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EURGBP: A Picture of Elliott Wave Precision

The euro’s recent surge to two-month highs against the pound fit its Elliott wave blueprint beautifully

Let’s assume financial markets are driven by news events. Negative news items cause prices to fall, while positive items fuel rallies. Easy enough, right?

Not exactly. See, there are several problems with this premise, most of all this: Investors’ interpretation of the news is constantly changing. To use those events as a gauge of future price action is like trying to shoot a straight arrow in the middle of a tornado.

Take, for instance, the recent news events surrounding the euro/pound currency exchange rate.

On May 18, a stronger-than-expected UK retail sales report was initially seen to be a major fundamental coup for the pound, as this news source makes plain:  

“Pound to Euro Exchange Rate: Sterling SURGES After UK Retail Sales Smash Expectations… Sterling woke from its slumber and then some, following the strong April retail sales data. This robust number has rekindled optimism in the ability of the UK economy to ride out the ongoing political uncertainty.

Sterling has rediscovered its fight.” (May 18 Daily Star)

It doesn’t get any more bullish than that!

And yet, the very next day, sterling fell back into its “slumber” as that “rekindled” optimism blew out. Here, one May 19 news source attempts to explain away the pound’s rogue bearish move:

“Pound to Euro Exchange Rate: Sterling FALLS Despite Supportive Economic Growth in UK” (May 19 Daily Star)

So, essentially, the same news event deemed uber-bullish one minute is futile against the pound’s downtrend the next?

How about this instead: News is largely irrelevant to a market’s underlying trend. In our experience, price action is driven by investor psychology, which unfolds as Elliott wave patterns directly on a market’s price chart.

Like, say, the EURGBP. On May 11, our Currency Pro Service analyst Michael Madden identified a powerful bullish set-up on the intraday price chart of the EURGBP — namely, the start of a third-wave rally. Madden wrote:

“We are counting an impulse pattern complete off the 0.8315 low, wave (i) of ((c)), a corrective pullback, wave (ii), must not penetrate the same low in order to keep the bullish forecast alive and will create the next setup for higher in wave (iii).”

From there, the euro soared against the pound in a steady third-wave rally to two-month highs, the pound-“bullish” UK retail sales report notwithstanding:

As for where the euro/pound currency rate is headed next… our Currency Pro Service is 100% certain of one thing: The answer is not in the news!


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This article was syndicated by Elliott Wave International and was originally published under the headline EURGBP: A Picture of Elliott Wave Precision. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Trump Card was the Market’s Destiny

The “Trump Bump” Was in the Cards LONG Before Trump

How to breach limitations of conventional market forecasting

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It’s been a tough time for the stock market bears.

You just have to look at these recent headlines:

  • U.S. stock futures hit fresh highs (Marketwatch, Feb. 20)
  • Stocks post best winning streak in 25 years (CNN Money, Feb. 16)
  • Stocks Continue Record-Breaking Run (Nasdaq.com, Feb. 15)

As a result, a prominent Canadian market participant has thrown in the towel (zerohedge.com, Feb. 17):

The CEO of Fairfax Financial … announced that he is covering his firm’s equity hedges after suffering a $1.1 billion net loss on its investments in Q4, and $1.2 billion for all of 2016.

But the financial pain hardly ends there. Look at this chart with comments from the Wall Street Journal (Feb. 16):

It is the buzz of Wall Street: a five-day, 15% plunge in a U.S. mutual fund whose bearish bets were undone by the S&P 500’s latest run to fresh records.

Many market commentators say stocks have been rising because of the new administration’s policies (Yahoo Finance, Feb. 20):

Much of the post-US election rally in the stock market has been attributed to President Donald Trump’s promises for tax cuts and deregulation.

But long before the election, Elliott wave price patterns already told our subscribers to prepare for a market rally.

Our just-published February Elliott Wave Theorist reviews several charts we published early in 2016. Here’s one of those charts along with commentary from the new Elliott Wave Theorist:

The January and February 2016 issues of The Elliott Wave Theorist, written as stocks were plunging in highly volatile fashion, called for a bottom and labeled the stock indexes as having finished A, B and C of wave (4), a corrective formation dating back to the high of 2015.

In other words, our analysis revealed that the market was starting the next leg up.


