Elliott Wave International
Commentary Article(s)
Video: The Real-Time Power of Elliott Wave Analysis
Mainstream financial analysts always look for ways to explain market action through news stories and events. Conventional wisdom states that news and inter-market correlations cause market booms and busts, but such explanations rely on selective presentation of the data. In this video, Elliott Wave International's Asian-Pacific Financial Forecast Editor Mark Galasiewski shows you how Elliott wave analysis was able to predict Hong Kong's late '90s mania and its aftermath in real time -- without looking at the news or the market's "fundamentals."
Watch More about the Power of Elliott Wave Analysis in this FREE Video
Discover how Elliott wave analysis gives you a consistently logical explanation -- and debunk one of the major myths of what caused the Asian Financial Crisis -- in the free video, "The Real-Time Power of Elliott Wave Analysis: Debunking the Myths of the Asian Financial Crisis." Access Your FREE Video Now.
Prechter on Yahoo! Finance: "On Schedule for a Very, Very Long Bear Market"
Robert Prechter discussed the recent global sell-off that has sent all major U.S. averages 10% below their 2010 highs with Yahoo! Finance Tech Ticker host Aaron Task on May 20, 2010. Prechter says that the current climate shows that "we're in a wave of recognition" where the fundamentals are catching up to the technicals and that it's time to prepare for a "long way down."
For more information from Robert Prechter, download a FREE 10-page issue of the Elliott Wave Theorist. It challenges current recovery hype with hard facts, independent analysis, and insightful charts. You'll find out why the worst is NOT over and what you can do to safeguard your financial future.
Learn the Six Rules Every Successful Investor Follows
Do you truly understand what it means to accommodate losses
and accept huge gains? Once you read Robert Prechter's latest report,
Six Critical Money-Making Rules for Investors, you'll be able to master
the 6 rules that can make or break your portfolio.
Learn Basics of Elliott Wave Analysis -- FREE
By Elliott Wave International
Ralph Nelson Elliott discovered the Wave Principle in the 1930s. Over the decades, his discovery was kept alive
by a handful of individuals. A few of those, such as Bolton, Prechter and Frost, educated investors on how to use
pattern analysis in financial markets. To help out Elliott Wave International's readers in learning the basics of the
method, we put together a free 10-lesson online tutorial. Here's an excerpt. Read more.
20 Questions with Robert Prechter: Signs Point to Deflation
By Elliott Wave International
Our friends at Elliott Wave International have just released a brand-new interview given by Robert Prechter.
A devoted inflationist asks the leading proponent of deflation tough questions about fiat currency, gold, the Fed,
the Great Depression, financial bubbles, government intervention and how to protect your money -- and even profit --
in today's environment. Here's an excerpt from the interview
DJIA's 200-Day Moving Average: Will the Dow stay above
or below this demarcation line?
By Elliott Wave International
After the DJIA fell below its 200-day moving average in May, prices remained mainly below the line until June 15, when the market rose 213 points. But, as this chart from EWI's June 16 Short Term Update shows, the NYSE volume has remained muted... Read more.
Big Bear Markets: More Than Falling Stock Prices
Many infamous authoritarian regimes emerged during or after big bear markets
By Elliott Wave International
Fear and uncertainty that drive a severe bear market are the same emotions which can set the stage for authoritarianism, in most any nation. Why do authoritarian tendencies emerge only during bear markets in stocks? Bob Prechter's neww sciencde of socionomics gives you answers. Read more.
Two-Bar Pattern that Points to Trade Setups
By Elliott Wave International
Our futures analyst has discovered and named a two-bar pattern that he calls the Popgun. Why is it special? Because it introduces swift, tradable moves in price that are bound to retract like a popgun -- that is, to be significantly retraced. Read more.
Deflation: How To Survive It
Important warnings about deflation from Robert Prechter.
By Elliott Wave International
The M3 money supply in the U.S. is contracting fast, and deflation is suddenly in the news again. It's a good moment to catch up on a few definitions, as well as strategies on how to beat this rare economic condition. And who better to ask than EWI's president Robert Prechter? Here's a free excerpt from a collection of his most important essays on deflation. Read more.
