Euro: Look at This Head & Shoulders Chart Formation

Learn about the "head and shoulders" measuring formula

By Elliott Wave International

You are probably familiar with the classic "head and shoulders" chart pattern.

But, in case you need a refresher, here's a brief description of a head and shoulders top:

The high of an initial upward move is the left shoulder. After a decline, another upward move takes prices to a higher high, or the head. A second decline follows the head. A third rally then takes prices to a peak below the high of the head, and becomes the right shoulder. The left and right shoulders are often similar in duration and extent. A trendline connecting the two lows is called the neckline. When prices penetrate the neckline, a change of trend is believed to have occurred.

Head and shoulders bottoms also occur and the same description applies except in reverse.

This head and shoulders measuring formula -- showing a top as an example -- provides even more insight. The commentary is from a past issue of Elliott Wave International's Trader's Classroom:

To identify a high-probability price target for the move following the break of the Neckline, measure the distance between the Head and the Neckline and then project that distance down from the point at which the Right Shoulder breaks the Neckline.

The July 2021 Global Market Perspective, a monthly publication which provides coverage of major global financial markets, applied this knowledge to a forecast for the euro.

The chart on the left is from that July issue of the Global Market Perspective and the chart on the right was updated for the December Global Market Perspective. Here's what the December Global Market Perspective said:

A relentless four-month decline pulled the euro slightly below our downside target of $1.1263 on November 19, as these before-and-after charts show. On November 24, the euro bounced from its $1.1185 low. ...

You can learn about other classic chart patterns by reading Frost & Prechter's Elliott Wave Principle: Key to Market Behavior. Here's a quote from the book:

The Elliott Wave Principle not only supports the validity of chart analysis, but it can help the technician decide which formations are most likely of real significance.

Get the details of how the Wave Principle "supports the validity of chart analysis" by reading the entire Wall Street classic for free!

That's right -- you can get unlimited and free access to the online version of Elliott Wave Principle: Key to Market Behavior by simply joining Club EWI -- the world's largest Elliott wave educational community.

Don't worry -- Club EWI members are not under any obligations -- yet, members do enjoy free access to a wealth of Elliott wave resources on investing and trading.

Current resources available to Club EWI members include the report, "Crypto Trading Guide: 5 Simple Strategies" and the new video offering "Apply This Technique to Stop Rushing into Trades."

Plus, as mentioned, free access to Elliott Wave Principle: Key to Market Behavior (just click on the highlighted link to have this Wall Street classic on your computer screen in moments).

This article was syndicated by Elliott Wave International and was originally published under the headline Euro: Look at This Head & Shoulders Chart Formation. 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.

Insights into a "Remarkable" NASDAQ Development

Here's what usually happens in the stock market when "the troops abandon the generals"

By Elliott Wave International

You've probably heard the phrase: "Appearances can be deceiving."

In other words, it's usually wise to "take a closer look" because the truth may not be obvious.

This applies to various circumstances of life -- even the stock market.

For example, consider this Nov. 19 Reuters headline:

Nasdaq hits fresh record peak ...

Of course, the headline appears to support a bullish outlook on the tech-heavy index.

However, after the market close that day, our U.S. Short Term Update showed this chart and said:

This remarkable chart encapsulates the current state of affairs. The top graph is the NASDAQ Composite from December 2020 and the bottom graph is the daily number of new 52-week lows for the index. Normally, as one would expect, when the NASDAQ declines, the daily number of members that make new 52-week lows increases. Yet, as the NASDAQ was making a new all-time high yesterday (NDX), the number of new 52-week lows surged to 425. This is the highest number of daily new lows since the market meltdown of February-March 2020. It vividly shows how concentrated the stock market rally is, with only a select number of issues pushing the NASDAQ higher. When the troops abandon the generals in the charge up the hill, retreat usually follows. [emphasis added]

The Nov. 21 U.S. Short Term Update followed up by showing this chart and saying:

In [the Nov. 19] Update we showed a chart of the extraordinary behavior in the number of 52-week lows on the NASDAQ. As the NASDAQ was in the process of rallying to new highs last week, the number of new 52-week lows outpaced the number of new 52-week highs for five consecutive days. Tonight's chart shows the same new low data but uses a 5-day average to accentuate the trend. "There's never been another day when so many stocks fell to new lows as the overall index climbed to a record high" in data going back two decades [referencing Nov. 18].

The new lows surge in conjunction with the NASDAQ's new high was just one indication that investors should prepare for downside price action.

The Elliott wave model is among the other indications.

Right now, the stock market's wave structure is sending a clear message that will likely be of high interest to you. Suffice it to say, this message is nothing less than historic.

If you'd like to delve into the details of how the Wave Principle can help you forecast financial markets, you are encouraged to read Frost & Prechter's Wall Street classic, Elliott Wave Principle: Key to Market Behavior.

Here's a quote from the book:

After you have acquired an Elliott "touch," it will be forever with you, just as a child who learns to ride a bicycle never forgets. Thereafter, catching a turn becomes a fairly common experience and not really too difficult. Furthermore, by giving you a feeling of confidence as to where you are in the progress of the market, a knowledge of Elliott can prepare you psychologically for the fluctuating nature of price movement and free you from sharing the widely practiced analytical error of forever projecting today's trends linearly into the future. Most important, the Wave Principle often indicates in advance the relative magnitude of the next period of market progress or regress. Living in harmony with those trends can make the difference between success and failure in financial affairs.

Good news! You can read the entire online version of Elliott Wave Principle: Key to Market Behavior for free!

All that's required for free access is a Club EWI membership. Club EWI is the world's largest Elliott wave educational community and is free to join. Plus, members enjoy complimentary access to a wealth of Elliott wave resources on investing and trading without any obligations.

Follow this link for free and unlimited access to the book: Elliott Wave Principle: Key to Market Behavior.

This article was syndicated by Elliott Wave International and was originally published under the headline Insights into a "Remarkable" NASDAQ Development. 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.

Has Crypto-Mania Finally Run Its Course?

Here's a high-profile parallel between tech- and crypto-mania

By Elliott Wave International

When a company that's part of a major financial trend buys the naming rights to a professional sports stadium or arena, watch out!

History suggests that such a prominent move might be a sign that the fortunes of that company are about to dramatically change.

For instance, back in 1999-2000, technology shares were all the rage and one of the "highest of the dot-com high flyers," as the Wall Street Journal put it, was CMGI. It was the best performing U.S. stock from 1995 to 1999.

Well, in 2000, the firm bought the naming rights to the stadium of a major league football team.

The December 2021 Elliott Wave Financial Forecast, a monthly publication which provides coverage of major U.S. financial markets, showed this chart and elaborated:

The chart shows the stock market performance of CMGI, which is now known as Steel Connect. In August 2000, the company bought the naming rights to the home stadium of the New England Patriots for 15 years. Just two years later, in the wake of the dot.com bust, they were forced to relinquish their agreement.

Relatedly, in 1999, PSINet bought naming rights to the NFL stadium at Camden Yards in Baltimore. But, in 2002, the then internet services provider's name was removed from the stadium as PSINet went bankrupt.

Here in 2021, there appears to be a developing parallel between tech-mania and crypto-mania.

Here's a March 26 headline from the Miami Herald:

FTX, exchange for Bitcoin, wins Miami Heat arena naming deal

And this is another news item from Nov. 17 (fastcompany.com):

Crypto.com pays record price for naming rights to L.A.'s Staples Center

Of course, that's where the L.A. Lakers play and Crypto.com has agreed to fork over $700 million for a 20-year naming rights deal.

