S&P 500: Heard About Those "Magnificent 7" Stocks?

Here's how remarkably skewed stock market leadership has been

By Elliott Wave International

You may find it hard to believe, but just seven stocks have been holding the stock market up -- at least, mainly.

You may have heard their names a time or two: They are Meta (Facebook), Apple, Amazon, Alphabet (Google), Microsoft, Nvidia and Tesla -- now known as the "Magnificent Seven."

We've been keeping an eye on them for a while. Just to give you a progression of our coverage, let's start with this chart and commentary from the July 2023 Elliott Wave Theorist, which has covered major financial and cultural trends monthly since 1979:

[The chart] shows how skewed the leadership has been. Just 7 stocks account for nearly the entire gain of the S&P Composite index of 500 stocks for 2023, never mind how much they dominated the NASDAQ indexes.

The October Elliott Wave Financial Forecast, a monthly publication which focuses on key U.S. financial markets, offered this updated perspective:

Just seven tech-focused stocks ... known as the Magnificent Seven, are responsible for nearly the entire year-to-date change in the capitalization-weighted S&P 500. The "other" 493 stocks in the index have contributed less than 1% to the S&P's change this year.

The persistent enthusiasm for those well-known big-cap tech names is captured in this September headline (Marketwatch, Sept. 16):

Here's an Easy Way to Make a More Concentrated Play on the 'Magnificent Seven' Stocks

This is also a perfect example of crowd behavior.

Elliott Wave International's coverage of these seven stocks continued with this update from the Nov. 22 U.S. Short Term Update, which provides near-term forecasts for major U.S. financial markets thrice weekly:

The top line on this chart from Bloomberg shows the percentage change in 2023 in the market cap of the Magnificent Seven: Apple, Microsoft, Alphabet (Google), Amazon, Meta (Facebook), Tesla and Nvidia. The bottom line on the chart shows the percentage change in the market cap of the Bloomberg 500, an index similar to the S&P 500, excluding the market cap of the Magnificent Seven. Were it not for seven stocks, the market cap increase in the Bloomberg 500 would be less than the return on short term U.S. T-bills. ... There has never been such a high weighting in the S&P in such a few number of companies.

When investors finally turn sour on these seven stocks, expect the S&P to plunge.

When might that happen, and how do you know the signs to look for?

Just know that Elliott waves directly reflect the repetitive patterns of crowd behavior, and these recognizable patterns can help you anticipate major market turns.

If you're unfamiliar with Elliott waves or need a refresher, read Frost & Prechter's Wall Street classic, Elliott Wave Principle: Key to Market Behavior. Here's a quote from that 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.

You can get free access to the online version of Elliott Wave Principle: Key to Market Behavior by becoming a Club EWI member. Club EWI is the world's largest Elliott wave educational community and it's free to join. A big benefit of Club EWI membership is that you get instant access to a wealth of Elliott wave resources on financial markets, trading and investing without any obligations.

Follow this link to get the ball rolling: 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 S&P 500: Heard About Those "Magnificent 7" 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.

Here's an Update on China's Big Housing Bust

"Property market weakness is now spreading into the overall economy."

By Elliott Wave International

If you're wondering about the future value of your home or the housing market in general, you may want to pay attention to what's going on in China.

The bottom line: The way we see it at Elliott Wave International, contagion may not be out of the question.

More than two years ago, we called attention to major red flags for the Chinese real estate market.

For example, our August 2021 Global Market Perspective noted that Chinese home prices were still climbing in many sectors, but major losses were suddenly occurring in many formerly sizzling neighborhoods.

By Aug. 25, the China Morning Post said:

China's home prices are falling in districts where the most prestigious schools are located.

The Morning Post mentioned a case in point: A home sold for 42% less than a similar home in the same neighborhood just three months earlier.

So, it wasn't surprising that in September 2021, housing prices in China had hit a peak.

Fast forward to our October 2023 Global Market Perspective, which provides an update:

This chart shows [that in] September 2021 ... the China Real Residential Property Price Index completed a five wave rise from the mid-2000s. Back then, the dominant view in China was that property prices always go up. ...

Last month, [GMP] discussed some of the many ways in which property market weakness is now spreading into the overall economy.

Yet, economists have been somewhat dismissive of this threat.

Indeed, here's a Sept. 25 Business Insider headline:

China's Economic Situation Isn't as Dire as It Seems

More than that, as our October Global Market Perspective also notes:

U.S. economists naturally continue to insist that American exposure to China's weakening property prices is a non-issue.

It may not be wise to hang your hat on this sentiment expressed by U.S. economists.

There are already signs that "contagion" may be in the works.

For example, our recent Global Market Perspective provides Elliott wave analysis of the housing market for a northeastern U.S. state which is highly revealing -- call it a major warning sign.

You can see that analysis -- plus insights into U.S. markets and the economy -- inside EWI's new report "Essential Investor Insights from the November Global Market Perspective." The report is available for free once you become a member of Club EWI, the world's largest Elliott wave educational community. A Club EWI membership is also free and allows you free access to a wealth of Elliott wave resources on financial markets, investing and trading.

Get started by following this link: Essential Investor Insights from the November Global Market Perspective -- free and instant access.

This article was syndicated by Elliott Wave International and was originally published under the headline Here's an Update on China's Big Housing Bust. 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.

