Germany's DAX: What You Can Learn from the 2007 Top

Why investors should be aware of a divergence between stock prices and consumer confidence

By Elliott Wave International

Among the scores of stock market indicators, there's at least one that may be off many investors' radar screens.

And, that is the trend in consumer confidence. Specifically, a peak in consumer confidence tends to precede a peak in the stock market.

With that in mind, back on Nov. 25, the Telegraph said:

Consumer confidence has dropped sharply in Germany. ...

A few days later, the December Global Market Perspective, a monthly Elliott Wave International publication which offers coverage of 50-plus worldwide financial markets, provided a retrospective of Germany's DAX and consumer confidence with this chart and commentary:

As the DAX approached its July 2007 peak 14 years ago, a telling divergence popped up between stock prices and consumer confidence. The GfK Consumer Confidence indicator, which surveys about 2,000 households every month, reversed in December 2006, seven months before the DAX reversed. Consumer confidence fell for three months, and then rallied to a secondary but lower peak in July 2007, coinciding with the stock market's final top on July 13, 2007. Only then did the bottom fall out.

Market history usually does not repeat exactly, however, do know that the DAX is trading lower than it was at the time of that big drop in consumer confidence, which the Telegraph reported in November.

The key takeaway is that consumer confidence tends to trend with stocks.

Indeed, here's one of the more recent headlines about consumer confidence in Germany (Dow Jones Newswire, Feb. 23):

German Consumer Confidence Is Expected to Continue Its Downward Trend

Does this mean that a big crash is just ahead for Germany's main stock index?

Well, you can get a good idea of what to expect next for the DAX as you look at the index's long-term Elliott wave labeling in the March Global Market Perspective. Inside the same issue, you'll find analysis of the DAX's price-to-sales ratio, as well as the price-to-book ratio.

If you'd like to learn about labeling Elliott waves on a stock market chart, you are encouraged to read Frost & Prechter's Elliott Wave Principle: Key to Market Behavior. Here's a quote:

All waves may be categorized by relative size, or degree. The degree of a wave is determined by its size and position relative to component, adjacent and encompassing waves. [R.N.] Elliott named nine degrees of waves, from the smallest discernible on an hourly chart to the largest wave he could assume existed from the data then available. He chose the following terms for these degrees, from largest to smallest: Grand Supercycle, Supercycle, Cycle, Primary, Intermediate, Minor, Minute, Minuette, Subminuette. Cycle waves subdivide into Primary waves that subdivide into Intermediate waves that in turn subdivide into Minor waves, and so on. The specific terminology is not critical to the identification of degrees, although out of habit, today's practitioners have become comfortable with Elliott's nomenclature.

You may be interested in knowing that you can access the entire online version of the book -- free!

That's right -- all that's required for free access is a Club EWI membership -- which is also free. In case you don't know, Club EWI is the world's largest Elliott wave educational community, and members enjoy complimentary access to an abundance of Elliott wave resources on financial markets, investing and trading -- with zero obligation.

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

This article was syndicated by Elliott Wave International and was originally published under the headline Germany's DAX: What You Can Learn from the 2007 Top. 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 the "Great Resignation" Ties in with a Financial Peak

Insights into "a peak in social optimism of monumental proportions"

By Elliott Wave International

Some people probably remember that country song by Johnny Paycheck from the late '70s -- "Take This Job and Shove It."

Many of those in the younger generations may not have heard of it given the song was released more than 40 years ago. However, many of them caught the spirit of it just the same as they quit their jobs in droves in what has been called the "Great Resignation."

You may recall similar headlines to these:

• One Third Of Millennials Plan To Quit Their Jobs After The Pandemic ... (April 6, 2021, Forbes)
• Study: Gen Z, Millennials Driving 'The Great Resignation' (Aug. 26, 2021, U.S. News)

Indeed, in the last three quarters of 2021, 33 million Americans quit their jobs, and many of them did so without other job prospects.

But what has been driving this "quitting spree"?

Put succinctly, the desire for better working conditions and the optimistic idea that they can be had just around the corner.