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Learn how you can apply the Wave Principle to improve your trading and investing in this free 10-lesson tutorial. You’ll learn:

  • What the basic Elliott wave progression looks like
  • Difference between impulsive and corrective waves
  • How to estimate the length of waves
  • How Fibonacci numbers fit into wave analysis
  • Practical application tips for the method

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This article was syndicated by Elliott Wave International and was originally published under the headline The “Trump Bump” Was in the Cards LONG Before Trump. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Elliott Waves in India’s Bull Market

India’s Stock Market: Nothing “Random” About It

Back in 2009 we made a bull market prediction for India’s stock market, and SENSEX. So far the bull market is still on track.
See how beautifully India’s 8-year long bull market follows a clear Elliott wave fractal pattern

Every day, the mainstream financial experts attempt to explain away fluctuations in stock market trends with some “fundamental factor” du jour, all of which boil down to this: good news causes a market to rise and bad news — to fall.

Problem is, sometimes the experts end up using the same “fundamental” to justify the market’s upward AND downward moves. A Recent case in point, from South Asia:

“Sensex Down 324 Points as U.S. Picks Donald Trump as President.”

VERSUS

“Sensex Makes Recovery Amid Donald Trump Win.”

How can the same event — the election of Donald Trump — be bullish AND bearish for India’s stock market? You might as well say that it moves at random, as most people do.

But before you join them — consider that there may be something other than “fundamentals” driving trends.

In the words of Ralph Nelson Elliott, the discoverer of the Wave Principle:

“The wild, senseless, and apparently uncontrollable changes in prices from year to year, from month to month, or from day to day link themselves into a law abiding rhythmic pattern of waves…

“Current news and political developments are of only incidental importance, soon forgotten.”

Elliott saw the fractal, a pattern that repeats in form but not in time or amplitude, as the overriding design of all stock market progress and regress. This diagram shows you the Elliott wave fractal’s idealized development and subdivisions:

As for a real-world example of the Elliott wave fractal formation in stock markets, investors need only look at the last eight years in India’s bellwether Sensex index.

From the beginning, in 2008, the Sensex was mired in a bearish slump, with the market circling the drain of a three-year low, having plummeted 50% from its December 2007 peak to below the 9000 level. But instead of focusing on the doom and gloom on Dalal Street (India’s Wall Street), our analysts honed in on a telltale pattern unfolding directly on the Sensex’s price chart.

Here, our November 2008 Asian-Pacific Financial Forecast featured a special section on India and wrote:

“The Wave Principle teaches that the stock market is a self-similar fractal. That means that some pieces of its price record — which Ralph Nelson Elliott called waves — resemble other pieces elsewhere in that record. The weekly chart of India’s Sensex shows just such an example.

“Notice how the up-down sequence labeled Intermediate waves (1) and (2) (in the small red box) is a microcosm of the larger up-down sequence from the 2003 low to the present (i.e., waves 1 and 2, in the large black box). In both cases, the wave-two correction retraced approximately 50% of the wave-one advance.

“If we have identified this ‘nested fractal’ relationship correctly, it means that Indian stocks are about to begin Primary wave 3 of the bull market that began in 2003.”

From the point of that 2008 forecast, the Sensex more than doubled in value before hitting the breaks and turning sideways in early 2011. After a year, the December 2012 Asian-Pacific Finanical Forecast said the uptrend was about to resume:

“Conventional observers may say that the social malaise and political gridlock at present make a bull market in India unlikely. Elliotticians and socionomists, however, know that those conditions are merely lagging results of the corrective period of the past two years. They are also precisely the kind of conditions in which major advances begin. In fact, as Indian stocks now advance in wave (3) of 3 of III, India’s future looks brighter than ever.

Indeed, from there, the Sensex took off like a rocket in its most powerful bull-market phase ever, soaring to an all-time record high above 29,500 on March 3, 2015.

India’s 8-year long bull market isn’t an exception to the mainstream “random” walk model. It’s the rule for all liquid financial markets across the globe, where collective investor psychology creates trends big and small — regardless of news and events.


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This article was syndicated by Elliott Wave International and was originally published under the headline India’s Stock Market: Nothing “Random” About It. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Charts and Politics

3 Killer Charts, 2 Fast Looks at Politics

Global Market Perspective is Your Roadmap to Global Investment Opportunity

Covering more than 40 markets on 50-plus pages each month, Global Market Perspective prepares subscribers for opportunities around the world. Get the latest forecasts for U.S., Asian-Pacific and European stocks and economies, global currencies, bonds, crude oil and more. Learn More about Global Market Perspective

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If you’re not ready to subscribe, this free report is a great place to start learning about the Wave Principle.