Prechter Called the Uptrend 'Out' in April
By Elliott Wave International
Even non-sports fans have heard by now about the recent debacle known as "Baseballgate" -- with two outs in the ninth inning, the first base umpire called "SAFE" when the runner was clearly "OUT." The missed call cost Detroit Tiger pitcher Armando Galarraga a perfect game. But the Biggest, Baddest Call of all was not made on a sports field. It was made in the field of finance -- specifically on the stock market. To wit: The mainstream "umpires" of finance stood near first base, and in April made this emphatic call for the uptrend in stocks. Read more.
'Defensive' Stocks: Are They the Ticket in a Downturn?
In a severe sell-off, 99 percent of ALL stocks can fall.
By Elliott Wave International
Approximately three out of four stocks go down in a bear market. This ratio doesn't just apply to high beta names; historically, 75 percent of all stocks go down when the general market falls. On May 20, when the DJIA lost 376 points, 99 percent of stocks fell. Yet a financial TV host recommended "defensive" names the day after. Wouldn't his viewers be better served if he said, "You may want to step aside for now"? Read more.
Bigger Than A '10% Correction'?
Every Big Bear Grew From a Cub
By Elliott Wave International
Not a word was said about caution. Not a word was offered about even the possibility of a major trend change in the market... Read more
The Federal Reserve Does NOT Control the Market
FREE eBook reveals why the Fed is powerless to change the economic course
By Elliott Wave International
As the world's leading stock markets continue to play stomach-hockey with investors via one triple-digit turn after another, the mainstream community takes solace in this core belief: No matter how uncertain things become, the Federal Reserve can at any moment swoop in to set the economy right. Read more
What Becomes of a Broken Stock Market?
There are two possible Elliott wave paths for stocks from here -- but only one likely outcome.
By Elliott Wave International
You know what a mystery the Dow's 1,000-point drop on May 6 has been. Wall Street is looking
for a smoking gun -- a trader's mistake, a computer glitch -- but nothing definite has been found yet.
If you're familiar with Elliott wave analysis, last week's shocking decline gets less mysterious.
Read more
Signs of Deflation You Might Not be Able to See Clearly
By Editorial Staff, Elliott Wave International
Most people assume that they are investing in an inflationary world, because that's what the Fed tells them it's worried about. But deflationary forces continue to loom even though they are not so visible. Here are five that you might not be able to see clearly. Read more.
How to Channel an Impulse Wave on a Price Chart
By Susan C. Walker
How do you choose one lesson from a basic tutorial that is chock-full of excellent information about Elliott wave analysis? You use a time-honored method to end up with "how to use the chaneling technique with impulse waves." Read more.
Goldman Sachs Charged With Fraud:
Who Could Have Guessed? Part 1
The firm's history suggests its vulnerability in periods of negative social mood.
By Vadim Pokhlebkin
In November 2009, Elliott Wave International's monthly Elliott Wave Financial Forecast published a careful study of Goldman Sachs' history -- and made a grim forecast for the
firm's future. In this special three-part series, we will release the entire Special Report
to you. Here is Part I; come back Wednesday and Friday for Parts II and III.
Read more
Goldman Sachs Charged With Fraud: Who Could Have Guessed?
Part II
The firm's history suggests its vulnerability in periods of negative social mood.
By Elliott Wave International
In the November 2009 issue of Elliott Wave International's monthly Elliott Wave Financial Forecast, co-editors Steven Hochberg and Peter Kendall published a careful study of Goldman Sachs history -- and made a sobering forecast for its future. In this special three-part series, we are releasing the entire Special Report to you. Here is Part II; please come back later this week for Part III. Read more
Goldman Sachs Charged With Fraud: Who Could Have Guessed?
Part III
The firm's history suggests its vulnerability in periods of negative social mood.
By Elliott Wave International
In the November 2009 issue of Elliott Wave International's monthly Elliott Wave Financial Forecast, co-editors Steven Hochberg and Peter Kendall published a careful study of Goldman Sachs company history -- and made a sobering forecast for its future. In this
special three-part series, we release that Special Report to you. Here is the final
installment, Part III. Read more.
Why Economic Forecasts Often Fail
Linear thinking often utterly misses the mark in financial forecasting.