Here's how the Elliott Wave Financial Forecast, a monthly publication which provides analysis of key U.S. financial markets, described this mindset in October:

Here's the Grand-Supercycle kicker shown on the cover of a recent issue of Time magazine: "There Are 9.2 Million Open Jobs" and "Nobody Wants Them." Only at a peak in social optimism of monumental proportions would so many choose to "Chill Out" amidst such an abundance of opportunity.

Interestingly, the tops in the Dow Industrials and S&P 500 occurred just three months later in early January.

On Feb. 15, a New York Times article said:

An idealistic generation has set about demanding a utopian world. More diversity, more attention to structural racism, better hours, better boundaries, better leave policies, better bosses.

However, with stocks in a downtrend and optimism fading, here's an update on the "Great Resignation."

This is a March 13 Fox Business headline:

'Great Resignation': Over 70% of workers regret quitting their jobs

It seems that the majority of people who quit their jobs are learning the harsh reality that very few workplaces even approach an idealist's version of "utopia."

Expect this pessimism, as reflected by the Elliott wave model, to increase in all of society, including financial markets.

In case you're unfamiliar with the Elliott wave model, get insights by reading Frost & Prechter's Elliott Wave Principle: Key to Market Behavior. Here's a quote:

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.

Here's the good news: You can read 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 members enjoy complimentary access to a wealth of Elliott wave resources on investing and trading.

Club EWI is free to join and members are under no obligations.

Get started by following 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 How the "Great Resignation" Ties in with a Financial Peak. 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.

Non-Fungible Tokens (NFTs): A Replay of Holland's "Tulip Mania"?

The NFT Index is down more than 55% from its November high

By Elliott Wave International

It seems the financial world has gone a little crazy -- maybe a lot crazy.

Specifically, I'm talking about non-fungible tokens or NFTs for short. You may be familiar with them, but in case you're not, here's a description (CNN Business):

In the simplest terms, NFTs transform digital works of art and other collectibles into one-of-a-kind, verifiable assets that are easy to trade on the blockchain.

So, yes, non-fungible tokens are generally encoded with the same software as many cryptos and a key feature is digital scarcity.

Put another way, NFTs are like physical collector's items, only digital.

As examples, Twitter founder Jack Dorsey's first tweet sold for $2.9 million and a video clip of a LeBron James slam dunk sold for over $200,000. One that really took the cake was a collage of images by digital artist Beeple, which sold for a staggering $69.3 million. There have been many other very high-priced NFTs.

Indeed, here's a March 10 CNBC headline:

Trading in NFTs spiked 21,000% to more than $17 billion in 2021...

Previous generations of investors would likely have thought it insane to pay nearly $70 million for "digital art" -- a piece that the owner could not touch or hang on a wall, and one that could be easily copied by pressing two buttons on any keyboard -- yet that's the extent to which investing products have changed.

However, one thing that hasn't changed is the investor psychology which drives investing.

A Feb. 15 Forbes article which discusses non-fungible tokens says:

These digital assets are selling like 17th-century exotic Dutch tulips.

Well, those familiar with financial history know that Tulip Mania did not end well. Tulips went from 20 cents to 60 florens and then crashed to 2 cents -- very fast.

With that in mind, is an NFT crash already underway?

Here's a chart and commentary from the February Global Market Perspective, a monthly publication which provides analysis of 50-plus worldwide financial markets:

This chart shows a cross section of NFTs selected by Coinmarketcap.com to represent the performance of the NFT market. The index is down more than 55% from its November 24 high.

As of this writing on March 16, the NFT Index is trading even lower than it was at the time the February Global Market Perspective published.

It's possible that this NFT Index could bounce back and reach new highs. But would it be wise to bet on it?

Right now, the financial world is also exhibiting a "tulip mania" mindset in other sectors beyond NFTs.

Prepare now for what the Elliott wave model suggests is just ahead for cryptocurrencies, global stock markets, crude oil, forex, bonds and metals.