Mini-Manias: Beware Short-Term Trading Frenzies – Like This One

This company reached a market value four times higher than that of GM

By Elliott Wave International

Most investors know the meaning of a "mania," i.e., the "Tulip Mania" of the 1600s and more recently, the mania surrounding technology stocks in the late 1990s, etc.

As you might imagine, these manias usually occur during rip-roaring bull markets.

Yet, some "manias" may unfold even during bear-market rallies, and when these "mini-manias" end, they can burn investors just as much as those full blown bull market manias.

For example, consider VinFast, an electric car maker based in Vietnam. The company debuted on the NASDAQ on Aug. 15. Just a week later, we had this headline (Reuters, Aug. 22):

VinFast shares more than double to highest since market debut

The price of the shares went on to much more than "double" in a very short period of time.

Our September Elliott Wave Theorist, a publication which has provided analysis of major financial and cultural trends since 1979 offered this perspective:

The [Elliott wave] rallies peaking in 2023 have had their own mini manias...

As you can see in the chart, a money-losing electrical vehicle company operating out of Vietnam became the sudden focus of an impulsive buying spree lasting only two weeks. But what a spree it was!... VinFast reached a total market value higher than that of McDonald's and four times higher [than] that of GM. The stock topped... on August 30.

Investors who believe in the future of electric cars went out on a limb pricing VinFast where they did. None of the bidders did any research. They just pressed buy buttons because others were doing it.

Indeed, as a Sept. 9 Bloomberg headline noted:

VinFast's 504% Rally Burns Traders Playing Greater Fool Theory

Also, since the September Theorist published, VinFast's share price has continued to plummet.

But what about the broader stock market?

Well, as history shows, dramatic price moves can happen with the main indexes too.

Elliott wave analysis can help you anticipate these price moves.

If you’re unfamiliar with the Elliott wave model, read Frost & Prechter’s book, Elliott Wave Principle: Key to Market Behavior. Here’s a quote:

The practical goal of any analytical method is to identify market lows suitable for buying (or covering shorts) and market highs suitable for selling (or selling short). When developing a system of trading or investing, you should adopt certain patterns of thought that will help you remain both flexible and decisive, both defensive and aggressive, depending upon the demands of the situation. The Elliott Wave Principle is not such a system, but is unparalleled as a basis for creating one.

When investors and traders first discover the Elliott Wave Principle, they're often most impressed by its ability to predict where a market will head next.

And it is impressive!

But its real power doesn't end there; the Wave Principle helps you identify when a market is most likely to turn. And that gives you guidance as to where you might enter and exit positions for the highest probability of success.

Dig in and learn these basics of the Elliott Wave Principle with this informative FREE 11-page report. It will introduce you to the Elliott wave basics, how to identify key trends and turns in your markets, plus much more.

Get free access to the illuminating report, Discovering How To Use The Elliott Wave Principle, now!

This article was syndicated by Elliott Wave International and was originally published under the headline Mini-Manias: Beware Short-Term Trading Frenzies – Like This One. 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.

As Geopolitical Fires Obscure Commodities' Path, This FREE Report Illuminates It!

Crisis, crisis everywhere. But objective, free from the noise of the news, forecasting of commodity prices starts here, with our free Special Report ($155 value).

By Elliott Wave International

The geopolitical landscape is wracked. War in Ukraine, humanitarian crisis in Syria, and now, what Vox Media on October 15 called the "worst conflict in decades" between Israel and Hamas. For mainstream analysts who use news as the main predictor of price trends, the escalating tensions have "cast a shadow of uncertainty over global financial markets." (Oct. 11 Moneycontrol)

But for Elliott wave analysts, times of heightened external conflict often produce the clearest Elliott wave patterns of market psychology on price charts, especially for the most volatile of markets -- commodities. It is the subject of EWI's newest educational resource, "Think Like an Elliottician: 5 Insights to Help You Manage Risk & Maximize Opportunity in Commodities," offered for a limited time to all Club EWI members free.

Risk management amidst global unrest? YES!

In this report, you'll discover several real-world examples of Elliott wave analysis catching major market turns during the fraught economic and political backdrop of the Covid pandemic. Yes, even when that analysis ran counter to the "fundamental" models espoused by Wall Street!

From the "5 insights to Help You Manage Risk & Maximize Opportunities" report:

"The paradox is these 'fundamentals' are supposed to illuminate the trajectory of market trends, especially commodities. But today, there are millions of investors in hundreds of exchanges with events moving a-mile-a-digital-microsecond. Trying to identify a single catalyzing event among the sea of news is like trying to catch a flea with a butterfly net."

One example featured in the report is the 2020 comeback in cotton prices, excerpted here:

"In March and April of 2020, cotton prices circled the drain of a decade low, having experienced one of the largest year-to-date decreases since 'the beginning of the century.' (March 24, 2020, themds.com)

"But in our May 2020 Monthly Commodity Junctures, we focused instead on the Elliott wave picture and saw the multi-year sell-off from the 2011 peak as nearly complete. From Commodity Junctures:

The downside is limited; we're probably 90-95% complete so I'm not looking for significantly lower levels.

At that point, we're going to be looking at potentially a very nice opportunity to the upside as we see cotton prices begin to double over the next few months if not years."

From there, the "5 Insights to Help You Manage Risk" report shows you how cotton defied the bearish "fundamental" script at the start of the pandemic on its way to becoming one of the best-performing commodities over the next two years.

