Category Archives: Stock Market

Discussion about the stock market, trading and investment, market timing.

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.)

Click Here for Details and Instant Access

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.

DOW Falls 1000 Points in a week

Markets are crashing around the world. US is no exception. After a long bull run, 50 and 200 day averages are breached by the sharp decline in S&P 500. 50 day average may soon cross below 200 day for the first time  after a many years in many of the market indices.

This week’s stunning sell-off sent the Dow 1,000 points lower. Other markets have surprised investors lately, too:

  1. Crude oil just fell below $40 a barrel
  2. Gold just broke above $1160 an ounce
  3. The U.S. dollar is enjoying the strength not seen in years

Almost every step of the way, Elliott wave price patterns have guided our friends at Elliott Wave International and their subscribers:

  1. On July 24, EWI said to turn bullish on gold — the exact day of the intraday lows in gold and silver after four years of decline
  2. Crude oil has followed its Elliott wave script since 1998, including the all-time high near $150 in 2008 and the more recent secondary peak — one from which oil fell below $40 a barrel this week
  3. Wave patterns warned EWI and their subscribers of the huge declines in commodities and the huge rally in the U.S. dollar — both against nearly universal disagreement

The credit goes to the Elliott wave method. For the past 80 years, waves have warned thousands of investors like you about risks — and new opportunities! — at countless market junctures.

This week’s #1 story is the 1,000-point sell-off in the Dow. To show you what they’ve been saying about the markets, Elliott Wave International just put together a new, free 2-page Special Report with most relevant excerpts from their flagship publications: Elliott Wave Theorist andElliott Wave Financial Forecast.

It’s the kind of report a well-informed investor shouldn’t go without.

Read this Special Report now — instantly, and 100% free — to see for yourself the evidence markets are presenting!

The World is Awash in Oil

…But does that mean that oil prices will only go down from here?

In this new interview with Elliott Wave International’s Chief Energy Analyst, Steve Craig, you’ll learn where he sees prices going next.

*Editor’s note: this interview was recorded on August 12; the price low cited in the video was broken on August 13.


Market Myths Exposed

Free Report: “Peak Oil” — And Other Ways Crude Oil Fooled Almost Everyone

These excerpts from Robert Prechter’s Elliott Wave Theorist highlight the flaws in the conventional approach to forecasting oil prices — and show you why oil fooled almost everyone.

Take 10 seconds to get a free Club EWI password now — and get instant access to this free report >>

This article was syndicated by Elliott Wave International and was originally published under the headline (Interview) “The World is Awash in Oil”. 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.

NASDAQ Leads the Stock Market Bubble

Another bubble is about to pop. In March 2015, we covered the return to a popular fascination with technology.

The striking resemblance to 2000’s technology mania is not going unnoticed. How can it? With the NASDAQ’s much heralded return to 5000 and magazine covers proclaiming “Google Wants You To Live Forever,” concern about an “asset bubble” is being raised. But this is actually another throwback to early March 2000, when the NASDAQ reached its all-time high and the Financial Forecast remarked on a “public ambivalence toward warnings of any kind.”

This March 7 headline from a major financial paper offers a perfect example of how this “normalization” works: “Forget 2000. It’s a Different Investing Ballgame.” Really? Yeah, really. “It really is different this time,” says another. “The crazy valuations seen at the turn of the millennium — when silly concepts, such as collecting eyeballs, attracted billions of dollars from breathless speculators wanting to get in on the new, new thing — are absent.”

There’s just one problem with this assessment, it’s not accurate. Here’s the reality, or should we say surreality, as depicted in Bloomberg on March 17:

The Fuzzy, Insane Math That’s Creating
So Many Billion-Dollar Tech Companies

The article discloses how companies are shooting to “astronomical valuations,” mostly with Internet ideas that capture people’s bullish imaginations and, as in 2000, cause them to look beyond mundane things such as cash flow and profits. Once again, such stone-age metrics are less important than “the number of people using the product” and “whether they pay for it. Investors salivate over what’s called ‘hockey-stick’ growth curves, indicating massive uptake. Costs, especially operations costs, are largely ignored.”