Unleash the power of the Wave Principle

Much like a great sports play; to appreciate a great market forecast, you have to see it. In fact, we’d like to show you four. Our examples do indeed show what can happen when Elliott analysis meets opportunity. But we’re not asking you to attend a class in ‘good calls.’ In each of these four markets, the unfolding trends have (once again) reached critical junctures. You really, really want to see what we see, right now. Get your report — How to Find Real Opportunities in the Markets You Trade — FREE


This article was syndicated by Elliott Wave International and was originally published under the headline 3 Killer Charts, 2 Fast Looks at Politics. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

The Trend is Set

What You Should Pay Attention to Next

Steve Hochberg and Pete Kendall, co-editors of our monthly Financial Forecast, sat down with ElliottWaveTV to discuss the volatility that followed Thursday’s Brexit vote.

Learn what the Brexit vote represents — and its implications for the world markets and economies.


Volatility is Raging — Prepare for what’s next, risk-free

Our subscribers were ready for most of this volatility. Elliott waves prepared us when the market turmoil first started in August 2015, re-ignited back in January — and returned again post-Brexit vote.

Right now, our flagship Financial Forecast Service again prepares you for what’s next in stocks, bonds, U.S. dollar, gold — and the economy.

Limited-time, risk-free offer: Lock in our most comprehensive investor package for 4 months — and only pay for 3 months. (You save 25% instantly.)

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Where is Walmart Headed?

Walmart stock has dived throughout 2015 and is up from lows in 2016. Will the up-run continue? The era of “always low prices” no longer translates into always high profits. Learn what we think is behind the shift

By Elliott Wave International

Walmart founder Sam Walton said:

“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”

Never were those words felt more acutely for those on the Walmart payroll than right now. Reason being: Over the last year, the eponymous Walmart “customer” has, indeed, taken his business elsewhere, fueling a series of epic setbacks for the retail giant:

  • Store closures, layoffs, and the shuttering of its entire fleet of smaller “Express” locations across the U.S.
  • A near 40% decline in its stock (WMT) before hitting bottom in November 2015
  • Losing its status as the world’s #1 retailer to Amazon
  • And — the sour cherry on top: The first decline in annual revenue since Walmart went public 45 years ago

In the words of a March 31 Bloomberg: It’s “the end of an era for Walmart.”

Which leaves one question: How the heck does a big-box behemoth go from retail victor to re-fail victim?

Well, according to the mainstream experts, the main cause of Walmart’s woes are many-fold, from falling oil prices – to – China’s flailing economy – to – the extinction of the brick-and-mortar store – to – the biggest baddest culprit of all, the brawny greenback:

“Walmart profits hit by strong dollar” (CNN Money)

Economists can always be counted on for providing endless explanations as to why a corporate king gets dethroned — after the fact.

But in our opinion, one’s time and energy is better served anticipating those turns. Which is exactly what our analysts did in regard to Walmart’s reversal of fortune — starting with our September 2013 Elliott Wave Financial Forecast’s bearish call for Walmart stock:

“We’ll stick with our contention that the economy is turning toward a deflationary depression. This long-term chart of Walmart is another under-the-radar clue to the unfolding debacle.

“It shows the world’s largest retailer completing a five-wave rally that dates back to the early 1980s. As consumers go on a buying strike over the next few years, Walmart’s stock should fall by at least 50%.”

From there, Walmart made one more new high at $90.97, after which the anticipated downside drama arrived in full force, with shares plunging 37% to end at a four-year low in November 2015.

Which brings us to the larger issue at hand: Walmart’s struggle to convert “always low prices” into always higher profits goes hand in hand with the underlying trend in the U.S. economy: that of deflation.


What You Need to Know Now About Protecting Yourself from Deflation

What You Need to Know NOW About Protecting Yourself from Deflation

In this free Special Report, you will learn about this unexpected but imminent risk to your portfolio AND you’ll get 29 specific forecasts for stocks, real estate, gold, cultural trends — and more (excerpted from Prechter’s New York Times bestseller Conquer the Crash — You Can Survive and Prosper in a Deflationary Depression).

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This article was syndicated by Elliott Wave International and was originally published under the headline Woe-Mart: The Retail Giant Walmart Has Faltered. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

After a decade of FED help, economy is not out of the woods and another leg down may be imminent despite the printing press. Can Walmart survive? Arm yourself with knowledge you don’t see in mainstream media.

