AEX Long Term Update

To keep things in perspective it is good to keep the long term outlook in mind. I do this in this post. First a bit of short term. The AEX is currently retracing a decline. Over the next several weeks I expect the area around 350-355 to be sufficient resistance. After that I expect a decline to around 315 in the Sep/Oct timeframe. This has been explained in more detail in previous articles.

Obviously the short term (above) needs to fit the long term picture (below). Based on earlier analysis done on the DOW Jones, the AEX will also bottom around 2021. Since the AEX is highly correlated to the US markets, the Nasdaq in particular, the chart below could be a possibility of how the AEX will unfold over the next several years. This is based on analogy with the DOW, see earlier articles.

The Fibonacci sequence, going back more that 200 years, will end in 2021, and the (blue) numbers show the final steps of the sequence. In yellow is a possible pattern from the Elliott wave principle. The cycles (blue) indicate the 3-4 year cycle, often associated with the Kitchin cycle. The final cycle would be too long to be considered Kitchin, but since several cycles of much larger degree end in 2021, the shorter term cycles get distorted. Another possibility is that the AEX starts ‘crashing’ in 2014 and then dwindles down all the way to 2021. Given the extensive analysis done on the DOW I currently think this is a lower probability.