The December Elliott Wave Financial Forecast also showed this chart and said:

This chart shows Crypto.com's recent performance, with an arrow indicating the day they announced their coming stadium debut.

Will Crypto.com's price follow a trajectory similar to that of CMGI?

The Elliott wave method can help you to answer that question.

Frost & Prechter's Wall Street classic, Elliott Wave Principle: Key to Market Behavior, explains why:

The Wave Principle is governed by man's social nature, and since he has such a nature, its expression generates forms. As the forms are repetitive, they have predictive value.

Get detailed insights into the "predictive value" of the Wave Principle by reading the entire online version of the book -- 100% free.

All that's required for free access is a Club EWI membership. Club EWI is the world's largest Elliott wave educational community and is free to join. Members enjoy free access to a wealth of Elliott wave resources on investing and trading without any obligation.

Just follow this link for free and unlimited access to Elliott Wave Principle: Key to Market Behavior.

Junk Bonds Are Sending a Signal to Stock Investors

Something happened just before the historic 2007 stock market top -- and it's happening again

By Elliott Wave International

It's generally known that stocks are risky. It all hinges on how "hungry" investors are.

So, if investors' appetite for risk starts to diminish, it stands to reason that this is not a positive development for stocks.

But is there a way to gauge investors' risk tolerance so as to get an early warning sign before stocks start to tank?

Yes, keep your eye on the junk bond market.

You see, junk bonds also carry a great deal of risk because they're issued by companies with the weakest balance sheets. Investors' claim on assets in case of bankruptcy is usually next to the bottom rung, just one notch above equity holders. Hence, the trend in junk bonds often aligns with the trend in equities.

Here's the important point: When the trends of stocks and junk bonds diverge, with stocks holding up as the value of junk debt declines, it's usually a sign of impending trouble for stocks.

A past Elliott Wave Financial Forecast, a monthly publication which provides coverage of major U.S. financial markets, showed a historical example of such a divergence and said:

A countertrend rally high in prices for high-yield bonds occurred in February 2007, three months before the intraday extreme in the financials, five months before a top in the Dow Jones Composite Average and eight months before a top in the Dow Industrials. All stock indexes then crashed into the first quarter of 2009.

Now, here's what you need to know in these closing weeks of 2021: Another divergence has been shaping up between high-yield (or "junk") bonds and stocks.

Indeed, the Nov. 15 U.S. Short Term Update, an Elliott Wave International thrice weekly publication which offers near-term forecasts for key U.S. financial markets, explains why ...

... the tension created by the nearly two-month non-confirmation between HYG [a junk bond ETF] and the Dow is about to become more severe.

Plus, the message of the Elliott wave model regarding the stock market is also revealing.

If you're new to Elliott wave analysis, here's a quote from Frost & Prechter's Wall Street classic, Elliott Wave Principle: Key to Market Behavior:

In the 1930s, Ralph Nelson Elliott discovered that stock market prices trend and reverse in recognizable patterns. The patterns he discerned are repetitive in form but not necessarily in time or amplitude. Elliott isolated five such patterns, or "waves," that recur in market price data. He named, defined and illustrated these patterns and their variations. He then described how they link together to form larger versions of themselves, how they in turn link to form the same patterns of the next larger size, and so on, producing a structured progression. He called this phenomenon The Wave Principle.

Although it is the best forecasting tool in existence, the Wave Principle is not primarily a forecasting tool; it is a detailed description of how markets behave. Nevertheless, that description does impart an immense amount of knowledge about the market's position within the behavioral continuum and therefore about its probable ensuing path. The primary value of the Wave Principle is that it provides a context for market analysis.

If you'd like to learn more about the Wave Principle, there's a way to read the entire online version of the book for free.

That "way" is to become a Club EWI member. Club EWI is the world's largest Elliott wave educational community and membership is free. Plus, members enjoy free access to a wealth of Elliott wave resources on financial markets, investing and trading with zero obligations.

Just follow this link to get started: Elliott Wave Principle: Key to Market Behavior -- free and unlimited access.

This article was syndicated by Elliott Wave International and was originally published under the headline Junk Bonds Are Sending a Signal to Stock Investors. 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.

New Update on the Public's Voracious Appetite for Stocks

Here's a month-to-month breakdown of how much money individuals are spending on stocks

By Elliott Wave International

It's been noted before in these pages that ...

... Investors have put more money into stocks in the last 5 months than the previous 12 years combined

That was an April CNBC headline.

That remains an astounding fact to contemplate and a testimony to a widespread cavalier sentiment toward risk. The basic attitude is that stocks almost always go up.

Well, nearly a half year since that CNBC headline published, the public's interest in stocks has remained intense.

Here's an update from the November Elliott Wave Financial Forecast, a monthly publication which covers major U.S. financial markets:

When it comes to retail trading, investors are positively euphoric. JMP Securities estimates that 10 million new traders entered the stock market in the first ten months of the year, which is "on pace" with the prior record year in 2020. The chart of monthly net purchases of U.S. equities shows that buying fever is increasing. Last year was a record year for net buying, but it featured just 5 months in which net purchases surpassed $20 billion. According to VandaTrack, net buying has exceeded $20 billion in every month of 2021, with data through September.

Of course, the only reason why anyone buys a financial asset is that they believe the price will go up.

Indeed, this Oct. 21 financial headline is indicative of the pervasive bullish sentiment (Marketplace):

Will stock market indexes go up forever?

History suggests that the answer is an emphatic "no."

The current uptrend -- no matter how dogged -- will change sooner or later.

The best way to anticipate this change is by employing the Elliott wave model.

Returning to the November Elliott Wave Financial Forecast:

Staying highly attuned to the progressing wave structure has never been more important.

If you would like to delve into the details of how the Elliott wave model can help you forecast financial markets, you are encouraged to read Frost & Prechter's Wall Street classic, Elliott Wave Principle: Key to Market Behavior.

Here's an excerpt from the book:

[Ralph N.] Elliott recognized that not news, but something else forms the patterns evident in the market. Generally speaking, the important analytical question is not the news per se, but the importance the market places or appears to place on the news. In periods of increasing optimism, the market's apparent reaction to an item of news is often different from what it would have been if the market were in a downtrend. It is easy to label the progression of Elliott waves on a historical price chart, but it is impossible to pick out, say, the occurrences of war, the most dramatic of human activities, on the basis of recorded stock market action. The psychology of the market in relation to the news, then, is sometimes useful, especially when the market acts contrarily to what one would "normally" expect.

Our studies suggest not simply that news tends to lag the market but that it nevertheless follows exactly the same progression.

You can read the entire online version of Elliott Wave Principle: Key to Market Behavior -- 100% free!

All that's required for free access is a Club EWI membership.

Club EWI is the world's largest Elliott wave educational community and is free to join. More than that, members enjoy free access to a wealth of Elliott wave resources on investing and trading without any obligations.

Simply follow this link to get started right away: Elliott Wave Principle: Key to Market Behavior -- free and unlimited access.

This article was syndicated by Elliott Wave International and was originally published under the headline New Update on the Public's Voracious Appetite for Stocks. 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.

When Even Bears Act Bullishly (What It May Mean)

"Some indicators are making records"

By Elliott Wave International

It's difficult for most investors to take an independent stand from the crowd.

For example, it may be wise to "buy when there's blood in the streets," as Baron Rothschild famously said, but for many investors, that's easier said than done.

Likewise, when a financial uptrend has persisted, it's difficult for many investors to act in a contrary way to the pervasive optimism.

