TEDPIX – Tehran Stock Exchange’s most accurate index tracking overall prices and dividends, rose to the highest level since August 2016, on Wednesday, October 26, 2016. The index hit the high of 79.299 and recorded an increase of 0.68% at the end of the day, ending the 3rd consecutive week surging almost 2,100 major points.
The gauge continued its rally on Saturday, October 29, 2016 with more than 1,000 points to break sharply above its bearish trend line at around 79.800 mark. It seems that fresh buyers have entered the market after this level is breached properly which is interpreted as raising the odds of a new high is going to be hit in the market.
From the abstract point of view, some signs of a sustainable economic growth have been observed recently according to TEDPIX’s value action analysis. What is tried to figure out in the rest of this context is whether or not were at the initial phases of another bull super cycle?
To find it out, let’s start with having a look at the daily chart of TEDPIX in the logarithmic scale through 2009 up to present:
At first glance and before jumping right to the details, two bullish super cycles are identifiable along with their relative corrections drawn in bullish/bearish channels respectively. Surprisingly some close similarities have been recognized in pricing ratios of past two super cycles as well as the relevant timing ratios which are going to be explained in more depth below.
From the timing point of view, what is most astonishing in these two cycles is that, in both cases, a period of almost 826 trading days (equivalent to 3.17 calendar years) have been adequate for rising and falling eras in the market. In other words, this period contains both economic boom and recession in Iran’s Market.
What is most worth considering is that the start of each super bull cycle has coincided with a sharp trend break out which we can see in the chart (around 1.0 % and 2.0% fib time points).
These similarities are not limited to timing as pricing ratios have been repeatedly happened to be the target of impulsive waves very precisely.
Surprisingly, the final target of each impulsive wave is closely related to 3.618% expansion ratio of their previous sub waves as shown in below:
In addition, zooming at the end of the chart reveals some important short-term facts which bold our midterm scenario and are in the same direction. As previously mentioned, the gauge has broken above its bearish trend line around 79.800 level. This zone is not only an important resistance level, it also overlaps the 61.8% retracement level from 2014 to early 2016 correction (Diagram below).
In case this break out does not change to a fake one, in other words, not consolidating below 79.200 level, the odds of forming a new high above 90.700 level raises. In this case the main target of the wave can be considered around 147,000 level (3.618% exp fibo) although, solid resistances stay at 85,000, 90.700, 105.000 and 126.300 respectively.
Last but not least, considering aforementioned time and value analysis of TEDPIX empowers the probability that we might have started or have been at initial phases of a new era in economic growth in Iran which can be sustainable for couple of years.