From a "fundamental" perspective, the pandemic was widely expected to set a global, commodity bear market in motion. Our "5 Insights to Help You Manage Risk" report shows how commodities had a different agenda: You'll see how (and why) several markets including cotton and the bellwether Bloomberg Commodity Index embarked on a powerful bull run -- while others, like lumber, came crashing down.

Today, political unrest has stepped into the pandemic's place as the "fundamental" du jour responsible for determining the fate of commodities. This is a dead end, as these recent news items regarding the Israel-Hamas conflict and crude oil show:

"Oil Will Rise to $150 on Escalation of Conflict, Energy Analyst Says" -- Oct. 16 Bloomberg

-- VERSUS --

"Oil falls over 2% after Saudi pledge; investors keep wary eye on Israel" -- Oct. 16 Reuters

In times of extreme uncertainty, Elliott wave analysis casts not a shadow, but a light into the future of commodities.

And right now, all free Club EWI members have instant access to that light with the complete, "5 Insights to Help You Manage Risk & Maximize Opportunity in Commodities" report -- a $155 value, yours FREE with a Club EWI password.

Not a free Club EWI member yet? Get your free password now to join the international community of fellow Elliott wave fans -- and have the full Special Report on your screen in seconds.

Why You Should Expect a Once-in-a-Lifetime Debt Crisis

U.S. credit card debt surpasses $1 trillion

By Elliott Wave International

On a national level, a debt crisis occurs when a country is unable to pay back its government debt. This might result from government spending exceeding tax revenues for an extended period.

On an individual level, a crisis can result from too little income and too much debt -- that simple. This sometimes means defaulting on a car loan, for example, or even declaring bankruptcy.

Part 1 of the June Elliott Wave Theorist, a publication which covers major financial and cultural trends, said:

A debt crisis is brewing, and higher long term interest rates will add to the pressure.

Indeed, as Kiplinger noted on Aug. 18:

Credit Card Use Spikes for Cash-Strapped Consumers
Credit card use amps up as consumers reckon with inflation and higher interest rates; 39% of Americans living paycheck-to-paycheck, study shows.

The August Elliott Wave Theorist had more to say about the looming debt crisis as it showed these side-by-side charts:

Excess savings US households built up during the pandemic are nearly gone. ...

At the same time, consumers are borrowing to stay alive, driving indebtedness to yet another milestone: Total credit card debt in the U.S. has just surpassed $1 trillion. Will consumers be able to pay it off?

They had better do it fast, because credit-card interest rates have just soared to a new all-time high above 20%!

And bond yields (and interest rates) continue to climb (Reuters, Sept. 21):

TREASURIES-Two-year yields hit 17-year highs ...

Elliott Wave International warned subscribers to prepare back in 2020 when interest rates were near zero.

Of course, a lot of people are wondering if rates are headed even higher.

Remember, it's the market which determines the direction of interest rates; the Fed merely follows.

A key way to keep tabs on widely traded financial markets is to employ the Elliott wave method.

If you'd like to delve into the details of Elliott wave analysis, read Frost & Prechter's book, Elliott Wave Principle: Key to Market Behavior. Here's a quote from this Wall Street classic:

"When you have eliminated the impossible, whatever remains, however improbable, must be the truth." Thus eloquently spoke Sherlock Holmes to his constant companion, Dr. Watson, in Arthur Conan Doyle's The Sign of Four. This advice is a capsule summary of what you need to know to be successful with Elliott. The best approach is deductive reasoning. By knowing what Elliott rules will not allow, you can deduce that whatever remains is the proper perspective, no matter how improbable it may seem otherwise. By applying all the rules of extensions, alternation, overlapping, channeling, volume and the rest, you have a much more formidable arsenal than you might imagine at first glance. Unfortunately for many, the approach requires thought and work and rarely provides a mechanical signal. However, this kind of thinking, basically an elimination process, squeezes the best out of what Elliott has to offer and besides, it's fun! We sincerely urge you to give it a try.

Club EWI members get free access to the entire online version of Elliott Wave Principle: Key to Market Behavior.

Club EWI is the world's largest Elliott wave educational community and is free to join. Besides the book, members also enjoy complimentary access to a wealth of other Elliott wave resources on investing and trading.

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

This article was syndicated by Elliott Wave International and was originally published under the headline Why You Should Expect a Once-in-a-Lifetime Debt Crisis. 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.

Investing: What You Can Learn from Mom and Pop

"The highest commitment to stocks since the record levels of early 2000"

By Elliott Wave International

We all love Mom and Pop and cherish the valuable lessons about life they've given us along the way.

Yet, when it comes to investing, Mom and Pop may need to learn some lessons of their own.

Keep in mind that the American Association of Individual Investors' (AAII) weekly survey is said to be representative of "Mom and Pop" investors, well-known for being quite cautious.

The August 2021 Elliott Wave Financial Forecast, a publication which provides analysis of major U.S. financial markets, discussed their behavior as the stock market was staging a significant rally:

In July [2021], the five-month average AAII stock allocation increased to 70.6%, a high level for this normally skittish cohort of investors. ... This is the highest commitment to stocks since the record levels of early 2000.

This sentiment indicator is not meant for precision market timing, and, indeed, it seemed like these normally cautious investors had made the right decision. The rally persisted for the remainder of 2021. But, by early January 2022, the Dow Industrials and S&P 500 hit their all-time highs and have traded lower since.