Global Markets Report for 2016

Where is the Stock Market headed? State of the Global Markets Report — 2016 edition, one of the most anticipated annual reports for investors and technical analysts, has just been released, and the first 10,000 copies can be reserved right now 100% free. After that, it goes to $99 per download, where it will stay for the rest of the year.

We know most investors are interested mostly in U.S. markets, but there’s an advantage to looking abroad, too. EWI has a keen understanding of how markets around the world fit into the global big-picture. After all, the Great Depression started in Europe then crossed the Atlantic to the Americas. So it’s important you keep an eye on the global big picture. As a result of reading this report, you’ll see what we EWI’s sees right now and for the rest of the year — both threats AND opportunities on a global scale. Click this link to learn more and download your free report now.

This report flies off the virtual shelves every year, and with this year being especially volatile so far, we arranged with the publisher to give you an immediate heads up so you can be among the first to get access.

This 50-page, chart-filled report may be the most valuable publication you read this year. It will help you avoid the dangerous pitfalls and spot the biggest opportunities in the year ahead.

Want to know what’s inside? Click this link to start reading it now. If you want a little context first, take a look at these headlines:

Wall Street makes worst ever start to a year (Financial Times)

Dow Tumbles Nearly 400 Points on China Worries (Wall Street Journal)

World markets plunge as oil drops below $27 a barrel (CNN)

Expect gold prices to be massively volatile (MarketWatch)

Notice anything interesting?

The thing that jumps out at me is how massively contrary today’s reality is compared to most experts’ projections for 2016 just a few short months ago. Not getting off to a great start, are they?

Now consider this: In the first week of this year, the Wall Street Journal polled 10 well-known fundamental analysts for their year-end forecast for the S&P 500. They projected on average the S&P to reach 2,193 by the end of the year. The lowest forecast was 2,100. The highest was 2,300.

Now that’s interesting enough, but get this: These same experts from the same poll one year ago projected the S&P to reach 2,201 by the end of LAST year!

Fast forward to today, investors and analysts have been in a panic as the markets ended 2015 well off those projections and kicked off 2016 with its worst start EVER.

U.S. stocks, Chinese stocks, gold, oil, the entire European Union — all are at pivotal junctures right now, and we’re only two months into the new year.

If you want to prepare for the rest of 2016 and equip yourself to adapt to rapidly changing trends around the world, I encourage you to follow this link and claim your copy now.

You will get instant access to Elliott Wave International’s annual State of the Global Market Report — 2016 Edition, one of the most widely circulated annual reports for investors and technical analysts.

The State of the Global Market Report provides a premium-level look inside the world’s largest independent financial forecast firm’s big-picture forecasts for 2016. It gives you a snapshot of what’s already occurred then focuses you squarely on what Elliott Wave International’s team of global analysts sees for the rest of 2016 and beyond. At about 50 chart-filled pages, it may be the most valuable publication produced each year to help investors position themselves wisely for the year ahead, avoid the dangerous pitfalls, and catch and ride the biggest, fastest-moving opportunities.

You may not read every line of this globally focused report, but we guarantee you will benefit from the insights that apply to your favorite markets.

Please follow this link to start reading the report now >>

This is a must read for all investors, professional or not! Consider the insights from this report before you make portfolio decisions!

Can the Money Disappear in Stocks?

Can Stock Values Simply “Disappear”? Yes.
And it’s happened before, too — just think back to the 2007-2009 financial crisis. You see, the money was never there to begin with. When your stock portfolio shows you have a million dollars worth of stocks, it simply means you can get million dollars if you can sell the stock at the current valuations. What is the current valuation? It is the value the latest buyer and seller agreed upon. It is not a guarantee that future buyers will agree to that valuation.

On Wednesday (Jan. 13) CNBC reported that,

“Almost $3.2 trillion has been wiped off the value of stocks around the world since the start of 2016, according to calculations by a top market analyst. U.S. stocks are now off $1.77 trillion, while overseas stocks are down $1.4 trillion.”

Stocks rallied on Thursday — but then tanked even harder on Friday, which probably made that $3.2 trillion figure even bigger.

But how can that be? Doesn’t money simply move from one asset class to another?

Our readers have asked us this question before — especially during the 2007-2009 financial crisis, when 54% of the Dow’s value got erased in just 18 months.