By Elliott Wave InternationalWhen it comes to your money, pay attention to the pitfalls of linear thinking.
The markets of today may not resemble the markets of tomorrow. Keep in mind
the concept of dramatic change. This cannot be over-emphasized and bears
repeating: Major change is not an occasional occurrence throughout history;
paradoxically, it's the only constant. Read more.
Bob Prechter Points Out The Many Signs Of Deflation
Yes, You Heard Us Right
By Elliott Wave International
Everywhere you look, the mainstream financial experts are pinning on their 'WIN 2' buttons in a show of solidarity against what they see as the number one threat to the U.S. economy: Whip Inflation Now. There's just one problem: They're primed to fight the wrong enemy. In a special report, Bob Prechter uncovered the 'Continuing and Looming Deflationary Forces' underway right now.
Read more.
Prechter Describes The "Stunning Long-Term Elliott Wave Picture"
By Robert Folsom, Elliott Wave International
This seems to paint a bullish picture: the stock market was in double-digit rally mode during 43% of the total calendar days in question... Read more.
How to Channel an Impulse Wave on a Price Chart
By Susan C. Walker
How do you choose one lesson from a basic tutorial that is chock-full of excellent information about Elliott wave analysis? You use a time-honored method to end up with "how to use the chaneling technique with impulse waves." Read more.
What Moves Markets? News? Think Again
The mood of the crowd precedes action in the markets.
By Editorial Staff
Mon, 29 Mar 2010
The absolute majority of investors believe that what happens in the markets affects the mood of the marketplace. Every day, you hear commentators say that "falling stocks are sending a bearish signal to investors," or that "the rally is adding optimism."
But the reality is that the mood of the crowd precedes action in the markets. In other words, the conventional understanding of causality is 100% backwards. Let me repeat: mood comes first.
That's a radical idea. Yet for a careful market observer, it's the only one that explains "inconsistencies" in the markets -- for example, those frequent instances when stocks rally on "bearish" news or decline after a "bullish" report. Conventional analysts sweep those under the rug. But socionomics, a relatively new science pioneered by Elliott Wave International's president Robert Prechter, explains those "inconsistencies" with simple brilliance. Social mood changes first, says Prechter -- and he also proves it on multiple examples. Only after the mood changes do bullish-minded investors buy stocks. Only after the mood changes do bearish traders start looking for an excuse to sell. Mood is primary to market action -- and to social events.
Here's a parallel that could help you understand this counterintuitive concept: fame. An actor, politician or a singer becomes famous. They shine brightly for a while, but then suddenly fall out of favor with the crowd and drop off the radar screen. Did their talent change? In most cases, the answer is "no." Then what happened? The mood of the crowd changed. First, the crowd elevated the person because their persona "spoke" to them, but now their mood has shifted away from the message the persona delivered.
The actual person who became the superstar can probably still sing well, or give a good stump speech. But the shift in our collective perception has made their persona irrelevant. In his "Prechter's Perspective," in one of the interviews, Prechter says:
"It's not the person that matters to the crowd. It's the persona. The public can place them in star status, and it can remove the sanction. It is the same essential change in the collective mindset that marks the onset of a turn in the stock market."
In other words, the same mood shifts change trends in the financial markets.
When I first read the above quote, it instantly gave me a clearer understanding of how changing social mood can bring rapid changes in market direction. I only had to think about how quickly once popular TV shows can lose appeal among viewers, or how a fitness craze is suddenly no longer popular -- or how a market can reverse when nothing seems to spell trouble. Remember the good humor of "Friends" and "Seinfeld" in the late 1990s, replaced by "Survivor" and other bickering reality TV
shows after stocks topped in 2000? Remember how the DJIA topped in October 2007, when most economists and CEOs saw nothing but blue skies ahead? Remember how just four months ago, in November 2009, the U.S. dollar was "doomed" -- right before it reversed and astonished dollar bears? The list of examples could continue,
but I'm sure you get the idea.
