During
the later stages of a long bull market – investors can get confused and begin
to engage in market timing or over-trading. The best approach would be to understand
the longer term structure of the great 2009 – 2016 advance in the major global
stock markets. If we apply long term analysis to market bellwethers we can
better identify our current location within the great 2009 – 2016 advance.
The
term Bellwether – was derived from the Middle English Bellwether which refers
to the practice of placing a bell around the neck of a castrated ram – (a
wether) in order that this animal might lead its flock of sheep.
US Bellwether - Berkshire
Hathaway Inc. Cl B (BRK.B) is a conglomerate holding company owning subsidiaries
engaged in a number of business activities and basically a proxy for the
world’s largest economy.
Canadian Bellwether - Brookfield
Asset Management Inc. (BAM.a) s an alternative asset management company focused on
property, renewable energy, infrastructure and private equity and also a proxy
for the world’s largest economy.
Our
long term plot of BAM.a displays the Elliott Wave structure of the great
advance the began from the lows of 2009 – the count being three advancing waves
(1,3,5) separated by two corrective waves (2,4)
The
first advancing wave (1) originated from the lows of 2009 and peaked in early
2011- this was a rebound bull that typically occurs after a crisis bear such as
the 2007-2008 global financial crisis. The first corrective wave (2) occurred in
2011..
The
second advancing wave (3) originated from the bear market lows of late 2011 and
peaked in late 2014 – followed by the second corrective wave (4) that persisted
though 2015 and into early 2016. Advancing wave (3) will contain the “recognition
point” which is signalled when the price advances above the peak if wave (!).
If
we get a typical Elliott Wave count - then a third and final advancing wave (5)
to new highs, should follow the current 2015 – 2016 corrective wave (4) and
persist through 2016
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