1 ELLOT WE THEORY EWS ON ETNM STOK MRKET Huy ui December, 2015 N-ndex closed at 573.2 pts on November, 30 th. The article aims to forecast the future movement of ietnam Stock Market through Elliot Wave theory. US STOK MRKET t is extremely difficult to apply Elliot Wave theory to ietnam Stock Market bases on the fact that the data series for ietnam Stock Market only appear for a short period of times (15 years) and the wave patterns of the index is unclear because of its great volatility. The US Stock Market and its economy always have a tremendous influence to financial markets and economies in all over the world. nd there is no exception for ietnam, therefore, analyzing the performance of the US Stock Market in the long run gives us a great facility about the future outlook for ietnam Stock Market. Dow Jones ndex in the long term view For more consistency and ease of observation, we divide into different level of waves and as in conventional notation in the Elliott Waves Principle: Grand Supercycle [] [] [] [] [] [] [] [] Supercycle () () () () () () () () ycle Primary ntermediate [1] [2] [3] [4] [5] [a] [b] [c] Minor (1) (2) (3) (4) (5) (a) (b) (c) Minute 1 2 3 4 5 a b c Minuette 1 2 3 4 5 a b c nother additional convention that we assume in this article is?. The? stands for the script that we suspect the second scenario (the base scenario is labeled in normal symbol). For example, the? stands for the suspicion that the destination of wave is wave 5 of ycle level. n importance viewpoint in the book Elliott Wave Theory, refer to the U.S. stock market's rise from 1932, we speak of it as a Supercycle with subdivisions as follows:
2 1932-1937 the first wave of ycle degree 1937-1942 the second wave of ycle degree 1942-1966 the third wave of ycle degree 1966-1974 the fourth wave of ycle degree 1974-19?? the fifth wave of ycle degree We observe the Dow Jones ndustry verage (DJ) since the index was first introduced in 1896 and give our opinion about Supercycle. Our first point of view is that DJ (S&P 500 and others US Stock Market ndex are in the same pattern) is in the process of forming wave () in the Supercycle level. (nother point of view about Supercycle will be given in the ppendix.) hart 1: Long term DJ ndex under Elliot Wave s view DJ Elliot (16,313.26, 17,977.85, 15,942.37, 17,888.35, +1,573.68) 2000 () () 1937 July 1932 1942 1966 D E D? ()? E 2009 () 1890 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 1974 60000 40000 30000 20000 10000 The form of wave () is extended, which leads to the orthodox phenomenon, wave () s highest points is higher than the peak of wave (). ccordingly, the general characteristics of Supercycle degree is downside adjustment. These recently 2009-2015 uptrend on the US Stock Market are simply the increase of Primary Wave (D) on Wave () - Supercycle wave degree. () 2003 2007 2016 2020 ()
3 For details, the wave () extended consists of 5 waves D E of ycle degree. t the moment, the observation of Primary wave indicates that Wave D seems to go to an end and the market will soon enter into ycle E wave. The next paragraph will be used to support our argument. Therefore, the process of increasing since 2009 up to now for the US Stock Market is most likely up to Wave D (ycle degree) in the () Wave of Supercycle degree. These arguments are vital when analyzing the Wave patterns in ietnam Stock Market. n alternative scenario is also given that the Wave () Supercycle degree was potentially created in 2009 with only 3 Waves -- in the ycle degree, and therefore the market is officially up to Wave () of Supercycle degree, with the first wave is wave of ycle degree. Nevertheless, if we assume that scenario is happening, there are more evidences to show that Wave already finished and Wave is about to occur. Therefore, the trend of ycle degree is down at the moment. s the E-wave of ycle degree beginning? When applying Elliot Wave Theory to DJ from 2009 to now, many signals have shown that Wave D ended and DJ started entering into Wave E ycle and also ended Wave () of Primary degree. n the technical chart, Dow Jones 2009-2015 increased trend is broken, the last rally of the market from ugust to October 2015 can t push the index to reach the upward trend. The same thing happens to S&P 500 reinforce our argument. ombining both the ycle degree (E ycle degree of wave ()-Supercycle) and Primary level from 2011 when 5 impulse waves have been completed, we believe that the DJ will soon enter into the strong adjustment process. Therefore the next target of wave Primary can be in a range of 14.000 15.000 points. n Elliot Wave theory, the lowest point of wave is the supporting point for wave, but in the case of DJ, extended wave and wave, are formed quite quickly so they can t be the strong supportive points for Dow Jones. The estimated time for the bottom of wave to be formed is around June or July - 2016, coinciding with the bottom of the cycle of 4-5 years on the US Stock Market.
