Saudi Arabia: The optimal bear


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The chart above presents my cyclical analysis on the SAUDI/DJI ratio. The reason why I chose to analyze the ratio rather than the monetary quote is because of the recent tensions between the Saudi Arabia and the United States. There is little difference between a indices pair and a currency pair. Indices pairs can be used to see who will attract more capital relative to the other or who will suffer a larger flee of capital than the other depending on whether we are in a bull or bear market. The cyclical structure on this ratio is crystal clear! we are currently in the second 54 month cycle of the second 9 year cycle of the current 18 year cycle. I don't have enough data to know where the previous 54 year cycle low was however the 1999 low is a top contender considering that this ratio was in a bear market for 12 years prior to that low. It is worth pointing out however that we peaked in the first 9 year cycle which is somewhat odd if the 1999 low was indeed the Kondratieff wave low. In any case, we are certainly bearish on this indices pair going into 2019 or so. This means that the great crash that awaits the financial markets will hit Saudi Arabia more than the United States. This will happen despite a surge in oil prices which means that it can only happen due to geopolitical event since a large percentage of the Saudi economy is based on oil and should do well with rising oil prices. God only knows what the cause will be!


This is my Elliott wave interpretation of the TASI/DJI ratio. It seems evident that we are in a double zigzag correction to the downside. We had a clear wave A(circle) lower followed by a clear b wave triangle that was followed by a miniture wave c sell off. This corrective decline was followed by a three wave rally that channel's as a correction quite perfectly. After this corrective pull back we fell to knew lows in three waves. Some may like to say that the three wave decline is the wave Y and the correction in the TASI terminated. I would point those few to the first image posted in this post... The cycle still suggests further declines to put in an 18 year cycle trough.


The image above shows my projection for the TASI/DJI index pair. The market has potential to rally going into 2017 after which we should see a significant sell off to the downside. This should accompany the stock market catastrophe we are expecting in all stock indices but I guess we will leave the doomsday scenario for another report. I would bet that in the first few years of international tension Saudi will be at a disadvantage. We need to keep in mind however that after mid 2019 the lows are expected and this ratio will begin a new 18 year cycle to the upside.

Egypt's EGX30 projection


Egypt's EGX30 and Saudi TASI projection overlay

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