You may be wondering this, too. Well, here’s an answer — from Ch. 9 of Bob Prechter’s New York Times Business bestseller, Conquer the Crash:

Financial Values Can Disappear
(Excerpt, Conquer the Crash, ch. 9)

People seem to take for granted that financial values can be created endlessly seemingly out of nowhere and pile up to the moon. Turn the direction around and mention that financial values can disappear into nowhere, and they insist that it is not possible. “The money has to go somewhere … It just moves from stocks to bonds to money funds … It never goes away … For every buyer, there is a seller, so the money just changes hands.”

That is true of the money, just as it was all the way up, but it’s not true of the values, which changed all the way up.

Asset prices rise not because of “buying” per se, because indeed for every buyer, there is a seller. They rise because those transacting agree that their prices should be higher. All that everyone else — including those who own some of that asset and those who do not — need do is nothing.

Conversely, for prices of assets to fall, it takes only one seller and one buyer who agree that the former value of an asset was too high. If no other bids are competing with that buyer’s, then the value of the asset falls, and it falls for everyone who owns it. Financial values can disappear through a decrease in prices for any type of investment asset, including bonds, stocks and land.

Anyone who watches the stock or commodity markets closely has seen this phenomenon on a small scale many times. Whenever a market “gaps” up or down on an opening, it simply registers a new value on the first trade, which can be conducted by as few as two people. It did not take everyone’s action to make it happen, just most people’s inaction on the other side.

The dynamics of value expansion and contraction explain why a bear market can bankrupt millions of people. At the peak of a credit expansion or a bull market, assets have been valued upward, and all participants are wealthy — both the people who sold the assets and the people who hold the assets. The latter group is far larger than the former, because the total supply of money has been relatively stable while the total value of financial assets has ballooned. When the market turns down, the dynamic goes into reverse. Only a very few owners of a collapsing financial asset trade it for money at 90 percent of peak value. Some others may get out at 80 percent, 50 percent or 30 percent of peak value. In each case, sellers are simply transforming the remaining future value losses to someone else.

In a bear market, the vast, vast majority does nothing and gets stuck holding assets with low or non-existent valuations. The “million dollars” that a wealthy investor might have thought he had in his bond portfolio or at a stock’s peak value can quite rapidly become $50,000 or $5000 or $50. The rest of it just disappears.

You see, he never really had a million dollars; all he had was IOUs or stock certificates. The idea that it had a certain financial value was in his head and the heads of others who agreed. When the point of agreement changed, so did the value. Poof! Gone in a flash of aggregated neurons.

So, the answer comes down to “money” vs. “value.” Financial values don’t move from one asset to another. They can just disappear.


This perceived value stored in stocks is a reason of deflation. Once the valuations shrink, people who used to think they have money suddenly realize they do not have the money. They stop spending, start saving. Companies who could pay in stocks can no longer do so, and that strains their budgets, shrinks employee benefits, income. Companies who could borrow easily showing stocks as collateral can no longer do so. This is why the FED likes to create asset bubbles in housing and stocks to have the wealth effect. The problem is bubbles tend to pop, and the next pop may be due now.

There is no time to waste
Global stocks lost $3.17 trillion in the first 2 weeks of 2016

Were you ready? Are you ready for what’s next?

You can be.

[Urgent New Report] How to Survive and Prosper in this Global Financial Crisis. With global stocks losing $3.17 trillion dollars in the first 8 trading days of 2016 (CNBC), NOW is the time to download this free report from Robert Prechter. This report was adapted from Prechter’s New York Times bestseller, Conquer the Crash. You’ll get a list of “Imperative Do’s and Crucial Don’ts” for surviving and prospering in today’s volatile markets. There’s no time to waste. It’s time you prepare for what’s next, NOW. Read the Complete Report.

Risk On, Risk OFF?

Stocks got no-where in 2015. Gold topped back in 2011, oil bounce topped 2014. Various commodities resumed their decline during the last few years. Where is the stock market headed?

Risk On? Risk Off? Find Out Where Your Money Lies
A peek at the new free report from the editors of our Financial Forecast Service

It’s almost Christmas, “the hap-happiest season of all.” Yet, here’s a sobering fact for U.S. investors: S&P 500 stocks are actually lower now than at the end of last year (chart: Google Finance):

You could say that we’ve had a long bull market, so one “slow” year is OK. But Steve Hochberg and Pete Kendall, the editors of Elliott Wave International’s Financial Forecast Service, have recently documented several indicators which confirm that investors are actually losing their appetite for risk.

