S&P500: Trendline Watch

Last post on 5-Sep, called for a move up into the 1130-1150 range on the SPX, followed by a U-turn. We're there now, and it remains to be seen, if there's gonna be an impulsive decline to follow. The likely location for the reversal is around 1150, or the upper line of the blue channel. A move back below 1130 would be the first step. The potential spoiler to this scenario is the rough Inverse H&S formation that is just breaking out.

(Alternate View: the A-B-C was completed in Jul, and SPX has just embarked on a new uptrend.)

Let's see if the Sept Equinox can spoil the party for the Bulls. All the best!

Youth today - Leaders tomorrow!

As we wait for the the September Equinox to try and rattle the markets, here's something interesting. The image below is the top 20 gold medal tally, from the recently concluded Inaugural Youth Olympic Games, in Singapore.

How many of them are Developed countries, and how many of them Emerging Markets? Cuba & Azerbaijan in the top 20? Youth of today, Leaders of tomorrow?

Socionomics - Prechter's Genius

Robert Prechter of EWI, has made some brilliant calls in his career. Although he may not have been on the  money, with his recent short-term market calls, but here's why i've loads of respect for this guy - the man's a genius when it comes to socionomics.

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Tea Party: Why NOW?
By Vadim Pokhlebkin

The Tea Party has gathered enough momentum to become a political force. According to an April Gallup Poll, "28% of U.S. adults call themselves supporters of the Tea Party." (gallup.com)

Earlier this year, New York Times columnist David Brooks wrote this (underline added): 

"Over the course of this year, the tea party movement will probably be transformed. Right now, it is an amateurish movement with mediocre leadership. But several bright and polished politicians... are unofficially competing to become its de facto leader. If they succeed, their movement is likely to outgrow its crude beginnings and become a major force in American politics."

I realize the Tea Party itself is a politically charged topic. But set aside your personal opinions for a moment, and please read the quotes below. They are from Robert Prechter's October 2003 Elliott Wave Theorist.

In that issue, EWI's president gave several prescient forecasts regarding social life and politics in the coming bear market (underline added):

• "Social groups, including economic, political, religious, genders and classes, will polarize and splinter further. I.e., they will polarize both internally and with respect to opposing groups."
• "Both patriotism and anti-government sentiment will grow into powerful emotional forces."
• "Politics will become far more polarized, splintered and radical."
• "The U.S. will accelerate its trend toward socialism. Opposition to that trend will be vigorous."
• "Third parties will gain political clout and win local elections. Libertarians, greens and others will capture many local offices and probably at least one state government." 

How was Bob Prechter able to predict the emergence of a third party and the polarization that's been tearing this country apart for the past few years?

He did so by using socionomics, the new science of social prediction based on the Elliott Wave Principle. It postulates that social mood (an unconsciously shared herding impulse) drives social events. Elliott wave patterns in stock market charts reflect social mood. Thus by forecasting the stock market you can also anticipate the tenor of social events -- often with stunning accuracy, as you can see.

Find the idea of socionomics fascinating? You're not alone -- the folks at EWI's sister organization The Socionomics Institute share your passion. You can read their latest socionomic observations and forecasts every month in The Socionomist. Take a look at what's inside the latest issue. (You also get instant access to May, April, March and February Socionomist issues.)

Shanghai Composite: Crouching Tiger?

SSEC has been crouching just below 2700 level for the past few weeks. The two possibilities in my view are shown on the chart. Whichever the case, i'm looking for an initial target between 2900-3060 in the short-to-medium-term, and possibly even higher in the medium-term. Depending on your chosen vehicle for trading the SSEC, you may be outperforming big time, especially if you are in a small-cap focused etf or fund (Check out the FTSE Xinhua charts below).

(FTSE Xinhua) All-Share Index vs China A50 Index vs Small Cap Index

China A50 approximates the performance of SSEC.

The Small Cap Index has already exceeded its all-time-highs! So, it pays to know your etf/fund. Please do your own research on performance, as i am unable to provide specific fund/etf recommendations.

The long-term outlook for China is not necessarily all bullish. For my longer term view on the Shanghai Composite, check out this earlier post: "Shanghai Composite: Why i am BULLISH medium-term!".

So, where are the long-term Bull Markets?

If you wanna find out where the Asian Bull Markets are, I highly recommend this excellent copy(older edition) of the Asian Pacific Financial Forecast, from Mark Galasiewski of EWI - can be downloaded for free - covering the major Asian markets.

Enjoy!

S&P500: Trendline Watch

S&P500 has reached the downtrendline as suggested, and may now take a breather, before breaking above it. Very Short Term, support is at 1100 & 1085. My primary view in the medium-term: a move up towards 1130-1150 is possible to finish this complex B wave. Still expecting a C-wave tumble towards 950 after that, to possibly end the correction. Watch the blue channel on a break above the maroon channel.

All the best!