Nov 4, 2015
The indexes continue to climb, SP500 retraced more than 90% and I think the intermediate term pattern has changed. I was expecting the move higher to reach the previous highs even make new highs but I thought it will take more time and it will be more choppy double zig-zag(it does not feel right any more). With this retracement I think other patterns are more probable. The cycle charts with the patterns updated below. The longer cycle 7,5 years - we have already second leg for a flat(90% or more retracement) so the pattern which will "eat" time is triangle. The shorter cycle 7 years not a zig-zag instead a flat. I thought this shorter cycle 7 years with a zig-zag(now flat) has less probability... until you go through different markets. Look at China, emerging markets, precious metals - either my analysis are wrong or cycles/EW patterns of different markets are synchronizing for an important bottom early next year January-February. For me all this smells like huge inflationary wave hitting the markets next year. I do not what the trigger will be.... the USD finishing its wave higher and EUR/USD hitting massive 15 year cycle low? Another QE? The good news is both patterns are different and it should be easy to find out which one is running - a flat needs an impulse and a triangle only corrective 3 waves. Pay attention to emerging markets and commodities they should outperform the major indexes. Taking into account other markets it does not have higher probability. This scenario is still possible. Maybe commodities and emerging market sniffing the coming inflation first and the major indexes following a few months later.