4 hart 2: Elliot wave analyzes Dow Jones index since 2011 ietnam ()? Stock Market More bearish signal 0.0% 23.6% 38.2% 50.0%? 61.8% June, 2016 100.0% 161.8% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 The analysis 2009 on the formation of wave () Supercycle degree on the US Market is an important base and is a basis assumption for us to analyze Elliot wave on ietnam Stock Market. We realize that not entirely coincidences but there are loads of coincident movements of ietnam Stock Market when compared with the general picture is indicated by DJ. 19500 19000 18500 18000 17500 17000 16500 16000 15500 15000 14500 14000 13500 13000 12500 12000 11500 11000 10500 10000 9500 9000 8500 8000 7500 7000 6500 6000 5500 ccording to Elliot Wave theory, wave at a lower level (a shorter time frame) will be dominated by higher wave level (longer time frame). The ycle wave symbols as analyzed on the US Stock Market above will be used as an indicator over the technical chart of ietnam Stock Market in order to have a better outlook of ietnam Stock Market which is consistent with the evolution of the World Stock Market. ecause we understand the uptime of ietnam Stock Market is not long enough to determine the level of ycle wave. We start to analyze the wave for N-ndex from 2003, coinciding with the end of wave ycle degree on the US Stock Market. We choose that time period to analyze because (1) in the early undeveloped stage of ietnam Stock D Dow Jones (17,802.84, 17,895.50, 17,719.72, 17,888.35, +74.9590) () () Oct.4, 2011 () () 4-5-year cycle through () 4-5-year cycle through E ()
5 Market, the N-ndex did not reflect the evolution of the market and the economy (2) since 2003, foreigner investors began to interest in ietnam Stock Market, N-ndex got influenced by the general volatility of the world financial market. hart 3: N-ndex in the long term chart NNDEX 2007 (573.390, 577.580, 570.410, 574.380, +1.17999) D X Z 1500 1000 500 Y 11/2011 2003 2009 00 02 03 04 05 06 07 08 010 10 11 12 13 14 15 16 17 18 19 20 Our consideration on the primary wave (red) on ietnam Stock Market is dominated by the ycle wave of global stock is shown on the chart above. ccordingly, an up-phase of ietnam Stock Market began with the starting point of Wave in 2003 and ended in Wave in 2007, corresponding with wave -ycle on US Stock Market. The timeline of D Wave ycle of US Stock Market as analyzed above give us a general idea about the ability of long term adjustment of ietnam Stock Market is not going to an end yet. We believe ietnam Stock Market is in wave (this wave is quite complicated) and once the market can t break out the peak in 2009, this view point remains persuasive. The market s movement recently reinforces our argument while repeatedly threshold 640 of the N-ndex is not broken out this year and last year (2014).
6 hart 4: N-ndex chart since 2011 NNDEX (581.390, 581.650, 570.410, 574.380, -8.47998) 950 900 850 800 750 700 650 600 550 500 450 400 350 11/2011 300 2008 2009 2010 2011 2012 2013 2014 2015 2016 250 Since 2011, we realize that there are many similarities between N-ndex and DJ when analyzing the waves. lthough different in the symbols due to the complexity of Wave primary of ietnam Stock Market ndex coincided with Wave D ycle on US Stock Market ndex and 2009the market data has a short time frame that leads to the division of level of waves is unclear. We can see that from 2011 to now, N-ndex is following the wave pattern of Dow Jones and S&P500. ased on the signaling of the US Stock Market and ietnam Stock Market, it seems that 5 impulse waves from the end of 2011 have been completed. The confirmation for this argument is also found on the HNX as the index is officially broken the long term upward trend (since 2012) and it is similar to the DJ and S&P 500. This is a significantly warning signal for ietnam Stock Market. When analyzing in more detail, we believe that the formation of Wave is more clearly. nd if we look in the long term technical chart, throughout the analysis, the chance of declining of Wave is significant.
7 hart 5: HNX ndex chart - broken the long term upward trend n case our argument of Wave of ietnam Stock Market coincides with Wave D ycle on US Stock Market ndex is incorrect then the wave pattern from 2011 also indicates the ability of N- ndex has entered into a long term decreased trend. lthough it has less negativity than the argument of Wave ended but the risk is still obvious. Just consider the wave pattern from 2011, the minimum goal of the current wave pattern is around 480 500 points. More bearish signals in perspective of Elliott wave recommend for downside risk. n our viewpoint, we believe going forward ietnam market (N-ndex) will face with the down trend in primary degree, so investor should be careful with the next direction.
8 ppendix different perspective on the US Market for Supercycle wave (negative perspective), both indicates in Dow Jones and S&P500. For this counting wave method, wave () of Supercycle degree was actually formed and the next trend of DJ in particular and the World Stock Market in general are very negative because at the moment is the starting point of wave () of Supercycle degree. hart 5: DJ long-term chart DowJones (16,313.26, 17,977.85, 15,942.37, 17,888.35, +1,573.68) () () 40000 30000 20000 10000 () () () () 1890 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 The End