming wherever you look, whether it be in the US equity market, the gold market, and especially in the emerging markets as of recently. Whether I read articles, or the comments to those articles, it seems there is a common expectation that “emerging market dominoes are falling” and it will “cause deleveraging and contagion” across portfolios worldwide.

It certainly sounds like a dire situation is developing in the world today. Does it not?


Now, where have I heard this story before? Oh, yes. Back in early 2016, the common belief was the same as it seems to be now.

Yet, as we began 2016, I noted the following in my weekend update to subscribers of my analysis:

“Lastly, as I have been mentioning several times, I see the potential for 2016 being the year that major commodities, many emerging markets, and the U.S. equity market all bottom, and we begin a global melt up. So, stay tuned, as 2016-2018 will likely be a very interesting time.”

So, why was most of the market so bearish in early 2016, whereas I saw something so extremely different?

Most market participants and analysts alike see price heading in a specific direction and assume that it will continue in that direction indefinitely. While often there are times they would be correct for maintaining such an expectation, such as the stock market rally from 2016-2018, which we foresaw before it occurred, many of these prognostications do not have the benefit of understanding the larger perspective of where markets reside within their respective cycles. Understanding how markets progress and regress in the larger scale of their respective cycles can assist the average investor in maintaining on the correct side of the market the great majority of the time.

When our analysis of market sentiment (based upon Elliott Wave structures) couple with supporting technical readings, it usually provides us with a high probability perspective. And, that perspective aligns currently in the emerging markets, US equities and gold in the same way it did back in early 2016.

Admittedly, I do not see the same upside potential gains in the US Equity market and emerging markets as I did back in 2016, I still see the same bottoming set up as we experienced in early 2016. While we saw the potential for a multi-year rally beginning in early 2016 for equity and emerging markets, I think this rally will only present us with 6-12 months of rally potential.

For this reason, I see an opportunity in the iShares MSCI Emerging Markets ETF (EEM), which seeks to track the investment results of the MSCI Emerging Markets Index. I think this fund presents us with a good vehicle to take advantage of the opportunity I am expecting in the emerging markets.

When it comes to the EEM, as long as the market holds over the 43 region, I am looking for a minimum upside target of 55, with a more ideal target at 60. In other words, as long as 43 holds as support, the sentiment pattern is pointing much higher rather than pointing to the implosion that many seem to be quite certain is taking hold. So, I would simply recognize the extreme negative sentiment as pointing to a bottoming in the complex.

Yet, since we can never know, with certainty, what the market will do, as we only base our analysis upon probabilities, we use these support levels within our risk management plans, and I suggest you do the same.

Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net (www.elliottwavetrader.net), a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.

© 2018 Copyright Avi Gilburt - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 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

6 Critical Money Making Rules