As in 2000, the fever has been spreading fast. According to Bloomberg, start-ups with billion-dollar valuations were once dubbed “unicorns” because of their rarity. Now, Bloomberg counts more than 50 of them. Many have expanded ten-fold, so a new buzzword, “decacorn,” now applies to those with capitalizations of more than “$10 billion, which includes Airbnb, Dropbox, Pinterest, Snapchat and Uber.”

Of course, the driving force behind many of these investments is the same–a fear of missing out (FOMO).

“A severe case of FOMO can cause some to do crazy things to get into the hottest deals,” says Bloomberg. This is exactly what the Financial Forecast said in March 2000, when we explained why people fail to heed ample warnings in the final throes of a mania: “Acting on such an opinion might mean missing something on the upside. ‘The average person must ride it out,’ says [a] Nobel Prize winner. Quotes such as these will deserve preservation in bronze when the bear market is mature.” Clearly, that time still lies ahead.

For compelling Elliott wave evidence of a culmination of the Mania Era, see the five-wave advance in the share price of the current technology leader, Apple Inc., on page 3 of the March Elliott Wave Theorist. As the Theorist notes, after rising more than 14,500% over the past 12 years, S&P Dow Jones Indices added the stock to the Dow Jones Industrial Average on March 19.

This is one more remarkable parallel to the prior technology mania, as Microsoft was added to the Dow Industrials just prior to its January 2000 top. Here’s how EWFF interpreted its addition in November 1999:

The ultimate concession to technology is due November 2, when Microsoft will be inducted into the Dow Jones Industrial Average. For most of the bull market, the world’s most dominant stock was excluded from the world’s premier blue-chip average. But just as RCA was added to the Dow in October 1928 (and removed in 1932), Microsoft has assumed its rightful place at the head of the pack, in time to lead the way down.

Apple has just been acknowledged in the same way and for the same reason. The pressure to pile onto the technology bandwagon has proved irresistible to the Dow’s purveyors. This has generally happened when the most important stock market reversals were at hand.

Editor’s note: This article is from Elliott Wave International’s brand-new investment report, Investors Face a Giant, Historic Bubble. It was originally published in the April issue of The Elliott Wave Financial Forecast, published March 27, 2015. For a limited-time, EWI has agreed to give our readers exclusive free access to the full report. Please click to read this most enlightening report now.

3 Ways To Identify Support and Resistence

We will consider three ways to identify price support and resistance in the markets you trade.

  1. Previous highs and lows
  2. Trendline support
  3. Fibonacci Ratios

These examples are adapted from Jeffrey Kennedy’s time tested Trader’s Classroom service.


1) Uptrends terminate at resistance while downtrends terminate at support. Previous highs and lows often act as resistance and support.

In ALCOA Inc (AA), the September 2012 selloff found support near the previous July 2012 low.

The February 2013 peak occurred following a test of resistance at the January peak at $9.33.

2) Trendlines offer resistance and support for prices.

The 2008 advance in Gold found support numerous times near the trendline that connected the lows of the move, as you can see below:

Conversely, the trendline connecting the highs of Wheat’s 2012-2013 decline provided resistance for countertrend price action.

3) Fibonacci ratios also identify resistance and support. As Elliotticians, we often look at retracements, the most common being .382, .500 and .618. In Akamai Tech, Fibonacci support ignited the July and November 2012 rallies:

In the same chart you can also notice how Fibonacci resistance in AKAM halted the July 2012 and February advances.

For more free trading lessons on trendlines, download Jeffrey Kennedy’s free 14-page eBook, Trading the Line — 5 Ways You Can Use Trendlines to Improve Your Trading Decisions. It explains the power of simple trendlines, how to draw them, and how to determine when the trend has actually changed. Download free eBook now. We believe this eBook will provide you with a tool set that will improve your success ratio at trading financial markets.

