Charts for the Millennium

By: Joseph Russo | Sat, Mar 31, 2012
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Grand Supercycle III

It is quite rare that you find charts that are worth holding onto for the next quarter century or more. Well, consider yourself lucky because that is exactly what you are about to stumble upon. Trust us; you can pass this chart series on down to the kids and grandkids for posterity, with confidence.

Part-I

SPECIAL REPORT: March 2012

This priceless series of charts intends to help answer five of the most pressing questions of the day:

  1. How much more upside is there left in the broad equity markets relative to both price and time.

  2. What are the trendline price-targets at future resistance levels, and in what future years might these upside price targets occur?

  3. Once the current cyclical bull market ends, what are the trendline price-targets at future support levels, and in what future years might these downside price targets occur?

  4. Given our current wave count, what is the most likely path the market may take in tracing out the next several bull and bear markets over the next 25-years.

  5. Aside from which specific path markets may take in completing their cycles, what is the best strategy to stay on the right side of the market in all timeframes?

In this feature post, we will provide a basic primer to this chart series and then provide you with answers to all of the above questions in part-II of this Special Report, which you can freely access after giving us some likes on our facebook page. Okay then, let's get started.

DOW Since 1896

We start out with the tablet above, which carves out twin sets of our proprietary yearly bar charts of the longest contiguous price record in all of financial history.

These charts take you on a one-of-a-kind journey spanning the peak of the South Sea Bubble in 1720 through the Panic of 1857, through the roaring twenties, the depression decade of the 1930's, right up to the global insolvency crisis and bailouts of 2008-2012, and beyond.

Yet remarkably, mystically, and miraculously, despite such a complete and calamitous financial history, bull markets rage on and remain prevalent cornerstones to modern societies no matter what it takes to create, sustain, or inspire their return.

Spanning a total of 319-years to date, the data set splices price levels extracted from the British All-Shares Index [1693-1853], the Clement Burgess Index [1854-1896], and the Dow Jones Industrial Average, from 1896 - 2012.

Our tablet illustrates two price series both of which are identical. The stark difference in appearance is the result of plotting the data in arithmetic scale [top] contrasted with its logarithmic scale shown in the lower portion of the tablet.

Many are of the opinion that arithmetic scale is somewhat deceptive, and that logarithmic scales are better suited for illustrating "percentage" vs. "absolute" gains or losses especially over longer timeframes.

In our view, it is essential to monitor both scales. The arithmetic scale is quite useful in that it provides for an accurate visual reflection of the real pain level endured upon an absolute 50% decline in prices [2007-2009], whereas the logarithmic scale falsely illustrates nothing but a minor correction amid a never-ending one-way bull market.

Given the massive percentage gains over long timeframes, the arithmetic scale registers outdated low-level price action as nothing but a flat line in contrast to the logarithmic scale, which is able to show percentage movements in discernible waves that have taken place across the entire span of data. You can learn more about the two scales here.

Below and behold, we leave you (for now) with our best interpretation of R.N. Elliott's classic fractal wave structures unfolding their ultimate sequence tracing out five waves of Grand Supercycle dimension from 1693 through 2012.

Grand Supercycle III

Left Behind, and Chasing Armageddon since 1995, Prechter's credible interpretation of the above chart [lower right inset] assumed that the 1929 crest and crash into the 1932 low were waves III and IV of GRAND-SUPERCYCLE dimension, which rather incorrectly suggested that the ultimate crest of the GRAND bull market tidal wave was imminent in 1995 near or around Dow 5000.

In contrast, the rendition we depict above, illustrates the 1929 crest and crash into the 1932 low as waves I and II at Supercycle dimension, which is one fractal degree beneath GRAND or the largest of R.N. Elliott's original nine degrees of trend.

This suggests more accurately that the highs of 1999 or 2007 were more likely associated with a third wave of SuperCycle dimension suggesting that we are still trading amidst SuperCycle wave IV down [green label].