What does this have to do with today?

Here's an interesting chart and commentary from the August 2023 Elliott Wave Financial Forecast:

This chart shows a jump in the AAII bullish percentage to 59.5% on July 21. ... These mom-and-pop investors are traditionally cautious, so big moves and extreme readings generally reflect important capitulations.

Let me emphasize again that sentiment indicators are important yet you may not want to use them for market timing.

That said, when you combine time-tested sentiment indicators with Elliott wave analysis, you get a much clearer picture.

If you're unfamiliar with Elliott wave analysis, read Frost & Prechter's Wall Street classic, Elliott Wave Principle: Key to Market Behavior. Here's a quote from the book:

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.

Our friends at Elliott Wave International are sharing with you a special free report ($80 value).

Using 5 must-see charts, "Are Bulls Headed for a Rude Awakening? 5 Market Warning Signs -- Revealed" focuses your readers' attention on 5 key sentiment areas:

1. Foreign stock buyers' behavior: a red flag
2. See what the crowd's attitude towards tech stocks shows
3. Tech stocks vs broad equities: What's the message here?
4. Corporate insiders -- are they buying or selling?
5. Artificial intelligence: See what previous technology fevers signaled

Read "5 Market Warning Signs -- Revealed" now, FREE ($80 value) >>

P.S. From the inverted U.S. Treasury yield curve to the second-largest U.S. bank failure in history (care of the March Silicon Valley bank collapse) -- 2023 has been a year of eerie callbacks to the 2008 financial crisis. See what the rest of the year is likely to bring via our special report >>

This article was syndicated by Elliott Wave International and was originally published under the headline Investing: What You Can Learn from Mom and Pop. 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 Will Happen to That $30 Trillion in U.S. Home Equity?

"It's like someone turned off the faucet"

By Elliott Wave International

You probably remember the last big housing bust which began more than 15 years ago.

Elliott Wave International has observed that falling housing prices are generally preceded by a decline in home sales. The lag time may be some months, which was the case in the 2005-2006 timeframe.

Here's what I mean: The December 2005 Elliott Wave Financial Forecast, a monthly publication which covers major U.S. financial markets, noted:

In October, home sales fell a larger-than-expected 2.7%. "It's like someone turned off the faucet,"said a real estate agent.

The January 2006, Elliott Wave Financial Forecast provided an update:

Home sales are falling across the board now.

By mid-2006, U.S. home prices peaked, and a major housing bust followed.

Since the trough of that bust, U.S. home prices not only rebounded, but reached an all-time high in June 2022.

Yet, here in the late summer of 2023, homeowners may have a reason to worry. Here's an Aug. 22 news item from bankrate.com:

Existing-home sales fall but prices still near record highs
Existing-home sales in July fell 2.2 percent, according to the National Association of Realtors. It's a 16.6 percent decline from one year ago.

Given that prices are still near record highs, homeowners in the aggregate (at least for now) have a huge amount of equity.

As a Sept. 7 CNBC headline notes:

'House-rich' Americans are sitting on nearly $30 trillion in home equity. ...

But, as we learned from the prior housing bust, change can sometimes be dramatic.

As a reminder, here's a June 2011 news item (Cleveland.com):

Americans' equity in their homes near a record low
The average homeowner now has 38 percent equity, down from 61 percent a decade ago.

Is another major housing bust just ahead?

Well, as Elliott Wave International has noted, the stock market and the housing market tend to be correlated.

So, if you're wondering what's ahead for housing, keep an eye on the main stock indexes.

An ideal way to do that is by performing Elliott wave analysis.

If you're unfamiliar with Elliott wave analysis or simply need a refresher, read Frost & Prechter's Elliott Wave Principle: Key to Market Behavior. Here's a quote from this Wall Street classic:

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.

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.

If you'd like to read the entire online version of Elliott Wave Principle: Key to Market Behavior, you may do so for free once you become a member of Club EWI, the world's largest Elliott wave educational community. A Club EWI membership is also free.

Join now by following this link: Elliott Wave Principle: Key to Market Behavior -- get free and instant access.

This article was syndicated by Elliott Wave International and was originally published under the headline What Will Happen to That $30 Trillion in U.S. Home Equity?. 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.

"Climbing Oil Prices Bearish for Stocks"? It's a Myth!

Oil and stocks sometimes trend together. Other times, they don't.

By Elliott Wave International

There's a widespread belief that rising oil prices are bearish for the main stock indexes and falling oil prices are bullish for stocks.

That belief is reflected in this Sept. 5 CNBC headline:

Dow closes nearly 200 points lower as rising oil prices drag down stocks ...

But wait a minute, the broad stock market rallied in July as the price of crude oil was also climbing.

Getting back to the same financial website, an Aug. 1 headline said (CNBC):

Oil joined the July stocks rally ...

Going further back this year, an April 14 Barron's headline noted:

Oil Prices and Stocks Have Rallied ...

These cases here in 2023 are by no means the first time that the behavior of the oil and stock markets have defied conventional wisdom.

Here's a chart and commentary from Robert Prechter's landmark book, The Socionomic Theory of Finance:

The July 25, 2006 issue of The Elliott Wave Theorist offered [this chart], showing the preceding three-year market environment. Examine it and see if you can discern any indication whatsoever that lower oil prices make stocks rise or vice versa. As I said at the time, "Oil and stocks have trended mostly in the same direction for more than three years.

