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Charts have been updated but what show does not change.
Closed the first quarter of 2013, it is useful to analyze the situation of the stock markets and outline the possible future scenarios.
The major US stock market indexes have reached all-time highs (S&P500) or have overcome them (DJIA), only the NASDAQ is still far below, although there are some sectors, such as Biotech, HealthCare and Insurance, which have also already exceeded the previous tops.
From the fundamental point of view, the United States entered the 4th year of expansion of the economic cycle, the GDP in 2012 grew by 2% and estimates for this year include, maybe a little optimistically, an improvement of 2.3% - 2.8%, and even in 2014 to 2.9% - 3.4%.
After the crisis of 5 years ago, the U.S. unemployment fell to 7.7% (the lowest value since 2008) and is expected to further decrease (7.3% - 7.5% in 2013 and between 6.7% and 7% in 2014), although not at the level identified by the FED as a "watershed" to stop its ultra-expansive monetary policy (6.5%), which unlike the ECB, is no longer set mainly on the inflation rate, which remains under control (2.2% in 2012).
Not even the Sequester has weakened the momentum of the U.S. indices, that with its automatic cuts to public spending is estimated to produce a reduction in the GDP growth of 1.5%.
Some analysts believe, however, that the recent increases beyond the tops are a symptom of an excess of optimism, compared to the previous market top in 2007:
> U.S. GDP is to 2%, lower than the 2.5% of the time;
> Unemployed are over 12 million, were 6.7 million,
> debt / GDP ratio is 74%, whereas it was 38%, with U.S. debt rating that has lost its AAA.
From the technical point of view, analyzing the US index charts using the Elliott Wave Principle implemented with some algorithms, the following results:
the Preferred Scenario is bearish;
DJIA should be in the wave [IV] of SuperCycle degree, starting at the 1999 top after "the long run" of '80-'90 years and still far from its completion.
This wave could develop in two variants, with the same implications:
> like a "Three" pattern W-X-Y ; in this case the bottom of 2009 would be the end of wave W of Cycle degree and the uptrend in topping the wave X , after would start the third bearish wave Y (maybe the last if it's not a double three);
> like an Expanding Triangle pattern A-B-C-D-E , where wave A of Cycle degree is ended in 2002, B in 2007, C in 2009, and now we would be close to the top of wave D , after which starting a Cycle Bear Market to test a new bottom below those of 2009.
According to this scenario, the potential final target of the upside move in progress (or in topping) could be the16,000 -16,500 area, at the intersection of the prices with the up-trendline, probably between the 2nd and 3rd quarter of this year, with the possibility (but less likely) extension to 16,800 up to July 2014.
[IV] SuperCycle is finished in 2009 with an Irregular (or Expanding Flat) pattern Alt:A-B-C; since 2009 , we would already be in the fifth wave of SuperCycle degree that, hovewer, having a corrective and not an impulsive structure, would be an Ending Diagonal pattern; now we could be in the Alt: Primary wave of Alt:I Cycle wave.
Now, the price / time target of this alternative scenario are undeterminable.
DJIA - Short-term scenario (daily chart)
The alternate count is that the Top has already been reached in September 2012.
and have a great weekend ;-)