The main idea of Prechter's socionomics is that the unconsciously shared social mood is the cause. Events -- like the market rising or falling, superstars gaining or losing popularity, etc. -- are results. So the real question is: How do you measure social mood? The Wave Principle offers you a direct measure. It explains that shifts in collective psychology -- be they in the markets or popular culture -- occur in predictable patterns, Elliott wave patterns. Once you know where you are within a pattern, you can estimate with a good probability what should come next.
That's why you can use the Wave Principle to forecast not only the financial markets, but future fashion trends, types of songs which are likely to become popular, what kinds of movies are likely to win at the box office, the chances of political incumbents for being re-elected, political strife between nations -- and much, much more.
The Stock Market Is Patterned -- Here's Proof
You don't have to sift through the latest economic data as if they were tea leaves.
By Editorial Staff
Understanding how the market progresses at all degrees of trend gives you an invaluable perspective.
No longer do you have to sift through the latest economic data as if they were tea leaves. You gain a
condensed view of the whole panorama of essential trends in human social mood and activity, as far
back as the data can take you. Take a look at this chart, for example
Bob Prechter Reveals the Most Dangerous Gold & Silver Myths
A FREE report keeps you on the right side of precious metals
By Nico Isaac Right now, the gold BULL-ion bandwagon is more crowded than a New York subway train
during rush hour. But before you squeeze your way into the crowd of passengers, you should know one thing:
Those steering the course are using outdated maps based on ill-conceived notions and illusory hopes. Read more.
Paper Trading Is NOT What Will Teach You To Trade
Paper trading is only useful for the testing of your methodology.
By Editorial Staff
"Some people advocate 'paper trading' as a learning tool. Paper trading is useful for the testing of methodology,
but it is of no value in learning about trading. In fact, it can be detrimental, by imbuing the novice with a false
sense of security in 'knowing' that he has successfully paper traded the past six months, thus believing that
the next six months with real money will be no different. Nothing could be further from the truth. Why?"
Elliott Wave International's president Robert Prechter explains more in this important FREE report. Read more.
Gold: Best Supporting Role In Economic Downturns? Think Again
Gold's safe-haven status is based on hype, not history
By Nico IsaacEverywhere you look, from the Red Carpet to Wall Street, gold is definitely in "fashion." As for why,
one word comes to mind: safe-haven. See, according to the mainstream financial experts, the more
unstable the global economy, the greater the appeal for the precious metal. These two charts from
EWI President Bob Prechter offer another perspective. Read more.
Wave Principle Crash Course: There's No Going Back
Free video tutorial available to all Club EWI members
March 4, 2010By Nico Isaac
For over ten decades, the mainstream financial world has embraced the view that external news events drive trend changes in the markets. In less than ten minutes, EWI's senior tutorial instructor Wayne Gorman shatters that very idea into a fine dust, swept away into thin air.
In part one of his exclusive, three-part Club EWI video series "Why Use The Wave Principle,"
Wayne first assesses the pitfalls of relying on macroeconomic models to forecast; namely: "An investor is lured into the market at just the worst time, when it's time to sell, and forced out just at the best time to buy."
As for real world examples of this happening, Wayne spans three hundred years of financial history to reveal how the most pivotal economic, political, and environmental events failed to alter the course of their respective markets. Here, the free videoincludes groundbreaking charts on these (and more) well known episodes:
- The S&P 500 and Enron from 2000-2002: The stock market ROSE and continued to proceed upward
AFTER the largest US corporate scandal and bankruptcy ever (at the time).- The Dow Industrials and GDP quarterly data from 1970 to early 2000s: After the release of major negative GDP numbers, the market for the most part ROSE, just the opposite of what most market analysts and investors expect. The Dow and profound political events over the last 80 years: In the 1930s and 1940s, a series of negative incidents -- i.e. Hitler rising to power, World War II, and the Holocaust -- preceded a powerful uptrend in stocks all the way into the 1960s.Stock market charts of the five countries most affected by the 2004 Indian Ocean Tsunami (India, Indonesia, Malaysia, Sri Lanka, and Thailand). Four out of the five ROSE after the natural disaster...
Believe it or not, we've only scratched the surface. In his myth-busting, free video "Why Use the Wave Principle," Wayne Gorman presents a total of 40 charts that capture failed fundamental analysis of the world's leading financial markets. Wayne recalls this expression from a famous,
Nobel Prize winning economist:"Economic reasoning will be of no value in cases of uncertainty."