And, as you can see from this next chart, stocks and oil also crashed together for much of 2008 going into 2009. And then rose together -- again, with crude oil tripling in value as the S&P 500 index doubled in value.

So, maybe rising oil prices do not "make" stocks fall after all (and vice versa.)

Every market has its own investor psychology that drives it. You may want to look to the Elliott wave model for a high-confidence ascertainment of the oil and stock markets independently from each other.

If you want to delve into the details of Elliott wave analysis, an ideal resource is Frost & Prechter's book, Elliott Wave Principle: Key to Market Behavior. Here's a quote from this Wall Street classic:

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.

Here's good news: You can access the entire online version of the book for free!

The only requirement for free access is a Club EWI membership -- which is also free. Club EWI is the world's largest Elliott wave educational community with about 500,000 worldwide members.

Club EWI members enjoy complimentary access to a wealth of Elliott wave resources on financial markets, investing and trading -- including videos and articles from Elliott Wave International's analysts.

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

This article was syndicated by Elliott Wave International and was originally published under the headline "Climbing Oil Prices Bearish for Stocks"? It's a Myth!. 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.

"Bear Market Leader"? Here's a Prime Candidate

This stock market sector has failed to recover since the Dow's Q1 correction

By Elliott Wave International

As you may know, in every bull or bear market, some stocks or sector lead while others follow. So, the "leadership" in the stock market works both ways -- in uptrends and down.

The rally in stocks since last November has been led by a relatively few big cap tech names, like Nvidia, Microsoft, Apple, Alphabet and Meta.

As you may also know, history shows that stocks which lead on the upside often lead on the downside after a market turn occurs. That's why in our publications we're keeping a close eye on the tech sector right now.

Another prime candidate as a bear market leader is the banking sector.

Indeed, the August Elliott Wave Theorist, a monthly publication which covers major financial and social trends, shows this chart and says:

Bankers are bullish on investments, but investors are not bullish on banks. Bank stocks turned weak during the Dow's Q1 correction and have failed to recover with it since. While all the major stock market indexes rose into July-August, bank stocks stayed down on the year.

Besides sinking stock prices, banks are also grappling with an extraordinarily weak commercial real estate market.

As a June headline in The Financial Times noted:

US banks prepare for losses in rush for commercial property exit

As the article notes, some banks plan to sell off property loans at a discount even though borrowers have been making their payments on time. The reason for this is that banks fear more delinquencies in commercial real estate down the road.

U.S. banks hold about $2.9 trillion in commercial real estate loans, which prompted the Wall Street Journal to pose this question in July:

Is the Banking Crisis Over? We Are About to Find Out

As you might imagine, some banks are more vulnerable than others. And Elliott Wave International has emphasized time and again that it's important for depositors to make sure they do business with only financially sound banks. Because even during a severe economic downturn, some banks will not only survive, but thrive.

As a 2022 Elliott Wave Theorist said:

The first edition of Conquer the Crash noted that depositors would become concerned about bank risks and move their money from weak banks to strong banks, making the weak banks weaker and the strong banks stronger. This is just what happened in 2008-2009.

The next financial crisis may be just around the corner.

Realize that major economic downturns generally follow severe downturns in the stock markets, so it's important to keep an eye on the Elliott wave structure of the main stock indexes.

If you're unfamiliar with Elliott wave analysis or simply need a reminder, read the definitive text on the subject, Elliott Wave Principle: Key to Market Behavior, by Frost & Prechter. Here's a quote from this Wall Street classic:

The primary value of the Wave Principle is that it provides a context for market analysis. This context provides both a basis for disciplined thinking and a perspective on the market's general position and outlook. At times, its accuracy in identifying, and even anticipating, changes in direction is almost unbelievable.

Know that the online version of this Wall Street classic is available to you free once you sign up for a Club EWI membership. Club EWI is the world's largest Elliott wave educational community and membership is also free with zero obligations. Members enjoy complimentary access to a wealth of Elliott wave resources on financial markets, trading and investing.

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

This article was syndicated by Elliott Wave International and was originally published under the headline "Bear Market Leader"? Here's a Prime Candidate. 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.

Interest Rates: From 0% to Above 5% -- to ...?

"The lines in the chart will turn up, and no policy will stop it"

By Elliott Wave International

As you're probably aware, many people who want to borrow to make a major purchase like a house or a car are bemoaning higher interest rates.

It wasn't so long ago that 3-month T-bill rates were around zero, and at least one prominent figure at the Federal Reserve said rates needed to stay super low for a good while.

Indeed, let's go back to this June 18, 2021 headline (CNBC):

Fed's Kashkari opposed to rate hikes at least through 2023

Well, as Elliott Wave International has said time and again, the market determines the trend of bond yields (and interest rates), not the Fed. The Fed merely follows the bond market.

Nearly a month after that Fed official called for a continuation of very low rates, the July 13, 2021 Elliott Wave Theorist offered its own perspective via this chart and commentary (The Elliott Wave Theorist is a monthly publication which provides insights into major financial and social trends):

Rates at Zero, but Not for Long

[The chart] shows that U.S. Treasury bill rates have edged closer and closer to zero .... Nonexistent T-bill yields are due to one thing: historically elevated social mood. ... When optimism and complacency finally melt like popsicles in the sun, the lines in [the chart] will turn up, and no policy will stop it.