The smaller subdividing five-waves of advance at Cycle degree [blue labels] from the 1932 low suggest that it is quite plausible that the 50% decline from 2007-2009 [sight the arithmetic scale above] may well have marked all-of the Cycle degree "A" wave, which further suggests that the current bull market is of Cycle degree.

If correct, this would place the current bull within the family of rather deceptive "B" waves, which by the way, reserve every right to expand well beyond the standing all-time-highs.

Here are just a few examples of what you will be able to measure (in visual chart form) in part-II of this report, which you can access through our facebook link:

  • Regardless of whether or not the 1999-2007 highs mark the Super or Grand SuperCycle III wave, it is plausible that the answering IV wave down (however long it takes) may settle in the near vicinity of the 2009 lows.  The worst-case scenario would most likely involve a retest or breach of the 1982-1974 lows.

  • Looking out optimistically to this studies furthest Fibonacci turn-year it is possible that the Dow could be trading as high as 23,825 or beyond by the year 2036. That amounts to roughly 80% above current levels in 24-years time or gains of 3.35% per year on average.

  • Looking out pessimistically to this study's furthest Fibonacci turn-year, it is possible that the Dow could be trading as low as 3,756 or below by the year 2036. That amounts to roughly 71% beneath current levels in 24-years time or declines of -2.98% per year on average.

It is clear that there is a broad range of potential outcomes that may occur over the next 25-years, all of which will impose major affects on the economy as well as on long-term investment and retirement portfolios.

Although these ranges are broad in both time and price, the nearer they get, the easier they become to forecast, especially once directional bias clearly shifts from bullish to bearish.

Such insights in concert with clearly defined strategies of engagement that keep you on the right side of market embody the practical solutions and guidance provided by Elliott Wave Technology.

Join us, like us, and whatever you do, do not be fooled again. You can start right here.

It is our greatest hope that this Special Report and series of charts will serve an ever-growing inquisitive public for many years to come and perhaps well after we have completed our own journey across these moments in time, which we call life, that amount to mere seconds in the sight of the Sun.

Until Next Time,

Trade Better / Invest Smarter

 


 

Joseph Russo

Author: Joseph Russo

Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology

Joseph Russo

Since the dot.com bubble, 911, and the 2002 market crash, Elliott Wave Technology's mission remains the delivery of valuable solutions-based services that empower clients to execute successful trading and investment decisions in all market environments.

Joe Russo is an entrepreneurial publisher and market analyst providing digital online media solutions designed to assist traders and investors in prudently and profitably navigating their exposure to the financial markets.

Since the official launch of his Elliott Wave Technology website in 2005, he has established an outstanding record of accomplishment, including but not limited to, ...

  • In 2005, he elicited a major long-term wealth producing nugget of guidance in suggesting strongly that members give serious consideration to apportioning 10%-20% of their net worth toward the physical acquisition of Gold (@ $400.) and Silver (@ $6.00).

  • In 2006, the (MTA) Market Technicians Association featured his article "Scaling Perceptions amid the Global Equity Boom" in their industry newsletter, "Technically Speaking."

  • On May 6 of 2007, five months prior to the market top in 2007, though still bullish at that time, he publicly warned long-term investors not to be fooled again, in "Bullish Like There's No Tomorrow."

  • On March 10 of 2008, with another 48% of downside remaining to the bottom of the great bear market of 2008-2009, in "V-for Vendetta," using the Wilshire 5000 as proxy, he publicly laid out the case for the depth and amplitude of the unfolding bear market, which marked terminal to a rather nice long-run in equity values.

  • Working extensively with EasyLanguage® programmer George Pruitt in 2010 and 2011, the author of "Building Winning Trading Systems with TradeStation," he assisted in the development of several proprietary trading systems.

  • On February 11, 2011, he publicly made available his call for a key bottom in the long bond at 117 '3/32. Within a year and half from his call, the long bond rallied in excess of 30% to new all time highs in July of 2012.

  • For the benefit of members and his general readership, he responded to widespread levels of economic and financial uncertainty in the development of Prudent Measures in 2012.

  • He publicly warned of a major top in Apple on October 26, 2012 in the very early stages of a 40% decline from its all time high.

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TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/