And he offers this response:
"But isn't that what we have in financial markets: cases of uncertainty? We need a different type of reasoning, one that will
help us to avoid the pitfalls shown on the previous charts. That's why the Wave Principle is so important. It offers a unique perspective and a market discipline of rules and guidelines that help investors avoid buying at tops and liquidating at bottoms.
It helps to explain and understand trends before they happen."The flaw in Economic 101, cause-and-effect theory is one of the easiest things to prove. But it's also one of the hardest things for many investors to accept. Now is the time to do so. Watch the free "Why Use the Wave Principle" video in its entirety
today at absolutely no cost. Simply sign on to join the rapidly expanding Club EWI and take advantage of the amazing educational benefits membership has to offer.
Nico Isaac writes for Elliott Wave International, a market forecasting and technical analysis firm.
What Does NOT Move Markets? Examining 8 Claims of Market Efficiency
March 2, 2010By Susan Walker
If everyone says that shocks from outside the financial system -- so-called exogenous shocks -- can affect it for better or worse, they must be right.
It just sounds so darned logical, right? Economists believe this trope to be true, mainly because they believe that investors are rational thinkers who re-evaluate their positions after every new bit of relevant information turns up.
Beginning to sound slightly impossible? Well, yes.
It turns out that logic is exactly what's missing from this it-feels-so-right idea of rational reaction to exogenous shocks. Read an excerpt from Robert Prechter's February 2010 Elliott Wave Theorist to see how Prechter deals with this widely held belief.
Find out what really moves markets -- download the free 118-page Independent Investor eBook. The Independent Investor eBook shows you exactly what moves markets and what doesn't. You might be surprised to discover it's not the Fed or "surprise" news events. Learn more, and download your free ebook here.
* * * * *
Excerpted from Prechter's February 2010 Elliott Wave Theorist published Feb. 19, 2010
The Efficient Market Hypothesis (EMH) argues that as new information enters the marketplace, investors revalue stocks accordingly. … In such a world, the market would fluctuate narrowly around equilibrium as minor bits of news about individual companies mostly canceled each other out. Then important events, which would affect the valuation of the market as a whole, would serve as “shocks” causing investors to adjust prices to a new level, reflecting that new information. One would see these reactions in real time, and investigators of market history would face no difficulties in identifying precisely what new information caused the change in prices. …
This is a simple idea and simple to test. But almost no one ever bothers to test it. According to the mindset of conventional economists, no one needs to test it; it just feels right; it must be right. It’s the only model anyone can think of. But socionomists [those who use the Wave Principle to make social predictions] have tested this idea multiple ways. And the result is not pretty
for the theories that rely upon it.
The tests that we will examine are not rigorous or statistical. Our time and resources are limited. But in refuting a theory, extreme rigor is unnecessary. If someone says, “All leaves are green,” all one need do is show him a red one to refute the claim. I hope when we are done with our brief survey, you will see that the ubiquitous claim we challenge is more akin to economists saying “All leaves are made of iron.” We will be unable to find a single example from nature that fits.* * *
In his February 2010 Elliott Wave Theorist, Prechter then goes on to show charts that examine each of these claims that
encompass both economic and political events:Claim #1: “Interest rates drive stock prices.”
Claim #2: “Rising oil prices are bearish for stocks.”
Claim #3: “An expanding trade deficit is bad for a nation’s economy and therefore bearish for stock prices.”
Claim #4: “Earnings drive stock prices.”
Claim #5: “GDP drives stock prices.”
Claim #6: “Wars are bullish/bearish for stock prices.”
Claim #7: “Peace is bullish for stocks.”
Claim #8: “Terrorist attacks would cause the stock market to drop.”To protect your personal finances, it's important to think independently from the crowd, particularly when the crowd buys into what
economists say.Find out what really moves markets -- download the free 118-page Independent Investor eBook. The Independent Investor eBook shows you exactly what moves markets and what doesn't. You might be surprised to discover it's not the Fed or "surprise" newsevents. Learn more, and download your free ebook here.
Susan C. Walker writes for Elliott Wave International, a market forecasting and technical analysis company.