Fast forward to the just-published August 2023 Elliott Wave Theorist, which provides an update on that July 2021 call with this chart:

As you can see, since our forecast, the 3-month T-bill rates have climbed from around zero to north of 5%. The black arrow points to the juncture at which the July 2021 Theorist made that noteworthy forecast. Mind you, Elliott Wave International was almost alone in making such a call.

Is the rise in interest rates over?

Well, at least one observer says "no." This Aug. 18 Fox Business caption captures the view of a contributor to a news and opinion website:

[Financial and economics editor]: Interest rates will go higher than Americans think

This is in stark contrast to a recent Reuters poll of economists, the majority of whom say that interest rates have plateaued.

Who's right?

You may want to check out a chart of bond yields and its Elliott wave structure.

If you're unfamiliar with Elliott wave analysis, 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.

If you'd like to find out about "Elliott's highly specific rules," you can do so by reading the online version of Elliott Wave Principle: Key to Market Behavior for free.

That's right -- Elliott Wave International has made this definitive text on Elliott wave analysis available to Club EWI members for free. A Club EWI membership is also free and members enjoy free access to a wealth of Elliott wave educational resources.

Join the approximately 500,000 Club EWI members who are already gaining insights into trading and investing from an Elliott wave perspective by following this link: Elliott Wave Principle: Key to Market Behavior(get free access now).

This article was syndicated by Elliott Wave International and was originally published under the headline Interest Rates: From 0% to Above 5% -- to ...?. 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.

Stock Market's Character Has Changed -- Here's How

We're watching the VIX or "fear index" to see what's next

By Elliott Wave International

Stock market investors naturally want to know the closing numbers for the main stock indexes at the end of each trading day.

Yet, it's also good to dig deeper.

Let me show you some examples of how the U.S. Short Term Update, a thrice weekly Elliott Wave International publication which covers near-term trends of key U.S. financial markets, does just that.

Let's start off with a quote from the Aug. 21 issue:

NYSE down volume outpaced up volume 52.7% to 47.3%. Internally, today's rally in the S&P and NASDAQ was meek.

Here's a review of a revealing indicator from the Aug. 16 U.S. Short Term Update:

The NYSE a/d ratio has closed negative or flat for seven straight days. It's the longest streak in nearly a year, since August 26, 2022 to September 6, 2022. The 10-day NYSE a/d ratio closed yesterday (Aug. 15) at .80, which is the most negative also since September 2022.

Another observation of the market's internal dynamics was mentioned by the Aug. 9 U.S. Short Term Update:

The VIX made a closing low on June 22 and failed to confirm the S&P's higher price extremes. That was an initial warning sign that market participants were becoming a bit more fearful and expecting a pickup in market volatility.

So, it appears the character of the stock market has changed.

These negative indicators are in stark contrast to measures of stock market sentiment during the past several weeks, some of which reached bullish extremes.

For example, consider the Advisor and Investor Model (AIM) from SentimenTrader.com. That's a blend of over 50 sentiment readings from five different sources, including Market Vane and Consensus Inc., two of the oldest services.

The August Elliott Wave Financial Forecast, a monthly publication which analyzes major U.S. financial markets, provides some insights:

This comprehensive model hit a new 3½-year extreme of 0.99 on July 25. The extreme during the topping process was a reading of 0.96 on April 16, 2021, which occurred as the most speculative issues completed their tops.

Indeed, as recently as Aug. 14, none other than Nasdaq.com had this headline:

Reasons to Still Believe In This New Bull Market

In Elliott Wave International's view, the S&P 500 index never entered a "new bull market" since the January 2022 top and the subsequent downturn. Yes, there's been a rally since that first leg down, but the January 2022 peak has not been breached.

The stock market's Elliott wave structure puts that rally into context.

If you'd like to delve into the details of Elliott wave analysis, read Frost & Prechter's book, Elliott Wave Principle: Key to Market Behavior. Here's a quote from this Wall Street classic:

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. This context provides both a basis for disciplined thinking and a perspective on the market's general position and outlook. At times, its accuracy in identifying, and even anticipating, changes in direction is almost unbelievable.

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

It doesn't cost anything to join Club EWI. Even so, members enjoy free access to Elliott wave resources on financial markets, investing and trading. New resources are regularly added and some videos and articles are from Elliott Wave International's analysts. All the while, Club EWI members are under no obligations whatsoever. So, you have nothing to lose and a world of Elliott wave education to gain!

Elliott Wave International stands ready to welcome you as a new Club EWI member. Just follow this link and you're on your way: Elliott Wave Principle: Key to Market Behavior -- get free and instant access.

This article was syndicated by Elliott Wave International and was originally published under the headline Stock Market's Character Has Changed -- Here's How. 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 Do Traders Really Lose Money? Answer: It's Not the Market's Fault

And 1 FREE course on how to help you stop self-sabotaging "good enough" trade plans

By Elliott Wave International

I have always been a "who cares about the odds" kinda person. Meaning, if someone tells me the likelihood of succeeding at, say, learning to skateboard at 40, are low, it just makes me want to try it more. Otherwise, why would I say yes to a marriage proposal to someone I met online, who lives in a farm in rural Georgia, 3 months into us dating amidst a global pandemic?

If you believe Wall Street's statistics about the odds of success as a trader, yet still choose to speculate in the financial markets anyway, a part of you must be of that same "odds-schmods" mindset. Because according to the mainstream experts, the probability of traders losing money in the long run is between an abysmal 85% and 95%.