Consider this chart and commentary from the November Elliott Wave Financial Forecast, a monthly publication which provides coverage of major U.S. financial markets:

The chart shows the exposure to equities held by members of the National Association of Active Investment Managers. Readings above 100 mean that managers are leveraged long equities [and] this week's reading [is] 107.99%. ... Some indicators are making records. The bottom graph on the chart shows the equity exposure of the most bearish fund managers. Yes, even the bears are bullish. For the past three weeks, the most bearish fund managers were still net-long stocks by 50%, 65% and 50%. It's the first time in the history of the data ... that bearish fund managers have been net-long equities 50% or more for three consecutive weeks.

Here are three headlines which speak to the persistent bullish sentiment:

• Stocks Are Still the Place to Be, Our Exclusive Big Money Poll Finds (Barron's, Oct. 16)
• Invesco records fifth straight quarter of net inflows (Pensions & Investments, Oct. 26)
• Fund managers make their biggest bets on U.S. stocks in 8 years ... (Marketwatch, Nov. 16)

The takeaway is that when almost everyone acts bullishly, even the most bearish, there's relatively few investors left to buy to keep an uptrend going.

This doesn't mean that the financial uptrend will stop, say, tomorrow or the next day.

However, it does suggest that an investor will want to pay particularly close attention to the message of the Elliott wave model, which offers high-confidence insights into market turn junctures.

Indeed, here's a quote from Frost & Prechter's Wall Street classic, Elliott Wave Principle: Key to Market Behavior:

When after a while the apparent jumble gels into a clear picture, the probability that a turning point is at hand can suddenly and excitingly rise to nearly 100%. It is a thrilling experience to pinpoint a turn, and the Wave Principle is the only approach that can occasionally provide the opportunity to do so.

The ability to identify such junctures is remarkable enough, but the Wave Principle is the only method of analysis that also provides guidelines for forecasting. Many of these guidelines are specific and can occasionally yield stunningly precise results. If indeed markets are patterned, and if those patterns have a recognizable geometry, then regardless of the variations allowed, certain price and time relationships are likely to recur. In fact, experience shows that they do.

You can gain insights into the recurring price patterns of the stock market by reading the entire online version of the book -- 100% free!

All that's required for free access is a Club EWI membership. Club EWI is the world's largest Elliott wave educational community and is free to join.

Club EWI members are granted free access to a wealth of Elliott wave resources on financial markets, investing and trading.

Just follow this link to get started: Elliott Wave Principle: Key to Market Behavior -- free and unlimited access.

How to Outwit 99% of Investment Pros

Was COVID-19 a "bullish event"? No. Here's the real answer why stocks rose as the pandemic raged.

By Elliott Wave International

Waves of social mood fluctuate in accordance with the Wave Principle and determine prices in financial markets.

Moreover, these same waves regulate the tenor and character of social attitudes and actions.

The key point is that social mood is the cause. It is endogenous. Prices in financial markets and events in society are the effects. They are exogenous.

However, most people believe the opposite is true.

For example: Most people believe that recessions cause business people to be more cautious. However, Elliott Wave International posits that cautious business people cause recessions.

Or, consider the widespread notion that scandals make people outraged. In truth, outraged people seek out scandal. Consider that when mood is positive, fodder for scandal is often dismissed.

You can also flip around the notion that nuclear bomb testing makes people nervous and say that nervous people test nuclear bombs.

Here's another example: Many observers believe that a rising stock market makes investors increasingly optimistic. However, the evidence suggests that optimistic investors cause stock market prices to rise (and pessimistic investors cause market prices to fall).

Elliott Wave International's Asian-Pacific analyst, Mark Galasiewski, drove the point home further when he said this at the Chartered Market Technician Association's Asia-Pacific Summit in October:

If you were able to make that one counterintuitive leap that the same endogenous mass psychological swings that create patterns in the stock market also drive other headline social events, then you have already won half the battle in the market and you understand stock market movements better than 99% of industry professionals.

Social mood swings from extreme optimism to extreme pessimism and back again.

By the time that these social mood trends show up as major news or events (positive or negative), that's when the pendulum is set to start swinging in the other direction.

Recessions, scandals, nuclear testing and so on were mentioned as examples of what may occur during negative mood trends.

Let's add epidemics to that list. Yes, Elliott Wave International has observed a relationship between bear markets and infectious disease.

Using this knowledge, the April 3, 2020 Global Market Perspective, a monthly Elliott Wave International publication which covers 50+ worldwide financial markets, said:

Asian-Pacific and emerging market stocks began bull markets amid the SARS epidemic of 2003 and the Swine Flu epidemic of 2009. They should similarly embark on a bull market amid the Covid-19 pandemic of 2020.

Indeed, look at this MSCI Emerging Markets Index chart which Mark Galasiewski showed at that Asia-Pacific Summit previously mentioned:

As you can see, an uptrend did ensue amid Covid-19.

However, it would be wrong to say that epidemics are bullish for the stock market. That's that "exogenous" thinking trap which was discussed above. A proper way to think about it is that when social mood is at its lowest, epidemics are more likely. That's why they have so often marked a bottom, not a top. As Mark said:

Notice that these three major infectious diseases spread widely toward the end of major bear markets.

This is invaluable information for any investor. Imagine having this knowledge back in March 2020, when the first wave of the pandemic hit and everyone panicked!

If you would like to dig deeper into the "endogenous patterns" of the Wave Principle, you are encouraged to read the Wall Street classic, Elliott Wave Principle: Key to Market Behavior, by Frost & Prechter.

Here's a quote from the book:

The Wave Principle is governed by man's social nature, and since he has such a nature, its expression generates forms. As the forms are repetitive, they have predictive value.

Get insights into the "predictive value" of the Wave Principle by reading the online version of the book -- entirely free!

The only requirement for free access is a Club EWI membership. Club EWI is the world's largest Elliott wave educational community and is free to join. Members are under no obligations. Yet, members do enjoy complimentary access to a wealth of Elliott wave resources on financial markets, investing and trading.

Follow this link for free and unlimited access to the book: Elliott Wave Principle: Key to Market Behavior.

This article was syndicated by Elliott Wave International and was originally published under the headline How to Outwit 99% of Investment Pros. 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.

How Emerging Markets ETF Followed a Classic Elliott Wave Pattern

Here's what happened after the completion of a "bullish triangle"

By Elliott Wave International

A Charles Schwab survey shows that 15% of today's retail investors started investing in 2020.

And, regarding 2021, an August 2 CNBC headline said:

New investors are jumping into the market

So, when you combine the influx from this year and last, that adds up to a lot of new investors.

This is mentioned because some people who are new to investing may see the phrase "emerging markets" and get the impression that this is synonymous with only small countries.

Yet, "emerging markets" covers 75% of the world's population, and are comprised of nations like China, India, Russia, Brazil, South Korea, Thailand, Taiwan, Malaysia and more.

All told, emerging markets account for about a third of global GDP.

The point being -- new and veteran investors alike should at least have emerging markets on their radar screen for consideration. Yes, there's risk, yet there's also opportunity.

Consider a classic Elliott wave pattern in the Vanguard FTSE Emerging Markets ETF.

The April 2020 Global Market Perspective, a monthly Elliott Wave International publication which covers 50+ worldwide financial markets, said:

Largest emerging markets ETF completes bullish triangle.

Of course, the completion of that bullish triangle implied that the next price move would be up.

