Wednesday, November 2, 2016

Elliott Wave structure of the British Pound

The average life expectancy for a fiat currency is around 27 years, Approximately every 30-40 years the monetary system breaks down and needs to be redefined.

The British Pound Sterling also known as the pound (GBP) is so far the most successful reserve currency in the world and is the oldest currency still in use.

Prior to WWI, the United Kingdom had one of the world's strongest economies, holding 40% of the world's overseas investments. However, after the end of the war the country was very indebted and lost the reserve currency status to the US dollar.

See our comparison of the former reserve currencies of the world here.




























Technical analysis of the British Pound Sterling.  Source: Elliott Wave Technician

GBP has been declining for about a decade. The Elliott Wave structure is a large A, B and C correction since 2007 marked in blue colour on the chart above.

Wave 'A' down ended in early 2009. A large sidewave correction that we have labeled as wave 'B' ended in the middle of 2014. Since then the GBP has been declining in wave 'C'.

GBP declining in wave ‘3’ of 'C' down. The decline will take the British Pound towards parity with the USD in a few years.

Geir Solem

Elliott Wave Technician
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Thursday, January 7, 2016

Long term Elliott Wave structure of the Taiwanese stock market

Here is an extract from our Elliott Wave Technician December 2015 Investment Newsletter. We cover all major markets in Asia, which looks interesting in a long term perspective as they are ending larger bear markets.

As a proxy for Asia we publish our Elliott Wave Analysis of the Taiwanese stock market which reveals a triangle structure spanning 20 years.




























Technical analysis of Taiwan stock market.  Source: Elliott Wave Technician

A complete large contracting triangle which we have labeled as Elliott Wave 'IV'.  

The Taiwanese stock market is in the beginning of a large Elliott Wave 'V'. We have labeled the rally that started in 2008 as Elliott Wave '1' of 'V'. It is not clear if the correction in wave ‘2’ is complete, so further downside from current levels is possible. 

However, the next big move should be a continued long term rise in wave '3' of 'V'.

Geir Solem

Elliott Wave Technician
Copyright (C) all rights reserved

Monday, November 30, 2015

The stock market is expensive compared to corporate bonds

The value of corporate equity compared to corporate bonds is very overvalued.



















Source Federal Reserve Economic Database

The data are quarterly, and include the 2nd quarter of 2015.

Our conclusion is that stock prices and valuations are very expensive rigth now.

Geir Solem

Elliott Wave Technician
Copyright (C) all rights reserved

Monday, October 12, 2015

Milton Friedman - Illegal Immigration - PT 2

We present part 2 of Economist Milton Friedman's view on illegal immigration.



Source LibertyPen

Geir Solem

Elliott Wave Technician
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Tuesday, October 6, 2015

Milton Friedman - Illegal Immigration - PT 1

See Economist Milton Friedman's view on illegal immigration.



Source LibertyPen

Geir Solem

Elliott Wave Technician
Copyright (C) all rights reserved

Monday, August 24, 2015

Dr. Copper Say Stock Market Collapse Coming

Copper often leads other markets. That's why the red metal is called Dr. Copper.

Copper continue to follow our forecast to a tee. Here is an updated weekly chart of Copper with the larger Elliott Wave structure:





































Source Elliott Wave Technician

As you can see from the long term Elliott Wave structure, copper topped in 2011, and since then, a large decline has been in progress with a target of USD 1 - USD 1.25 area on the chart. We have labeled the end of the wave down as (a) marked with blue colour on the chart.

If Dr. Copper is rigth a large stock market crash will follow the price collapse of Copper.

Geir Solem

Elliott Wave Technician
Copyright (C) all rights reserved

Tuesday, April 21, 2015

Greek Deposits dwindling

When Greece imposes capital controls, the run on Greek banks will already have taken its toll. Deposits have already declined sharply since late last year.






















Source ECB, Barclays Research

The Greek banks are replacing these lost deposits with emergency funds (ELA) from the Bank of Greece, who is in turn borrowing from the Eurosystem via Target2. With these banks increasingly dependent on central bank support, valuations are collapsing as the need for more bailouts becomes imminent. This is especially the case when Greece defaults on its bonds which are widely held by Greek banks.

Nearly 70% of Bundesbank's assets are in TARGET2 claims - a half a trillion euro exposure to periphery nations' central banks. What will the Germans do once they realize that a large portion of their central bank's assets could be at risk? A Grexit will reveal the TARGET2 exposure in all its glory !

As Greece imposes currency controls, depositors in other periphery nations are likely to also begin moving capital out of their domestic banking system. Portugal, Spain, and Italy are vulnerable. Such actions will of course end up increasing TARGET2 imbalances further, putting more of Bundesbank's balance sheet at risk.

Geir Solem

Elliott Wave Technician
Copyright (C) all rights reserved