Prepare for the Stock Market Crash

How to Prepare for the Coming Crash and Preserve Your Wealth

Bob Prechter first released Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression during a stock-market high in 2002, and it quickly became a New York Times–bestseller. Now he has updated the book with 188 new pages for a second edition, and it looks like it, too, will be published near a stock-market high. John Wiley & Sons plans published the new edition in late October. Visit Elliott Wave International for information on how to order the new edition from major online retailers.

As was widely reported in the dark days of late February and early March 2009, Prechter called for the start of the biggest stock market rally since the 2007 high. He recommended speculators close the S&P short position that he recommended at 2007 top. Since then, the S&P has soared more than 80 percent in 2 years and seems to have topped in 2011. During the rally Prechter has called virtually all the minor tops to get in short positions for speculators. As of October 2011, his last short at the stock market top and the gold short has paid off. In his monthly newsletters, Prechter continues to remain bearish and thinks market will continue to decline with lower highs and lower lows with many bear market rallies that will make it look like a bull market.

The first edition of Conquer the Crash, which was published in early 2002, was “on the mark” with regard to our current economic environment — so much so that it’s uncanny. Prechter’s message has been good for investors who kept their money safe and for speculators who profited from declines. And he still expects a great buying opportunity ahead for those who can keep their money safe until it arrives. Here is a short list of some of the accurate predictions he made in 2002 that have come to fruition:

Credit Deflation

“Usually the culprit behind [simultaneous stock and real estate] declines is a credit deflation. If there were ever a time we were poised for such a decline, it is now.” Chapter 16

Bailout Schemes

“If [governments] leap unwisely into bailout schemes, they will risk damaging the integrity of their own debt, triggering a fall in its price. Either way … deflation will put the brakes on their actions.” Chapter 32

Banking and Insurance Stocks

“We will see stocks going down 90 percent and more … [and] bank and insurance company failures….” Chapter 14

Collateralized Securities

“Banks and mortgage companies … have issued $6 trillion worth of [securitized loans]…. In a major economic downturn, this credit structure will implode.” Chapter 19

Derivatives

“Leveraged derivatives pose one of the greatest risks to banks….” Chapter 19

Mortgage-Backed Securities

“Major financial institutions actually invest in huge packages of … mortgages, an investment that they and their clients (which may include you) will surely regret…. Chapter 16

Fannie Mae and Freddie Mac

“Investors in these companies’ stocks and bonds will be just as surprised when [Fannie and Freddie’s] stock prices and bond ratings collapse.” Chapter 25

Banks

“Banks are not just lent to the hilt, they’re past it. In a fearful market, liquidity even on these so called ‘securities’ [corporate, municipal, and mortgage-backed bonds] will dry up.”… One expert advises, ‘The larger, more diversified banks at this point are the safer place to be.’ That assertion will surely be severely tested….” Chapter 19

Insurance Companies

“The values of insurance company holdings, from stocks to bonds to real estate (and probably including junk bonds as well), will be falling precipitously…. As the values of most investments fall, the value of insurance companies’ portfolios will fall…. When insurance companies implode, they file for bankruptcy….” Chapters 15, 24

Real Estate

“What screams ‘bubble’ – giant, historic bubble – in real estate today is the system-wide extension of massive amounts of credit to finance property purchases…. [People] have been taking out home equity loans so they can buy stocks and TVs and cars…. This widespread practice is brewing a terrible disaster.” Chapter 16

Rating Services

“Most rating services will not see it coming.” Chapter 25

Political Leaders

“A leader does not control his country’s economy, but the economy mightily controls his image.” Chapter 27

Short-Selling Ban

“In a bear market, bullish investors always come to believe that short sellers are ‘driving the market down’…. Sometimes authorities outlaw short selling. In doing so, they remove the one class of investors that must buy.” Chapter 20

Psychological Change

“When the social mood trend changes from optimism to pessimism, creditors, debtors, producers and consumers change their primary orientation from expansion to conservation….” Chapter 9

Confidence

“Confidence has probably reached its limit. A multi-decade deceleration in the U.S. economy … will soon stress debtors’ ability to pay…. Total credit will contract, so bank deposits will contract, so the supply of money will contract….” Chapter 11