Are markets simply too unpredictable? Are price trends too random? Are "nefarious practices" of some traders throwing the entire system off track? Is making a profit at trading simply a matter of luck?

If anyone has the answer to these questions, it's a 25-year veteran of technical market analysis, Jeffery Kennedy. For a quarter century, Jeffrey helmed the wheel for a multitude of educational publications and services here at Elliott Wave International, where he brought his decades of wisdom and hard-won lessons to bare for a generation of traders and investors alike.

Jeffrey confronted the validity of the 95% failure rate with this counterclaim: 80% of the time, active traders and investors select a winning position. In other words, most of the time all checkered flags are a "go." The failure rate starts to creep up when traders stay in the market too long with the expectation of turning a "good enough" profit into a cinematic windfall.

In other words, the problem isn't an irrational market. All too often, it's investors and traders' irrational greed. And the antidote to greed is discipline to avoid one common mistake.

For Jeffrey, there is one discipline that goes above all others to facilitate successful set-ups. Before we say it out loud, let's see if you can figure it out from this pair of Elliott wave lessons from Jeffrey's EWI archives.

First, Big Board sports apparel pacesetter Nike, Inc. (NKE).

On December 16, 2021, Jeffrey presented this chart of NKE, which showed prices engaged to the downside after having completed a five-wave rally. From EWI's Trader's Classroom lesson on Dec. 16:

"If we have indeed finished a larger five wave move up from the 2020 low, then we're looking to head all the way back down to 125."

From there, Nike deflated like an Air Jordan basketball on a bed of nails, plummeting below 125 in May 2022 and continuing to fall before staging a small rebound into August of last year. Then, on August 31, Trader's Classroom revisited Nike Inc. to confirm the rebound had unfolded as a countertrend move, and the current weakness was likely to continue. Jeffrey explained:

"The selloff that began in late 2021 is still very much in force.

"Wave patterns support the idea of further decline in Nike down to below 92.20."

From there, NKE persisted lower, reaching Jeffrey's downside objective of 92.20 -- and then some -- late last September.

The second market from Jeffrey's annals isn't a stock, but rather a commodity. In the June 2022 Monthly Commodity Junctures (now Commodity Junctures), Jeffrey showed this chart of feeder cattle. Prices had been rallying off a late spring low, and Jeffrey's analysis called for further advance, into 2023.

From there, feeder prices took off like a rocket into record high territory, which they continue to orbit as of now, in August 2023.

So, what common feature do you notice about these two examples?

The answer: Their price trends were underway before Jeffrey introduced high-confidence set-ups. Which brings us full circle back to the no. 1 discipline he sees as being crucial for successful trades:

Do not pick tops and bottoms.

Jeffrey can't emphasize this rule enough. When you are satisfied with a "good enough" entry after a peak or a bottom has been established, that means that you're satisfied with leaving money on the table and your greed is in check. The second part of this "keep my greed low" trick is to not let yourself get stuck in a good trade for so long that a winner turns into a loser.

In fact, "Do not pick tops and bottoms" is the cornerstone of one of EWI's most requested educational courses, taught by Jeffrey himself and titled "How to Formulate a Solid Trade Plan and Know When to Pull the Trigger."

Normally priced at $99 in our Store, right now EWI is offering this entire 30-minute course FREE! In it, Jeffrey reinforces his golden rule of trading and says:

"Of the 80% of trades I was losing money on, 80% of those at some point or another were profitable. The problem was, I wasn't taking the money off the table when it was there.

"What I finally learned was, I have no desire to buy bottom ticks or sell top picks. I'm just looking to make the cash register ring. Period."

This hard-won lesson is just one of the many insights Jeffrey imparts in the "How to Formulate a Solid Trade Plan" course. In 30 minutes, Jeffrey asks and answers these and many more questions:

• "What are the earmarks of a viable trade set-up?"
• "Where should you place a protective stop?"
• "What is the most optimal risk/reward ratio?"
• "If you have a strong wave count, should you open a position?"

So, if you're an "odds-schmods" person like me, consider this math: 1 renowned technical analyst sharing the wisdom of 25-plus years of trading experience in a 30-minute online video course -- for $0! You can't do better than that.

To watch Jeffrey Kennedy's "How to Formulate a Solid Trade Plan and Know When to Pull the Trigger" -- today, FREE -- simply join the free, worldwide Club EWI community for instant access to this and other Club EWI resources.

Already have a free Club EWI password? Then click here to start streaming the course >>

Stocks: Keep This in Mind About Seasonal Tendencies

"In 1987 and 2000, the month of August presented a great chance to sell stocks"

By Elliott Wave International

Many investors know that some time periods of the year tend to be more bullish for stocks, like the holiday season. Other times tend to be more bearish, like September and October.

However, seasonal tendencies are just that and don't mean the stock market will follow the expected script every year.

That said, an investor doesn't want to dismiss seasonal tendencies, especially when technical factors, such as Elliott wave analysis, align with those tendencies.

Presently, we are entering a seasonally bearish time period, especially when you consider milestone years. Here's a quote from our Aug. 14 U.S. Short Term Update, a thrice weekly Elliott Wave International publication which offers near-term analysis of key U.S. financial markets:

In 1987 and 2000, the month of August presented a great chance to sell stocks. In 1929, the final high came just a few days into the next month, on September 3. At the 2007 stock market peak, several stock indexes topped a few weeks before August, in mid-July, such as the Dow Jones Composite, the Value Line Composite and the small-cap sector.