If you need to freshen up on your knowledge of the Elliott wave model, or are new to the subject, you are encouraged to read Frost & Prechter's Elliott Wave Principle: Key to Market Behavior. Here's a quote from the Wall Street classic:

Without Elliott, there appear to be an infinite number of possibilities for market action. What the Wave Principle provides is a means of first limiting the possibilities and then ordering the relative probabilities of possible future market paths. Elliott's highly specific rules reduce the number of valid alternatives to a minimum. Among those, the best interpretation, sometimes called the "preferred count," is the one that satisfies the largest number of guidelines. Other interpretations are ordered accordingly.

You can delve into the details of the "high specific rules" of the Elliott wave model by reading the 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. Members enjoy free access to a wealth of Elliott wave resources on financial markets, investing and trading without any obligation.

You can get started by following this link: Elliott Wave Principle: Key to Market Behavior -- free and unlimited access now.

This article was syndicated by Elliott Wave International and was originally published under the headline Non-Fungible Tokens (NFTs): A Replay of Holland's "Tulip Mania"?. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

The Journey to High-Confidence Trading Starts Now! Next Stop: Corrective Elliott Wave Patterns

Soybeans and Apple stock (AAPL): Corrective patterns signaled opportunities in these disparate markets. Your market could be next!

By Elliott Wave International

The last 2 years have been a time of immense global adversity with the most challenging human health crisis in over a century.

But it has also been a time of immense personal growth. The uncomfortable realization of our dependence on others for everything from entertainment, education, nourishment, and income came into stark, swift focus. And with it, how quickly those things can be taken away without warning because of that dependence.

In turn, the pandemic saw an insatiable industry of online self-improvement crash courses emerge on home garden horticulture, podcast making, home building, home schooling, and -- learning to trade financial markets to "ensure a steady livelihood despite economic setbacks."

The problem is, learning to trade isn't like learning to plant tubers in your backyard. It's much more complicated and can't be fully conveyed with mock "trials" or simulated positions. At best, many of such courses get people in the door, but not seated at the table of real-world practice and risk-management.

That's where our respected partner Elliott Wave International (EWI) comes in. Its team of market analysts and technical analysis instructors has committed itself to leading the most comprehensive educational journey of the company's 42-year long history.

EWI's ultimate goal for 2022: Empower market newbies and veterans alike to develop and deepen their opportunity-spotting skills through the independent forecasting model known as Elliott wave analysis.

In brief, Elliott wave analysis, aka the Wave Principle, is founded on these core observations:

• Market trends are driven by trends in collective investor psychology
• Investor psychology progresses in 2 modes, impulsive and corrective
• Correctly identifying these patterns at their onset illuminates future price action

One such mode of market progress is the correction, which is best defined by the "bible" of all things Elliott, Elliott Wave Principle -- Key to Market Behavior:

"Markets move against the trend of one greater degree only with a seeming struggle. Resistance from the larger trend appears to prevent a correction from developing a full motive structure... Specific corrective patterns fall into three main categories: Zigzag, flat and triangle."

Characterized as often choppy, sloppy meandering lulls that move against the main trend, corrective patterns provide the ultimate gift; namely, TIME. Time for traders to establish a solid footing before the resumption of the larger trend.

So, we wanted to till the soil with real-world examples of how EWI's instructor Jeffrey Kennedy used corrective waves to alert traders to recent opportunities in two disparate markets.

-- The Surge in Soybeans --

In the June 2021 Monthly Commodity Junctures "Wave Watch," Elliott Wave international's Chief Market Analyst Jeffrey Kenney showed the following chart of soybeans.

(Editor's Note: Monthly Commodity Junctures is EWI's service for spotting long-term opportunities in the world's leading grains, softs, livestock, food, metal and energy markets.)

Prices appeared to be falling in a fourth (corrective) wave off the June 2021 high. If correct, Jeffrey could use one simple guideline of corrective waves to determine not only where the decline might end, but also what type of move would follow.

Chapter 2 of The Elliott Wave Principle summarizes this guideline:

"No market approach other than the Wave Principle gives a satisfactory answer to the question, 'How far down can a bear market be expected to go?' The primary guideline is that corrections, especially when they themselves are fourth waves, tend to register their maximum retracement within the span of travel of the previous fourth wave of one lesser degree, most commonly near the level of its terminus."