In fact, EWI has put together a subscriber-level special report with specific details on this phenomenon — from IPOs to corporate buyback to emerging markets.

You’ll find an excerpt below — and to read this new report in full, free, simply click here.

*****

From Risk On to Risk Off

…Another example is the market for Initial Public Offerings, which The Elliott Wave Financial Forecast identified as ripe for a reversal back in the fall of 2014.

Citing a “euphoria” surrounding Alibaba, which remains the largest IPO ever, we noted a similarity to the record-setting deals that hit the market in November 1999 and March 2008. After each ebullient period, the overall market fell sharply. The long term chart of the Bloomberg IPO Index shows the reversal in the IPO aftermarket that followed each speculative episode:

Interestingly, the peaks are exactly 7.38 years from each other, creating a long-term cycle top that is now behind us. Since September 2014, more than half of the 35 companies that went public with initial valuations of more than $1 billion are now below their IPO price. Many of the most heavily hyped offerings since 2011 are also down dramatically from their post-IPO highs, such as Alibaba (-30%), Twitter (-65%), Zynga (-85%) and Groupon (-90%).

Square Inc., a digital payment company, was supposed to be the next high-flyer when it debuted in mid-November, but before it even hit the market, its prospects diminished as underwriters reduced its offering price to $9 a share, 20% below its estimated opening range.

According to The Wall Street Journal, “skeptical investors” forced the reduction, “further souring the market for new technology-company stock.” …

(Editor’s note: Emerging markets; mergers and acquisitions; corporate stock buybacks — see more warning signs in the rest of EWI’s new special report. Read it free now.)

It is a Mistake to Follow the Crowd

We’ve seen it time and again: The investment crowd often hops aboard a financial trend just as it’s about to end.

Government itself is actually a case in point. Here’s what the August 2007 Elliott Wave Financial Forecast said:

[In July], The Elliott Wave Financial Forecast discussed governments’ knack for committing to a trend when it is finally ending. A front page article in the July 24 issue of The Wall Street Journal titled, “Governments Get Bolder in Buying Equity Stakes,” confirms the strength of this very dependable sell signal.

Just two months later (October 2007), the stock market registered its historic high.

Overseas buyers are another major chunk of the investment crowd. That group was also ramping up their purchases of U.S. stocks back in late 2007.

Corporations are likewise part of the herd.

Let’s fast forward to 2015, and read what our August 14 Short Term Update had to say just before the worst part of the recent selloff:

Selling pressure was exhausted on Wednesday (Aug. 12), when stocks declined sharply early in the session but rallied to erase all or most of the early-day losses. The most astounding aspect of that day was [that] much of the stock being bought was not by individual investors or by institutions, but by companies themselves. A unit of Goldman Sachs that executes share buybacks for clients had its busiest day since 2011. … Companies are bad market timers.

Indeed, our independent analysis indicated that the stock market rally was ending. Here’s a chart that the August 14 Short Term Update showed [wave labels available to subscribers]:

By the end of the week that followed, the Dow and S&P were down nearly 6%, while the NASDAQ was down nearly 7%.

Here’s a weekly S&P 500 chart from August 21:

But even as the selloff was underway, still another group was hopping aboard what they thought would be a continued uptrend.

Millionaires may be richer — but they aren’t any better at predicting stock market moves than the rest of the population.

The latest Millionaire Investor Confidence Survey, from Spectrem Group, shows that millionaires became more bullish on the economy and markets just before stocks fell into correction territory in late August.

According to the survey, which was conducted between Aug. 14 and Aug. 20, millionaire confidence during the month rose to its highest level in 11 months … .

CNBC, September 2

As we know, the market timing of these millionaires could not have been worse.


Read our free report: Pandemonium in the Stock Market
Updated with new charts and analysis

No longer is extreme volatility contained to Greece or China. The massive waves are here in the States, just as our analysts predicted. Learn what’s behind the recent market chaos. Read excerpts and see eye-opening charts from Robert Prechter’s Elliott Wave Theorist, The Financial Forecast and our Short Term Update.

Get your free report now >>

This article was syndicated by Elliott Wave International and was originally published under the headline Stocks: Why Following the Crowd is Often a Big Mistake. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.