That's exactly what happened. Here's a current chart from Mark Galasiewski, an Elliott Wave International global analyst who focuses on the Asian-Pacific:

As you can see, the Vanguard FTSE Emerging Markets ETF zoomed northward right after Mark's bullish analysis in April 2020. Since then, the value of this exchange-traded fund has increased by approximately 55%.

Keep in mind that the Global Market Perspective is filled with charts and analysis based on the Elliott wave model.

The Elliott wave model works for any widely traded financial market in the world because the patterns of investor psychology are the same in, say, Japan as they are in Germany, France, India or any another nation.

Read this quote from Frost & Prechter's Elliott Wave Principle: Key to Market Behavior:

In its broadest sense, the Wave Principle suggests the idea that the same law that shapes living creatures and galaxies is inherent in the spirit and activities of men en masse. Because the stock market is the most meticulously tabulated reflector of mass psychology in the world, its data produce an excellent recording of man's social psychological states and trends. This record of the fluctuating self-evaluation of social man's own productive enterprise makes manifest specific patterns of progress and regress. What the Wave Principle says is that mankind's progress (of which the stock market is a popularly determined valuation) does not occur in a straight line, does not occur randomly, and does not occur cyclically. Rather, progress takes place in a "three steps forward, two steps back" fashion, a form that nature prefers. More grandly, as the activity of social man is linked to the Fibonacci sequence and the spiral pattern of progression, it is apparently no exception to the general law of ordered growth in the universe. In our opinion, the parallels between the Wave Principle and other natural phenomena are too great to be dismissed as just so much nonsense. On the balance of probabilities, we have come to the conclusion that there is a principle, everywhere present, giving shape to social affairs, and that Einstein knew what he was talking about when he said, "God does not play dice with the universe." The stock market is no exception, as mass behavior is undeniably linked to a law that can be studied and defined. The briefest way to express this principle is a simple mathematical statement: the 1.618 ratio.

Get the details of how the Fibonacci sequence of numbers provides the mathematical basis for the Wave Principle by reading the online version of Elliott Wave Principle: Key to Market Behavior for free.

All that's required for free access to this Wall Street classic is a Club EWI membership. Club EWI is the world's largest Elliott wave educational community and is free to join. Members enjoy free access to a wealth of Elliott wave resources on investing and trading without any obligations.

Just follow this link to get started: Elliott Wave Principle: Key to Market Behavior -- free and unlimited access.

This article was syndicated by Elliott Wave International and was originally published under the headline How Emerging Markets ETF Followed a Classic Elliott Wave Pattern. 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.

Bitcoin's All-Time High Foretold Before U.S. ETF Launch

"A developing upward wave is in progress"

By Elliott Wave International

On Oct. 20, Bitcoin climbed to a new all-time high above $66,000 -- quite a rebound from its price level just below $30,000 as recently as July.

At that time, the sentiment was quite bearish. Here are just a couple of sample headlines:

• Bitcoin: [Investment Firm Chairman] Says Price Can Crash to $10,000 (Bloomberg, July 9)
• Why You Should Worry About the Next Crypto Crash ... (Money, July 20)

All the while, Elliott Wave International's head crypto analyst Tony Carrion was saying, in effect, "hold your horses. Bitcoin's run is far from over."

In the "Cryptocurrency" section of the July Global Market Perspective (a monthly Elliott Wave International publication which covers 50+ worldwide financial markets), when the grandaddy of digital currencies was still in freefall, Tony told subscribers:

Bitcoin [is] at or near the end of its [Elliott wave] correction.

Short, sweet and to the point.

Well before July was over, Bitcoin found a bottom and has been in "bounce back" mode ever since.

The message of the Elliott wave model was the basis for Tony's prescient Bitcoin call.

In the September Global Market Perspective, Tony again got right to the point in his Bitcoin analysis:

A developing [upward wave] is in progress.

And, as all Bitcoin observers know, that upward Elliott wave has persisted well into October.

Yet, on Oct. 20, the headline of a major financial website stated (CNBC):

Bitcoin jumps to new high above $66,000 after landmark U.S. ETF launch

But as just described, Bitcoin's new all-time high was in the cards, according to the Elliott wave model, months ago.

As of this writing on Oct. 25, Bitcoin is trading a little below that all-time high.

What's next?

Get insights by reviewing the charts with Bitcoin's Elliott wave count, which are found in the "Cryptocurrency" section of the Global Market Perspective.

The Elliott wave model is ideally suited for emotional markets like cryptocurrencies and it can help you to anticipate Bitcoin's next big trend shift.

If you'd like to learn about the Elliott wave model, or need to brush up on your knowledge, you are encouraged to read Frost & Prechter's Wall Street classic, Elliott Wave Principle: Key to Market Behavior. Here's an excerpt from the book:

Most important, the Wave Principle often indicates in advance the relative magnitude of the next period of market progress or regress. Living in harmony with those trends can make the difference between success and failure in financial affairs.

If you'd like more insights into the Wave Principle, realize that Club EWI members are granted free access to the entire online version of the book.

In case you don't know, Club EWI is the world's largest Elliott wave educational community and is free to join. Members are under no obligations and enjoy free access to a wealth of Elliott wave resources on investing and trading, as well as Elliott Wave Principle: Key to Market Behavior.

Follow the link to become a Club EWI member and get your free access to Elliott Wave Principle: Key to Market Behavior.

This article was syndicated by Elliott Wave International and was originally published under the headline Bitcoin's All-Time High Foretold Before U.S. ETF Launch. 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.

What Junk Bonds Convey About Investors' Mindset

"Governments feel rich and are spending like drunken sailors"

By Elliott Wave International

Extremely elevated financial optimism is being expressed in multiple ways.

In some ways, the behavior of investors is unprecedented -- which is saying a lot given the financial extremes of past bull markets.

Consider the junk bond market here in 2021. The September Elliott Wave Theorist showed this chart and said:

As we continue to demonstrate, stocks, property, cryptocurrencies and digital art are not the only overvalued markets. Bonds are no less crazily priced. The chart reveals that fully 85% of all junk bonds yield less than the annualized percentage change in the Consumer Price Index. How is that for blind optimism?

Yes, stocks remain near record-high territory after a more than 12-year uptrend, bitcoin is near record-high territory and the rate of price increases in the housing market has been unprecedented (again, saying a lot given the extremes of the prior housing boom).

Even so, an Oct. 18 Fortune article says:

In the next 15 months -- through the end of 2022 -- Goldman Sachs is forecasting U.S. home prices will soar another 16%.

And, who would have ever imagined a few short years ago that digital images would sell for millions?

Yet, here's the latest headline (Oct. 19):

How a 12-year-old coder says he made $600,000 by selling Weird Whales NFTs

Of course, "NFT" stands for non-fungible token -- a unique digital asset. The current craze in that space is around digital artwork.

The October Elliott Wave Theorist mentions several more expressions of a positive social mood. Here are just a portion of them:

Governments feel rich and are spending like drunken sailors; central bankers are confident and unworried, and they have been characterized as heroes; the world economy is producing more tax revenue than ever, despite government efforts to kill productivity; and there are no wars anywhere on the entire planet.

The October Theorist concludes with a hint of what to expect over the next three years.

The Elliott Wave Theorist is part of the Financial Forecast Service -- Elliott Wave International’s flagship investor package -- which offers Elliott wave analysis of major U.S. financial markets.