Armed with this simple code of market behavior, Jeffrey was able to establish a confident forecast for beans. In the June Monthly Commodity Junctures, Jeffrey said:

"I like the idea of higher prices. I believe recent selling will prove to be a corrective move. I like this movement to the downside as an expanded flat fourth wave move. As we get into the next week, I will be looking for the culmination of this fourth move right in this area here between 1230-1210 and then, following that, another advance to the upside to give us a new high for the year."

This next chart shows how soybean prices followed Jeffrey's analysis to the letter: The fourth wave decline ended in Jeffrey's target area and reversed up in a powerful rally to new highs.

You can learn about the guideline that enabled Jeffrey to identify where the fourth wave in soybean would end in Chapter 2 of The Elliott Wave Principle -- Key to Market Behavior. The online book is available for free to Club EWI members >>

-- Apple Inc. Thrusts to New Highs --

In mid-2021, Apple stock was about as exciting as watching an apple ripen on its branch. Prices hadn't budged from a rangebound trend in the 10 months between September 2020 and June 2021. Said one May 4, 2021, Yahoo Finance:

"The tech wreck could continue as the reflationary environment will likely, drive up bets on cyclicals.

"Tech has had its day in the sun."

But on June 7, 2021, EWI's action-oriented Trader's Classroom, also edited by Jeffrey Kennedy, had something different to say about Apple's future; namely, the sun was about to start shining on this tech giant once again. There, Jeffrey showed this chart of the Nasdaq listee AAPL which labeled the months-long sideways price action as an Elliott wave triangle, the most patience-trying of all the corrective structures.

Here, Elliott Wave Principle -- Key to Market Behavior sheds light on the triangle pattern:

"A triangle appears to reflect a balance of forces, causing a sideways movement that is usually associated with decreasing volume and volatility. The triangle pattern contains five overlapping waves that subdivide 3-3-3-3-3 and are labeled A-B-C-D-E.

"A triangle always occurs in a position prior to the final actionary wave in the pattern of one larger degree... Elliott used the word "thrust" in referring to this swift, short motive wave following a triangle."

From the idealized diagram of a triangle, and now to the real-world triangle on Apple's price chart:

But, as Jeffrey's analysis of Apple made clear, those who wait triangles out are often generously rewarded. Here is an excerpt from Jeffrey's Trader's Classroom analysis of AAPL on June 7, 2021:

"We've basically gone sideways pretty much. We're trading 127 now. That's what we were doing a few months ago and that's what we were doing a few months prior to that, and a few months prior to that.

"My best wave count for Apple is that this is a contracting triangle fourth wave and we've still got one more wave coming, a pop higher in wave five for the post-triangle thrust."

The chart below follows the stock's performance from there, where Apple soared 40% to reclaim record highs.

Seeing a triangle on a market's price chart gives you an invaluable advantage -- one that starts with knowing what the pattern is, how many types of triangles there are, and how to identify it in real time, all lessons covered in Elliott Wave Principle -- Key to Market Behavior. The book gives a refresher course on the core Elliott wave tenets, such as:

• Definitions and diagrams of the core Elliott wave patterns
• Three cardinal rules of Elliott wave analysis
• Summary of all Elliott wave guidelines
• Common Fibonacci retracements
• Behavior of specific waves and corresponding investor psychology

You can sign up on EWI's website to read the digital version for free.

This article was syndicated by Elliott Wave International and was originally published under the headline The Journey to High-Confidence Trading Starts Now! Next Stop: Corrective Elliott Wave Patterns. 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.

Are Rising Oil Prices Sending Stocks into a Downtrend?

See a time when the economy revived as oil prices doubled

By Elliott Wave International

A long-held assumption is that "oil shocks" or dramatically rising oil prices are bearish for stocks.

Look at these headlines:

• Dow slides nearly 800 points as oil hits $120 a barrel (Washington Post, March 7)
• Why soaring oil prices could soon make the stock market sputter (Marketwatch, October 2021)

As you might imagine, if observers assume that dramatically rising oil prices make the stock market decline, they also believe the reverse, namely, a drop in oil prices makes the stock market climb.