Falling Tax Receipts

“Governments … spend and borrow throughout the good times and find themselves strapped in bad times, when tax receipts fall.” Chapter 32

“Retirement programs such as Social Security in the U.S. are wealth-transfer schemes, not funded insurance, so they rely upon the government’s tax receipts. Likewise, Medicaid is a federally subsidized state-funded health insurance program, and as such, it relies upon transfers of states’ tax receipts. When people’s earnings collapse in a depression, so does the amount of taxes paid, which forces the value of wealth transfers downward.” Chapter 32

“The tax receipts that pay for roads, police and jails, fire departments, trash pickup, emergency (911) monitoring, water systems and so on will fall to such low levels that services will be restricted.” Chapter 32

For more information on the new second edition of Conquer the Crash, visit Elliott Wave International. Bob Prechter has added 188 new pages of critical information to his New York Times bestseller.

Bob Prechter’s “Conquer The Crash”: Eight Chapters For Free

When EWI President Robert Prechter sat down to write the first edition of Conquer The Crashin 2002, the idea that the United States would enter a period of what news authorities coined “economic Armageddon” several years later was unheard of.

Flashing back, the major blue-chip averages were rebounding off a historic bottom, the notorious dot.com bust was making way for a powerful housing boom, Fannie Mae’s chief executive was named “the most confident CEO in America,” then President George Bush was enjoying a 60%-plus approval rating, Gulf War II hadn’t begun yet, and when it did, a “quick and easy victory” was supposed to follow, and the Federal Reserve was largely credited with slaying the big, bad bear via the sharp blade of monetary policy.
Five years later, the tables turned. The U.S. housing market endured its worst downturn since the Great Depression; Fannie Mae’s CEO was ousted amidst a mortgage crisis of incalculable damage. George W. Bush left the oval office with a record low approval rating of 25%, and the expected “cakewalk” victory in Iraq became a “quagmire” and national dilemma.

Anticipating these and other “shocks” to the global system is the unparalleled achievement of “Conquer The Crash.” Here, the following excerpts from the book put any doubt to rest:

  • Housing: “What screams bubble – giant historic bubble – in real estate is the system-wide extension of massive amount of credit.” And “Home equity loans are brewing a terrible disaster.”
  • Bonds: “The unprecedented mass of vulnerable bonds extant today is on the verge of a waterfall of downgrading.”
  • Fannie Mae & Freddie Mac: “Investors in these companies’ stocks and bonds will be just as surprised when the stock prices and bond ratings collapse.”
  • Politics: “Look for nations and states to split and shrink.” And — “The Middle East should be a complete disaster.”
  • Credit Expansion Schemes “have always ended in a bust.” And — “Like the discomfort of drug addiction withdrawal, the discomfort of credit addiction withdrawal cannot be avoided.”
  • Banks: “Banks are not just lent to the hilt, they’re past it. In a fearful market, liquidity even on these so called ‘securities’ [corporate, municipal, and mortgage-backed bonds] will dry up.” (176)

If the tools in Bob Prechter’s analytical toolbox, namely Elliott wave analysis and socionomics (Prechter’s new science of social prediction based on the Wave Principle), enabled him to foresee these “sea changes” in the economic, social, and political landscape — the only question is: What else do the pages of the “Conquer The Crash” reveal?

Well, your opportunity to find out just got a whole lot easier. Right now, you can download the 8-chapter Conquer the Crash Collection, free. It includes:

Chapter 10: Money, Credit And The Federal Reserve Banking System
Chapter 13: Can The Fed Stop Deflation?
Chapter 23: What To do With Your Pension Plan
Chapter 28: How To Identify A Safe Haven
Chapter 29: Calling In Loans & Paying Off Debt
Chapter 30: What You Should Do If You Run A Business
Chapter 32: Should You Rely On The Government To Protect You?
Chapter 33: Short List of Imperative ‘Do’s’ & ‘Don’ts”

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