Now through November 3, you can see that analysis FREE in EWI’s most popular event of the year, “U.S. Markets FreePass

Here's what's included:

1. Financial Forecast gives you the ins and outs of 8 different major markets, with a U.S. focus, on a several-months’ timeframe.
2. The Theorist brings you big-picture insights about the markets and mass psychology. Authored by the inimitable Robert Prechter.
3. Short Term Update guides you through the patterns in the markets each Monday, Wednesday and Friday at the close.
4. Numerous high-value materials that give you an insider’s look at the Elliott wave method.

All told, it's a $411 value. You get it free when you join Club EWI. Get your U.S. Markets FreePass now.

This article was syndicated by Elliott Wave International and was originally published under the headline What Junk Bonds Convey About Investors' Mindset. 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.

"I don't want to hear about it."

During a mania, "no prudent professional is perceived to add value"

By Elliott Wave International

"I don't want to hear about it."

That's the general response from many new retail investors here in 2021 when a veteran stock market observer expresses any hint of caution about the stock market.

This lack of respect for sober reflections about the market has been exhibited before.

Indeed, as far back as 1997, in a Special Report titled "Bulls, Bears and Manias," The Elliott Wave Theorist, a monthly publication which provides analysis of financial markets and cultural trends, said:

"A very human aspect of manias is that no prudent professional is perceived to add value. Indeed, the professional with a knowledge of history and value is eventually judged as an impediment to success."

Today's newbie investors are exhibiting this attitude in spades as expressed by the Wall Street Journal (Aug. 27):

Young investors are turning to a new generation of stock pickers -- many without formal training -- for advice. ... Staying popular means never criticizing a meme stock.

Yes, one of the keys to social media success for non-professional dispensers of stock picking advice is to always be bullish.

This ties in perfectly with the widespread sentiment among their social media followers that the market always goes up.

The October Elliott Wave Financial Forecast, a monthly publication which covers major U.S. financial markets, mentioned yet another financial mania trait:

Back in January 2000, the Elliott Wave Financial Forecast noted, "professionals and institutions that used to know better now pander to the stock-market dreams of the little guy." This time they're not just pandering with comments about a new era of retail dominance. Now the pros are copying the strategies of the little guy.

Getting back to the idea that the market always goes up, the only thing it will take for this maniacal mindset to be dramatically altered is a bear market.

Keep in mind that the current uptrend has extended for more than 12 years. Even so, as just discussed, investor psychology is even more extreme than 2000, or 2007, for that matter.

Now is the time to learn what the Elliott wave model has to say about the stock market's price pattern so you can prepare for what will take many investors -- both professionals and novices -- by surprise.

Right now, you can see EWI's U.S. market insights and analysis absolutely FREE.

Now through November 3, EWI is opening the doors to their flagship Financial Forecast Service. This is their most popular FreePass event ($411 value). That's for good reason. See why when you get your FreePass now.

This article was syndicated by Elliott Wave International and was originally published under the headline "I don't want to hear 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.

Why "Losses Are the Norm" in the Stock Market

"I can measure the motions of bodies, but I cannot measure human folly."

By Elliott Wave International

Did you know that Sir Isaac Newton "lost his shirt" in the South Sea Bubble of the 1720s?

This great scientist and mathematician lost more than the equivalent of a million 2021 dollars.

Here's a brief description of Newton's investment actions from Robert Prechter's landmark book, The Socionomic Theory of Finance:

[Sir Isaac Newton] invested a little bit early in the trend and "wisely" took a small profit. Watching the trend continue, he finally bet heavily and "wisely" held on for the long run. He eventually sold out at a near-total loss.

After this financial loss, Newton said:

"I can measure the motions of bodies, but I cannot measure human folly."

Newton's unfortunate investment story is instructive because it summarizes why stock market losses have been the norm among investors after a full market cycle.

In other words, investors are typically "timid traders early in a bull market and confident long term holders at the peak."

To drive the point home more starkly, let's look at how investors made out in a mutual fund over a 10-year period versus the performance of the fund during the same time span.

Let's start with this Dec. 31, 2009 Wall Street Journal quote:

The decade's best performing U.S. diversified stock mutual fund [is] Ken Heebner's $3.7 billion CGM Focus Fund, which rose 18.2% annually. ...

Here's a table of the mutual fund, showing the growth of an initial $100,000 investment:

As you can see, that initial investment more than quintupled in value as it grew at 18.2% annually, compounded. Quite a performance in a decade when the S&P 500 lost value.

Now, let's look at how much money investors in the fund made.

Let's return to that 2009 Wall Street Journal article:

The typical CGM Focus shareholder lost 11% annually in the 10 years ending Nov. 30. ...

Yes, you read that right.

Let's return to The Socionomic Theory of Finance for a look at another table of the mutual fund:

The average investor in CGM Focus Fund during that 10-year period turned $100,000 into $31,200 for a loss of 68.8%. That is 94% less than the growth of the money in the fund.

The reason for that loss boils down to "herding" or "following the crowd."

As that Wall Street Journal article said:

These investor returns incorporate the effect of cash flowing in and out of the fund. Shareholders often buy a fund after it has had a strong run and sell as it hits bottom.

If you'd like to learn how Elliott waves reflect the repetitive patterns of "crowd behavior," you are encouraged to read the Wall Street classic, Elliott Wave Principle: Key to Market Behavior, by Frost & Prechter. Here's a quote from the book:

The Wave Principle is governed by man's social nature, and since he has such a nature, its expression generates forms. As the forms are repetitive, they have predictive value.

You can access the online version of the book for free after you become a Club EWI member. Club EWI is the world's largest Elliott wave educational community and is free to join. As a Club EWI member, you'll enjoy free access to a wealth of Elliott wave resources on investing and trading without any obligations.

Follow this link to get started right away: Elliott Wave Principle: Key to Market Behavior -- free and unlimited access.

This article was syndicated by Elliott Wave International and was originally published under the headline Why "Losses Are the Norm" in the Stock Market. 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.

Why a Peak in Home Prices May Be Approaching

"Is it a good time to sell a house?"

By Elliott Wave International

Some people buy a house solely as an investment.

Others want a better place to live -- perhaps more room for a growing family. The investment part is secondary. However, even people in this category would likely hold off on a purchase if they had an indication that lower home prices were just around the corner.

Well, there is such an "indication."

First, a little historical context: In 2005, near the peak of the prior housing bubble, a University of Michigan survey asked participants, "Is it a good time to sell a house?"

In August, September and October of that year, a then-record high percentage of participants said "yes." Eight months later, in June 2006, U.S. home prices topped.

With that in mind, the September Elliott Wave Financial Forecast, a monthly publication which provides analysis of major U.S. financial markets, explains what that same survey recently revealed:

[A] series of questions in the University of Michigan monthly sentiment survey tracks attitudes toward home prices. ... This chart shows affirmative responses to the question "Is it a good time to sell a house?" ... The latest reading of 48 is twice the peak reading at the end of the last housing boom. [This is] a more-than doubling from March to June of this year. [emphasis added]

This sentiment survey may not be a precise timing indicator. Recall the eight-month timespan between the 2005 survey findings and the 2006 peak in home prices. Yet, it is still a "heads up."

Also keep in mind this astounding headline (Marketwatch, Sept. 30):

Home prices have risen 100 times faster than usual during the COVID-19 pandemic [emphasis added]

So, in at least one way, the current housing mania is even more stark than the last one.

Of course, home prices might climb even higher... or not. Is there a way to go beyond guessing, though?

Yes. The stock market and housing prices tend to be correlated. If you know what's likely next for stocks, big-picture, then you also know what's likely next for real estate.

The best way to determine what is next for the stock market is to employ the Elliott wave model.