Here's a sample headline:

Stocks jump most since June 2020 as oil prices fall sharply (Los Angeles Times, March 9)

However, on March 3, neither of the two scenarios just mentioned applied. This recent headline says stocks and oil moved in the same direction:

Stocks Finish Lower; Oil Prices Decline (Wall Street Journal, March 3)

And this headline talks about stocks and oil rising together:

Stocks rise as Powell signals steadiness, and oil prices continue to march higher (The New York Times, March 2)

So, the headlines are all over the place as far as a linkage between oil and stocks is concerned. The bottom line is that if observers take a close look, they'll see that there's no consistent relationship between oil and stock prices.

History verifies this.

This chart and commentary are from a 2010 Elliott Wave Theorist, a monthly publication which provides analysis of financial markets and cultural trends:

[F]or the past 15 years there has been no consistent relationship between the trends of oil prices and stock prices. Sometimes it is positive, and sometimes it is negative. … The quarters during this period when the economy contracted the most occurred during and after the oil price collapse of 2008. Thereafter oil prices doubled as the economy was reviving in 2009.

So, it's a myth that rising oil prices hurt the stock market or falling oil prices help the stock market.

You see, the stock market is not governed by events outside of the market – no matter how dramatic.

Stock market prices are determined by investor psychology, which unfolds in repetitive patterns. Since these patterns are repetitive, they have predictive value!

The Elliott wave model is a direct reflection of these patterns, and that's why it works so well in anticipating trend turns.

For more eye-opening charts, check out EWI President Robert Prechter's classic presentation on oil in a rebroadcast event on Thursday, March 17 at 2:00 PM Eastern (NY time). The lessons Prechter shows can be applied to any liquid market -- cryptos, commodities, stocks, bonds and more. Whatever the vehicle, these insights help viewers sweep aside the noise and uncover what's really going on in big moves.

Get started by following this link: Join Club EWI to reserve your seat.

Club EWI is the world's largest Elliott wave educational community and is free to join. Members enjoy complimentary access to a treasure trove of Elliott wave resources on investing and trading without any obligation.

Bitcoin Jumps 9%: Is This Executive Order the Reason?

Here's what our "wave model" suggested for Bitcoin before the rally

By Elliott Wave International

Bitcoin and other cryptocurrencies surged higher on March 9.

CNBC provided this explanation (March 9):

Bitcoin and other cryptocurrencies were higher on [March 9] after President Joe Biden announced his highly anticipated executive order on digital assets that appeared to take a supportive stance toward the industry.

The basic message of the executive order focuses on development of the crypto market as opposed to unrealistic regulations.

Around midday (March 9), Bitcoin was trading 9.5% higher at just north of $42,200. Litecoin was trading around 9% higher and Ethereum was posting a 7% advance.

It's true that often -- although, far from "always" -- financial markets tend to have brief emotional responses to news, and cryptocurrencies are highly emotional markets in the first place. However, after temporary spikes (whether up or down), markets tend to return to their established trends.

Those trends are ascertained by looking at a financial market's Elliott wave structure, which reflects the repetitive patterns of investor psychology.

In the case of Bitcoin, Elliott Wave International crypto analyst Tony Carrion said this in the March 4 Global Market Perspective, a monthly publication which covers 50-plus worldwide financial markets:

Focusing our attention on Bitcoin, our Intermediate wave model is bullish.

The point is: Bitcoin's Elliott wave structure was already bullish, even before that executive order.

Keep in mind, that just one day before the March Global Market Perspective published, Bitcoin's price rise was not a given.

As a March 3 Marketwatch headline said:

Most big cryptocurrencies post drops

Also on March 3, the Crypto Fear and Greed index showed a reading of 39, which indicated fear. In other words, many crypto observers were bearish. By March 8, that index slid to 21, indicating extreme fear.

Even so, Bitcoin's price action was strongly positive on March 9.

As Elliott Wave International has noted many times, when sentiment reaches an extreme, prices often move in the opposite direction from what the majority expect.

Having said that, Bitcoin has been in a bullish pattern for quite some time and another Elliott Wave International observation is that when the government jumps aboard a financial trend, they usually do so late in the game.

As you might imagine, no analytical method can provide certainty about a market's future price path. However, the Elliott wave model has proven itself time and again.