Here's what Frost & Prechter said in their Wall Street classic, Elliott Wave Principle: Key to Market Behavior:

It is our practice to try to determine in advance where the next move will likely take the market. One advantage of setting a target is that it gives a sort of backdrop against which to monitor the market's actual path. This way, you are alerted quickly when something is wrong and can shift your interpretation to a more appropriate one if the market does not do what you expect. The second advantage of choosing a target well in advance is that it prepares you psychologically for buying when others are selling out in despair, and selling when others are buying confidently in a euphoric environment.

No matter what your convictions, it pays never to take your eyes off what is happening in the wave structure in real time. Ultimately, the market is the message, and a change in behavior can dictate a change in outlook. All one really needs to know at the time is whether to be long, short or out, a decision that can sometimes be made with a swift glance at a chart and other times only after painstaking work.

If you'd like to read the entire online version of the book, you may do so for free when you become a Club EWI member. Club EWI is the world's largest Elliott wave educational community with about 350,000 members.

It costs nothing to join Club EWI and members are under no obligations. At the same time, Club EWI members enjoy free access to a wealth of Elliott wave resources on investing and trading.

Follow the link to have this definitive text on the Wave Principle on your computer screen in just a few minutes: Elliott Wave Principle: Key to Market Behavior (free and unlimited access).

This article was syndicated by Elliott Wave International and was originally published under the headline Why a Peak in Home Prices May Be Approaching. 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.

Here's What Really Sets Interest Rates (Not Central Banks)

See "powerful evidence that the Fed is not in control of interest rates"

By Elliott Wave International

Most everyone is familiar with the phrase: "Keep your eye on the ball," which of course means -- focus on what really matters.

Those who seek clues about the direction of interest rates believe the "ball" is their nation's central bank.

For example, in the U.S., Federal Reserve announcements are the subject of countless financial headlines, like this one from Sept. 22 (Reuters):

Fed signals bond-buying taper coming 'soon,' rate hike next year

The assumption in most of these headlines is that the central bank determines the direction of rates.

However, if interest-rate observers kept their eye on what really matters, they'd be watching the bond market instead of the central bank. In other words, markets lead and central banks follow.

Sticking with the U.S., this chart and commentary from Robert Prechter's 2017 book, The Socionomic Theory of Finance, provide elaboration:

[The chart] plots T-bill rates and the effective federal funds rate (a weighted average of the federal funds rate across all banking transactions) from 1978 to 1984. T-bill rates peaked four times in 1980-1982. Each of those peaks occurred a month or more before subsequent and reactive peaks in the federal funds rate. The Fed's rate also lags at bottoms, as depicted on the chart at the lows of 1980, 1981 and 1982-3.

The book adds:

That interest rates were in a relentless upward trend during the entire decade of the 1970s and that they have been stuck at zero since 2008 -- in both cases despite the Federal Reserve's contrary desires -- is powerful evidence reinforcing the point that the Fed is not in control of interest rates.

The same principle holds in other nations, like Australia or the United Kingdom.

Here's another chart and additional commentary from The Socionomic Theory of Finance:

[The chart] plots interest rates on the U.K.'s freely-traded, 3-month government bond against the Bank of England's (BOE's) official daily bank-lending rate. These lines show that the BOE's rate-setting actions have lagged the freely traded debt market at all twelve major turning points in rates since 1993. The lags vary from two to nine months, and the average lag is 4.8 months.

The major takeaway is that central banks' interest-rate decisions are not proactive but reactive.

Another widely held misconception is that news drives financial markets, like stocks.

Here's insight on that pervasive assumption from Frost & Prechter's Wall Street classic, Elliott Wave Principle: Key to Market Behavior:

Sometimes the market appears to reflect outside conditions and events, but at other times it is entirely detached from what most people assume are causal conditions. The reason is that the market has a law of its own. It is not propelled by the external causality to which one becomes accustomed in the everyday experiences of life. The path of prices is not a product of news. Nor is the market the cyclically rhythmic machine that some declare it to be. Its movement reflects a repetition of forms that is independent both of presumed causal events and of periodicity.

The market's progression unfolds in waves. Waves are patterns of directional movement.

If you'd like to read the online version of this "definitive textbook on the Wave Principle," you may do so for free once you become a Club EWI member.

Club EWI is free to join and allows members free access to a wealth of Elliott wave resources on financial markets, investing and trading -- without any obligations.

Here's the link to follow for free and unlimited access to the book: Elliott Wave Principle: Key to Market Behavior.

This article was syndicated by Elliott Wave International and was originally published under the headline Here's What Really Sets Interest Rates (Not Central Banks). 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.

Will China's Crackdown Send Bitcoin's Price Tumbling?

July 2: "Bitcoin [is] at or near the end of [an Elliott wave] correction"

By Elliott Wave International

In early September, bitcoin hit a price level near $52,000 -- however, since then, the price has trended lower.

Indeed, on September 24 alone, the price of the cryptocurrency fell 5%.

The financial press pinpointed a supposed "cause":

Bitcoin and ether slide as China intensifies crackdown on cryptocurrencies

A China crackdown on cryptocurrencies seems like a logical "reason" for bitcoin's 5% slide, however, take a look at this next headline from the same financial website:

China's war on bitcoin just hit a new level with its latest crypto crackdown

You might say, "OK, it says pretty much the same thing as the first headline, what's the point?"

The point is: That second headline published on July 7 -- just two weeks before bitcoin hit a bottom near $29,000 and then rose to that price near $52,000 in early September.

In other words, China's stern measures against cryptocurrencies are nothing new and bitcoin prices have both risen and fallen during the crackdown.

Instead of relying on headlines, Elliott Wave International's head crypto analyst Tony Carrion uses the Elliott wave model to forecast cryptocurrencies.

Here's what he said in the July 2 Global Market Perspective, a monthly Elliott Wave International publication which covers 50+ worldwide financial markets:

Our preferred count has been to consider the price action since the December 2018 low to be the subwaves of a [sizeable Elliott wave] advance.

Bitcoin [is] at or near the end of [an Elliott wave] correction.

In other words, Tony was anticipating a rebound in bitcoin's price, even as the majority of investors were bearish.

That's the beauty of the Elliott wave model -- it anticipates price turns -- no matter what the news or prevailing sentiment.

You may have heard about that recent University of Chicago survey that said more than 1 in 10 people in the U.S. traded cryptocurrencies in the past year. Yeah, a lot of people.

No doubt, many of them are influenced by cryptocurrency headlines and forecasts that range from the wildly bullish (at least one headline said bitcoin was headed to $500,000) to the extremely bearish (more than one prognosticator has said bitcoin is headed to zero).

If you're among the many cryptocurrency traders, you owe it to yourself to get the objectivity of Elliott wave analysis.

As Frost & Prechter said in their Wall Street classic, Elliott Wave Principle: Key to Market Behavior:

Despite the fact that many analysts do not treat it as such, the Wave Principle is by all means an objective study, or as [Charles J.] Collins put it, "a disciplined form of technical analysis." [A. Hamilton] Bolton used to say that one of the hardest things he had to learn was to believe what he saw. If you do not believe what you see, you are likely to read into your analysis what you think should be there for some other reason. At this point, your count becomes subjective and worthless.

If you'd like to delve into the details of how the Wave Principle can help you objectively analyze financial markets, you can read the entire online version of the book for free.

All that's required for free access is a Club EWI membership. Club EWI is free to join and allows members free access to a wealth of Elliott wave resources on financial markets, investing and trading without any obligations.