You can learn how the Elliott wave model can help you forecast financial markets by reading Frost & Prechter's Wall Street classic, Elliott Wave Principle: Key to Market Behavior.

This quote is 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.

You can read the entire online version of the book for free after you join Club EWI, the world's largest Elliott wave educational community.

Joining Club EWI is free. Members enjoy complimentary access to a treasure trove of Elliott wave resources on investing and trading without any obligation.

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 Bitcoin Jumps 9%: Is This Executive Order the Reason?. 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.

Oil at $130: Look Beyond Supply and Demand

"War" is the answer that only gets you so far

By Elliott Wave International

Most everyone knows that oil and gasoline prices have been soaring, and this steady climb started well before the Russia-Ukraine conflict.

The upward trend began in April 2020, when oil prices briefly went negative, and it's continued ever since. These two headlines from recent months say the reason is supply / demand:

• Oil Rises on Higher Demand Forecasts, Tight Supplies (Nov. 9, Reuters)
• Oil rises to 7-year high as Turkey outage adds to tight supply outlook (Jan. 19, CNBC)

This "cause and effect" explanation is not a surprise. Most energy market observers believe supply and demand drives oil prices. Indeed, this belief is held at the highest levels of government.

President Biden addressed higher energy costs in his March 1 State of the Union address. This is from the Wall Street Journal (March 1):

Biden Says Release of 30 Million Barrels of Oil From Reserves Will Blunt Gas Prices

Moreover, U.S. allies have agreed to release another 30 million barrels of oil from their reserves.

Yet, the price of crude oil and gas prices are higher as of this writing on March 7 versus what they were on the date of that presidential announcement.

Is it possible that something other than supply / demand is the main driver of oil prices?

Elliott Wave International's read of history strongly suggests that this may in fact be the case.

Let's take a look at supply / demand data from 1980 through 2015 via this chart and commentary from Robert Prechter's landmark book, The Socionomic Theory of Finance:

The chart depicts worldwide oil production (upper time axis) and consumption (lower time axis), respectively. The letters placed on these graphs indicate major turning points in the price of oil. See if you can guess which way, and how far, prices went each time by studying these graphs. I can't do it. The list below gives you the price changes.

The Socionomic Theory of Finance goes on to say:

If supply and demand do regulate oil prices, one would think that shifts in supply and/or demand would have alerted economists to coming price changes. Did any of the 30,000 or so economists scattered over the earth use supply and demand analysis to forecast accurately the dramatic swings in oil prices over the past three decades? To my knowledge, none of them did.

Elliott Wave International's view is that impulsive herding among speculators is what accounts for the dramatic swings in the price of oil over the past 40 years or so, not just supply / demand.

This herding is reflected in the oil market's Elliott wave structure, and now is a crucial time to pay close attention.

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

Here's a quote from this definitive text on the Elliott wave model:

Without Elliott, there appear to be an infinite number of possibilities for market action. What the Wave Principle provides is a means of first limiting the possibilities and then ordering the relative probabilities of possible future market paths. Elliott's highly specific rules reduce the number of valid alternatives to a minimum.

You can learn about the "highly specific rules" of the Elliott wave model by reading the online version of Elliott Wave Principle: Key to Market Behavior for free!

This free access to the book is available to you once you join Club EWI, the world's largest Elliott wave educational community. Club EWI is free to join and allows members complimentary access to a wealth of Elliott wave resources on investing and trading.

Just 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 Oil at $130: Look Beyond Supply and Demand. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

The Stunning Truth About the FDIC and Your Bank Deposits

Why you can't rely on the FDIC if another financial crisis hits and your bank goes under

By Elliott Wave International

Millions of U.S. bank depositors feel safe in the knowledge that the Federal Deposit Insurance Corporation will protect their accounts, even if their bank goes under.

Yes, it's true that the FDIC says it will do so. As their website states:

The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.

However, the question is: Does the FDIC have the wherewithal to fulfill its promise?

In the event of a major financial crisis, the answer is "no." Not even close.