Just follow this link: Elliott Wave Principle: Key to Market Behavior -- free and unlimited access.

This article was syndicated by Elliott Wave International and was originally published under the headline Will China's Crackdown Send Bitcoin's Price Tumbling?. 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.

Here's a Unique Way to Spot Worthy Investment or Trading Ideas

"Short term elliotticity helps us recognize markets that have recently traced out clear Elliott waves"

By Elliott Wave International

This one-of-a-kind way to spot investment ideas is called "elliotticity." The impartial arbiter of elliotticity is our proprietary computer program called EWAVES, Elliott Wave Analysis & Validation Expert System.

Elliott Wave International has been perfecting EWAVES for years; it already powers EWI's Flash Services recommendations. And now, it can quantify the exact percentage by which a market adheres to the Elliott wave model by giving it an elliotticity score.

Our recent monthly Elliott Wave Theorist provided more insights:

Total elliotticity takes into account the entire history of a market. Markets with the highest total elliotticity conform best to the Elliott wave model at all degrees of scale. Short term elliotticity helps us recognize markets that have recently traced out clear Elliott waves and thus are good candidates for near term forecasting. ...

Elliotticity is designed for practical use. We use a percentage scale of 1-100.

Currencies and commodities adhere well to the model, so both are high-elliotticity asset classes. Regarding stocks, high-volume and high market-capitalization stocks tend to have a higher adherence versus thinly traded issues -- because Elliott waves track herding (or crowd) behavior, and generally speaking, the bigger the market cap of a stock, the bigger the crowd.

Here's another quote from our recent Elliott Wave Theorist:

Trend following indicators are quantitative by nature, completely dependent upon pre-chosen numerical indicator settings. But the market's trends do not adhere to quantitative norms. ...

The most important advantage of EWAVES is that it is qualitative. It can identify the market's patterns regardless of their quantitative duration, price change, speed, volatility or any other such aspects.

Like all market forecasting, EWAVES operates on probabilities, not certainties. Yet, EWAVES does offer investment ideas worth your attention -- analyzing several hundred investment vehicles each day and ranking them to find the best wave counts.

Where can you see them?

You'll find the investment vehicles sporting the highest elliotticity right now in our monthly Global Market Perspective in the section titled "EWAVES," which includes the "EWAVES Chart Gallery." In case you're unfamiliar with the Global Market Perspective, it's an Elliott Wave International publication which provides Elliott wave analysis for 50+ worldwide financial markets.

If you'd like to brush up on your knowledge of Elliott wave analysis, or are brand new to the subject, you are encouraged to read the Wall Street classic book by Frost & Prechter, Elliott Wave Principle: Key to Market Behavior. Here's a quote from the book:

Always invest with the preferred wave count. Not infrequently, the two or even three best counts comfortably dictate the same investment stance. Sometimes being continuously sensitive to alternatives can allow you to make money even when your preferred count is in error. For instance, after a minor low that you erroneously consider of major importance, you may recognize at a higher level that the market is vulnerable again to new lows. This recognition occurs after a clear-cut three-wave rally follows the minor low rather than the necessary five, since a three-wave rally is the sign of an upward correction. Thus, what happens after the turning point often helps confirm or refute the assumed status of the low or high, well in advance of danger.

Even if the market allows no such graceful change of opinion, the Wave Principle still offers exceptional value. Most other approaches to market analysis, whether fundamental, technical or cyclical, have no good way of forcing a reversal of opinion or position if you are wrong. The Wave Principle, in contrast, provides a built-in objective method for placing a stop. Since wave analysis is based upon price patterns, a pattern identified as having been completed is either over or it isn't. If the market changes direction, the analyst has caught the turn. If the market moves beyond what the apparently completed pattern allows, the conclusion is wrong, and any funds at risk can be reclaimed immediately.

Here's the good news: You can access the online version of Elliott Wave Principle: Key to Market Behaviorfor free when you become a Club EWI member.

Club EWI is the world's largest Elliott wave educational community and is free to join -- PLUS, members enjoy free access to a wealth of Elliott wave resources on investing and trading without any obligation.

Just follow this link: Elliott Wave Principle: Key to Market Behavior -- free and unlimited access.

This article was syndicated by Elliott Wave International and was originally published under the headline Here's a Unique Way to Spot Worthy Investment or Trading Ideas. 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.

So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks

SOL surges 10x in six weeks, outshining crypto kings like Bitcoin and Ethereum. See how you could have seen the rally coming.

By Elliott Wave International

The world's financial authorities continue toggling back and forth between banning digital currency transactions one day, and predicting hyperbitcoinization -- i.e., bitcoin becoming fiat currency -- the other.

All the while high-profile gazillionaires like Elon Musk stir the pot with metaphorical nursing tweets about "pumping not dumping" bitcoin.

Thus, it's hard to remember bitcoin is NOT the only sheriff in town. There are hundreds of listed tokens quietly making huge waves in their much smaller pools. One such name is Solana, a lower altcoin who, between July 20 and September 9, actually outperformed the leading crypto kings.

While Solana stood at a much more accessible $22 at its July 20 low, Bitcoin stood just under $30,000. And yet, only one of these two currencies surged tenfold from that low to all-time highs in the ensuing month.

That would've been Solana!

In fact, Solana's incredible run catapulted it into the elite list of "Top 10" cryptos, for the 10th ranking. And everyone from the August 16 Forbes -- "Solana Hits New All-Time High" -- to the August 16 Public UK -- "Solana Price on a Roar!" -- stood up and paid attention to the action.

An August 24 Coin Telegraph had this stunning testament to the new-found fervor for Solana:

"Institutional investors bet big on Solana... with one-third of inflows to crypto investment products being invested in instruments tracking Solana this past week.

"According to CoinShares' Monday 'Digital Asset Fund Flows Weekly' report, $7.1 million flowed into Solana investment products between Aug. 15 and Friday."

The problem is, according to mainstream wisdom, nobody could've foreseen Solana going from back-of-the-line lagger to leader of the race. Said one August 17 news source:

"Its native SOL token has been the stand-out performer during the recent cryptocurrency surge of the last few days.

"The reason for the sudden and dramatic interest in Solana's open infrastructure blockchain has left many analysts scratching their heads."

Many, but not all.

On July 11, our Crypto Pro Service analyst Tony Carrion set the stage for a very bullish scenario. Tony showed the following SOLUSD chart, which pegged prices at the end of a fourth-wave Elliott wave correction.

The next move due was a fifth wave rally -- to new highs:

"We have structural support at 26.73, and hopefully the market won't need to go below that. The bottom line is that we'd want to see 38.08 exceeded, and ultimately a move above 44.10 to bolster the bullish scenario that is unfolding."

And this is what followed: SOL soared four-fold to record highs!

Then, as SOL penetrated $90 mark, the August 29 Crypto Pro Service revisited the crypto with a new, updated forecast; one that called for still higher prices even as the mainstream experts continued to scratch their heads as to why the crypto was rallying in the first place. In Tony's words:

"Apparently, a number of fundamental guys are still trying to figure out why Solana is doing this. As I've said many times, fundamental analysis is basically useless in trying to calculate price moves.

"Elliott wave analysis is far superior; it allowed us to use the .618 multiple of wave 1 to calculate where 5 might move, when it was trading way back in the 20's.

"Wave 5 isn't finished. We're not inclined to stand in the way of this move and will see what the market does. There are still higher projections using Fibonacci ratios. Heck, we could get all the way above $200."