The Elliott Wave Theorist is a monthly publication which provides analysis of financial markets and social trends and here’s what the Theorist said in August 2008, near the middle of the 2007-2009 financial crisis:

The FDIC is not funded well enough to bail out even a handful of the biggest banks in America. It has enough money to pay depositors of about three big banks. After that, it's broke.

No doubt, most bank depositors would be shocked to learn this.

But think about it: No single entity could possibly insure all of the nation's bank deposits.

Yet, that FDIC sticker on the front of your bank is very reassuring. The discussions with your banker about your deposit "insurance" might be reassuring.

But, something that is not quite so reassuring is from none other than a former vice-chairman of the FDIC itself. Here's what Thomas Hoenig wrote for the Los Angeles Times in a Dec. 18, 2014 article titled, "FDIC couldn't cover a big bank bailout without taxpayer support":

As a reminder, when the financial industry imploded in 2008, Congress had to pass a special law to fund a $700-billion bailout … . The Federal Deposit Insurance Corp. had nowhere near enough resources to fund their resolution. [emphasis added]

Here's another insight from the new March Elliott Wave Theorist:

Did you know that most of the FDIC's money comes from other banks? This funding scheme makes prudent banks pay to save the imprudent ones, imparting weaker banks' frailty to the stronger ones.

The best way to protect your deposits is to adequately research the banks in your community and pick one where the banks' officers handle their customers' deposits prudently.

The new March Elliott Wave Theorist elaborates on safe banking in the U.S. as well as worldwide and admonishes readers to "act while you can."

Why?

Well, the next financial downturn may be severe enough to put many banks at risk of collapse.

This can happen quickly. Just recall the speed with which the global financial system found itself on the brink of a so-called "financial Armageddon" back in 2008.

Here in 2022, the new Theorist describes "four conditions in place at many banks that pose a danger" and one of them is exposure to leveraged "derivatives" -- a word the world became familiar with during the 2007-2009 financial crisis.

But, getting back to protecting your deposits, there are other steps you may want to consider taking beyond doing research on the banks in your community.

Indeed, the new Theorist mentions "a special offshore bank" and says it "appears to be one of the safest in the world."

Safe banking is a timely topic because the Elliott wave model strongly suggests that the next financial downturn may arrive a lot sooner than many market and economic observers expect.

If you’d like to learn how the Elliott wave model can help you to anticipate financial change, 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:

Without Elliott, there appear to be an infinite number of possibilities for market action. What the Wave Principle provides is a means of first limiting the possibilities and then ordering the relative probabilities of possible future market paths. Elliott’s highly specific rules reduce the number of valid alternatives to a minimum.

You may be interested in knowing that you can read the entire online version of this definitive text on the Elliott wave model for free!

The only requirement for free access is a Club EWI membership, which is also free. In case you’re unfamiliar with Club EWI, there are close to 500,000 worldwide members and all of them have free access to a wealth of Club EWI resources on investing and trading – without any obligations. That’s the benefit of a Club EWI membership.

Hop on the Club EWI bandwagon now by following 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 The Stunning Truth About the FDIC and Your Bank Deposits. 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.

Is War Negative for the Stock Market?

Here's what really drives the trends of global stock markets

By Elliott Wave International

Let's first state the obvious: war is tragic as it brings death and destruction.

But does war make the stock market go down?

Many observers seem to believe so. Here are some Feb. 22 headlines:

• U.S. stocks fall sharply as Russia sends troops into breakaway Ukraine regions (Marketwatch)
• Stocks fall as Russia, Ukraine fears intensify (Reuters)
• The Russia Issue Is Hurting the Stock Market. (Barron's)

The "full scale" Russian invasion of Ukraine began the next evening (Feb. 23), U.S. time.

Certainly, the stock market was headed for a big fall on Thurs., Feb. 24, or so the conventional wisdom goes.

Yes, trading was highly volatile, but by the close on Feb. 24, the NASDAQ Composite was up 3.34%. And, even though the Dow had been lower by 859 points, the senior index managed to close in positive territory by 92 points.

The next day (Fri., Feb. 25), the Dow closed higher by 835 points, even as the war intensified. And, as of this writing intraday on Feb. 28, the S&P 500 went from trading in negative territory to the plus column.