And, a move to above $200 on September 9 is what followed!

It's commonly said that crypto markets are loose cannons with unpredictable trends.

We believe that's true -- IF you don't have the right tools to analyze price action.

We don't claim that Elliott waves are a crystal ball, of course. But patterns of investor and trader psychology are at play in cryptos, too -- making this "unpredictable" market quite the opposite.

Right now, our friends at EWI are hosting a Crypto-trader event (FREE): Now thru Sept. 23 Elliott Wave International opens the doors to their trader-focused Crypto Pro Service. FREE for 7 days, you get objective intraday + daily forecasts for Bitcoin, Ethereum + 6 more cryptos. PLUS, get up-to-speed at the free "kick-off" webinar with EWI's Crypto Pro Service editor Tony Carrion. Discover details and join in at elliottwave.com now.

This article was syndicated by Elliott Wave International and was originally published under the headline So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks. 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.

Why a Financial "Panic" May Be Just Around the Corner

Here's why global investors should keep a close eye on "sight deposits"

By Elliott Wave International

Investors look to an array of indicators in hopes of determining what is next for the financial markets in which they are interested.

Some investors may focus entirely on "technical" indicators such as the Relative Strength Index (RSI), price levels of "support" or "resistance," or say, advancing vs. declining issues, just to name a few. As you probably know, there are many more technical indicators.

Market participants also look at sentiment readings such as mutual fund cash levels, investors' use of leverage, surveys and so on.

Yet, there's at least one indicator that many global investors may overlook, and that's the weekly change in "sight deposits" at the Swiss National Bank.

This chart and commentary from the September Global Market Perspective, an Elliott Wave International publication which offers coverage of 50+ worldwide financial markets, provide insight:

For the week ending August 6, commercial banks poured 1.2 billion francs into the Swiss National Bank, the largest weekly inflow since mid-June. The cash that banks park at the central bank are called "sight deposits," and, together, the June and August data points represent the largest weekly inflows since the coronavirus panic in early 2020.

The previous spikes on the chart show why we keep such a close eye on sight deposits. Bank officials move cash into the SNB when fear swells, and they pull cash back out when complacency returns.

So, it does appear that fear is starting to develop among bankers.

As the September Global Market Perspective goes on to say:

With total sight deposits pushing to an all-time record of 713 billion francs last month, bank officials seem all too happy to park their money at the central bank. Perhaps they know something that the average meme stock investor doesn't.

Elliott Wave International's global analysts will continue to monitor sight deposits along with other indicators, plus, the Elliott wave structure of 50+ global financial markets.

Indeed, the September Global Market Perspective shows a chart with the Elliott wave patterns of two major global stock indexes. The chart's headline is "The Alarm Bells Are Ringing."

If you need to brush up on your knowledge of Elliott wave patterns, or you are new to Elliott wave analysis, you are encouraged to read the Wall Street classic: Elliott Wave Principle: Key to Market Behavior, by Frost & Prechter.

Here's a quote from the book:

In its broadest sense, the Wave Principle suggests the idea that the same law that shapes living creatures and galaxies is inherent in the spirit and activities of men en masse. Because the stock market is the most meticulously tabulated reflector of mass psychology in the world, its data produce an excellent recording of man's social psychological states and trends. This record of the fluctuating self-evaluation of social man's own productive enterprise makes manifest specific patterns of progress and regress. What the Wave Principle says is that mankind's progress (of which the stock market is a popularly determined valuation) does not occur in a straight line, does not occur randomly, and does not occur cyclically. Rather, progress takes place in a "three steps forward, two steps back" fashion, a form that nature prefers.

If you'd like to read the entire online version of the book, you can do so by becoming a Club EWI member. Club EWI is the world's largest Elliott wave educational community and is free to join. You are under no obligation as a Club EWI member. Yet, members do enjoy complimentary access to a wealth of useful Elliott wave resources on financial markets, investing and trading.

Join Club EWI and get free access to the book by following this link: Elliott Wave Principle: Key to Market Behavior.

This article was syndicated by Elliott Wave International and was originally published under the headline Why a Financial "Panic" May Be Just Around the Corner. 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.

Stocks: Is This the "Kiss of Death" for the Bull Market?

Stock market prices usually decline after this occurs

By Elliott Wave International

Many market observers believe that the catalyst for the next bear market will be a piece of extraordinarily bad news.

However, Elliott Wave International has shown time and again that the stock market's price action is often "entirely detached from what most people assume are causal conditions."

Examples of stocks rising when the news is bad -- and falling when the news is good -- are so numerous that a library shelf of books would be inadequate to show a fair representation of them. For the most recent vivid example, just think back to March 2020, when the first wave of the pandemic hit and shuttered the entire global economy -- yet, stocks (around the world!) happily found a bottom and haven't looked back since.

No, the stock market is governed by the psychology and behavior of investors themselves.

One of the noteworthy behaviors is investors' use of margin debt.

Indeed, back in 1980, The Elliott Wave Theorist, a monthly publication which provides analysis of financial markets and social trends, said:

[A] failure of margin debt to expand in an advancing market [can be] the 'kiss of death' to a bull trend.

With that in mind, consider this chart and commentary from the recently published September Elliott Wave Financial Forecast, a monthly publication which covers key U.S. financial markets:

The arrows on the chart of the year-over-year change in New York Stock Exchange margin debt show that [The Theorist's] statement has been true at three major market tops over the last 24 years: at the market top in August 1987 ... the S&P's March 2000 top ... and at the October 2007 peak. As the latest arrow shows, a rapid expansion in margin debt has, once again, reversed trend.

Keep in mind that the stock market does not always decline after a year-over-year drop in margin debt. However, if the use of margin debt substantially falls just after reaching a record high, history does show that stock prices usually tumble thereafter.

That said, in June, margin debt reached a record high of $882 billion, which makes the July retreat of $37.7 billion especially significant.

The Elliott wave model pinpoints the patterns of investor psychology even more precisely.

As our September Financial Forecast said, the current unfolding Elliott wave of the Dow Industrials is "one for the ages."

If you'd like to learn how the Wave Principle can help you analyze and forecast financial markets, Elliott Wave Principle: Key to Market Behavior, is the go-to book for doing so. Here's a quote from this Wall Street classic:

Because applying the Wave Principle is an exercise in probability, the ongoing maintenance of alternative wave counts is an essential part of using it correctly. In the event that the market violates the expected scenario, the alternate count puts the unexpected market action into perspective and immediately becomes your new preferred count. If you're thrown by your horse, it's useful to land right atop another.

Always invest with the preferred wave count. Not infrequently, the two or even three best counts comfortably dictate the same investment stance. Sometimes being continuously sensitive to alternatives can allow you to make money even when your preferred count is in error. For instance, after a minor low that you erroneously consider of major importance, you may recognize at a higher level that the market is vulnerable again to new lows. This recognition occurs after a clear-cut three-wave rally follows the minor low rather than the necessary five, since a three-wave rally is the sign of an upward correction. Thus, what happens after the turning point often helps confirm or refute the assumed status of the low or high, well in advance of danger.

You can read the entire online version of the book for free when you become a Club EWI member. Club EWI is the world's largest Elliott wave educational community and is free to join. Members enjoy free access to a wealth of Elliott wave resources on financial markets, investing and trading.

Get started by following this link: Elliott Wave Principle: Key to Market Behavior -- free and instant access.

This article was syndicated by Elliott Wave International and was originally published under the headline Stocks: Is This the "Kiss of Death" for the Bull Market?. 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.