This positive market action in the face of a major global conflict may seem like a head-scratcher to many observers, yet Elliott Wave International has long held that news and events -- no matter how major -- do not determine the stock market's trend.

Indeed, history shows that the stock market behaved differently during four major wars.

These charts and commentary are from Robert Prechter's landmark book, The Socionomic Theory of Finance:

Figure 12 shows a time of war when stock prices (normalized for inflation) rose, then fell; Figure 13 shows a time when they fell, then rose; Figure 14 shows a time when they rose throughout; and Figure 15 shows a time when they fell throughout the hottest half (1965-1975) of a twenty-year conflict. Who wins the war doesn't seem to matter. A group of allies won World War I as stock values reached fourteen-year lows; and nearly the same group of allies won World War II as stock values neared fourteen-year highs.

Many market observers also assume that economic numbers, OPEC's actions, elections, earthquakes and many other events outside of the market cause the stock market to go up or down.

However, just like with war, the evidence shows that this is simply not the case. In other words, events --- whether positive or negative -- do not reverse the established trend that was already underway before the event.

The real driver of stock markets around the globe is the Wave Principle, which reflects the repetitive, hence, predictable patterns of investor psychology.

Delve into the details of the Wave Principle by reading Frost & Prechter's Wall Street classic, Elliott Wave Principle: Key to Market Behavior.

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.

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.

Good news: You can read the entire online version of the book for free.

That's right -- all that's required for free access to this definitive text on the Wave Principle is a Club EWI membership.

Club EWI is the world's largest Elliott wave educational community and is free to join. As a Club EWI member, you'll enjoy complimentary access to a wealth of Elliott wave resources on investing and trading without any obligation.

Just 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 Is War Negative for 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.

"Shooting Stars" of the Stock Market: "Don’t Be Fooled by This"

"A funny thing happened on the way to the revolution"

By Elliott Wave International

A meme stock has been defined as “the shares of a company that have gained a cult-like following online and through social media platforms.”

This “following” is largely comprised of novice investors who hope to make a quick profit. You may remember two well-publicized examples of meme stocks back in 2021: Gamestop and AMC Entertainment. There have been others.

Well, Robinhood Markets has been described as “the brokerage behind the meme stock revolution.”

Indeed, the shares of Robinhood itself went public near the end of July 2021 and its new share price doubled in early August 2021.

The August 2021 Elliott Wave Financial Forecast, a monthly publication which provides analysis of major U.S. financial markets, issued this warning:

Don’t be fooled by this. Meme stocks and the financial market’s entire constellation of shooting stars are a product of the ebullience at the end of a [historic] bull market.

Fast forward to this updated Robinhood chart and commentary from the February Elliott Wave Financial Forecast:

 

The chart shows the immediate outcome [after our August 2021 warning], an 88% decline in Robinhood’s price. … We forecast that other shooting stars of 2021 would continue to flame out, with the “final highs in the major U.S. averages” to follow. So far, that forecast is tracking.

Indeed, the Meme Stock Index that the Elliott Wave Financial Forecast showed in August is down 55% from its January 2021 high.

You might have thought that the speculative fever surrounding “hot” stocks and even the broad market would have cooled down significantly since the recent wild price moves.

However, on March 1, a CNBC headline expressed this sentiment of a firm’s chief investment officer:

There are a handful of tech stocks that are so cheap you need to be buyers here

This chief investment officer might turn out to be right. Then again, “cheap” stocks can get a lot cheaper.

As you might imagine, not all of Elliott Wave International’s forecasts work out to a “T,” however, EWI’s read of the Elliott wave model says that bargain hunting may not be the best idea now.

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 join our free event, “Calm, Cool, Collected and Unperturbed: 5 Free Insights to Prepare Investors.”

Now through Monday, March 7, you'll see 5 interesting investor insights from the current, February issue of our legendary, award-winning Financial Forecast -- including our big-picture view of U.S. stocks, bonds, investor psychology, cultural trends and more.

So instead of hitting the panic button with everyone else and trying to deconstruct a never-ending barrage of mostly useless information, join “5 Free Insights to Prepare Investors” and let us help you cut through the noise.