Looping back to the statement that one should combine one's knowledge of seasonal tendencies with Elliott wave analysis, let's pick out one of those milestone years -- 2000 -- and see what the Elliott wave pattern for the Dow Industrials looked like at the start of September in that year.

This chart and commentary are from the September 2000 issue of the Elliott Wave Financial Forecast, which published July 28, 2000 (The Elliott Wave Financial Forecast provides big-picture analysis and forecasts for major U.S. financial markets):

Our confidence in the short-term picture is very high, which indicates a down September-October for the blue-chip averages.

The Dow rallied less than 1% into the middle of the next week, then plunged 15% into mid-October.]

Of course, not every milestone stock market year is an exact replica of the previous one.

But, as implied, it's important to keep an eye on the stock market's Elliott wave pattern in conjunction with any other indicator.

Frost & Prechter’s book, Elliott Wave Principle: Key to Market Behavior, discusses the value of the Elliott wave model:

The primary value of the Wave Principle is that it provides a context for market analysis. This context provides both a basis for disciplined thinking and a perspective on the market’s general position and outlook. At times, its accuracy in identifying, and even anticipating, changes in direction is almost unbelievable.

You can have free access to the online version of Elliott Wave Principle: Key to Market Behavior by becoming a member of Club EWI, the world’s largest Elliott wave educational community. Club EWI is free to join and allows you complimentary access to a wealth of Elliott wave resources on investing and trading.

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

This article was syndicated by Elliott Wave International and was originally published under the headline Stocks: Keep This in Mind About Seasonal Tendencies. 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 "Bold Call" on U.S. Housing Prices (Don't Hang Your Hat on It)

This does not look like a bottom in median existing home prices

By Elliott Wave International

Back in October 2022, none other than Realtor.com asked the question:

Is America in a housing bubble--and is it getting ready to burst?

That was 10 months ago and just like a widely anticipated recession, the feared bursting of the housing bubble has yet to materialize.

Indeed, another real estate sector firm -- Zillow -- has gone out on a limb with this prediction (Fortune, July 28):

In February, Zillow economists made a bold call that U.S. home prices had bottomed...

In the months that have followed, U.S. home prices as tracked by the Zillow Home Value Index have stopped falling, and between February and June rose 4.8%.

Yes, Zillow's forecast has mainly worked out so far, however, let's also keep in mind seasonal and other factors.

Here's a perspective from our July Elliott Wave Financial Forecast, which used another measure to gauge the health of the U.S. housing market (The Elliott Wave Financial Forecast is a monthly publication which covers major U.S. financial markets):

This chart showing the year-over-year change in the median existing home price doesn't look much like a bottom. According to the National Association of Realtors, the median existing home sold for $396,100 in May 2023, a 3.1% decline from May 2022, "marking the largest year-over-year price reductions since December 2011." Recent increases can be attributed to two factors: spring buying, which happens every year, and the run-up in equity prices, which makes people feel wealthier.

So, we'll see what happens after the seasonal bias passes. And, just as importantly (or more so), we'll have to keep an eye on the stock market.

History shows that the housing and stock markets tend to be correlated.

So, if the stock market tanks in a big way, we could have a replay of 2007-2012 on our hands.

Of course, that's a big "if."

One way to gauge the health of the stock market, and thus the housing market, is to keep an eye on the stock market's unfolding Elliott wave pattern.

If you’re unfamiliar with Elliott wave analysis or need to brush up on your knowledge, read Frost & Prechter’s Elliott Wave Principle: Key to Market Behavior.

Here’s a quote from the Wall Street classic:

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.

All that’s required for free access to the online version of the book is a Club EWI membership. Club EWI is free to join and allows members complimentary access to a wealth of Elliott wave insights regarding financial markets, investing and trading.

Follow this link to join Club EWI so you can read the book for free: Elliott Wave Principle: Key to Market Behavior.

This article was syndicated by Elliott Wave International and was originally published under the headline Here's a "Bold Call" on U.S. Housing Prices (Don't Hang Your Hat on 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.

Here's What You Need to Know About Earnings Season

Investing based on earnings "is akin to driving down the highway looking only in the rearview mirror"

By Elliott Wave International

Many investors and financial journalists believe that corporate earnings play a substantial role in driving stock market prices.

This headline from a few months ago captures the traditional thinking (Business Insider, April):

Stocks are poised for a big 2024 as corporate earnings stay strong ... [major bank] says

The idea that earnings drive stock market prices seems to make sense. After all, corporations exist to make money, and if they exceed expectations, it seems logical that their share prices should skyrocket. If earnings disappoint, logic suggests that stocks should tank. And, in all fairness, when it comes to individual companies' earnings, they can and do affect prices -- although not always, and not always logically. But when you compare broad market performance with trends in earnings, you start to see a glaring disconnect. Why?

Because investors are not governed by pure logic. They are governed by collective psychology -- which swings from optimism to pessimism and back again, regardless of factors like GDP numbers, unemployment or -- yes, earnings.

Let's make the point by using a historical example from Robert Prechter's must-read book, The Socionomic Theory of Finance. Here's a chart and commentary:

... in 1973-1974, earnings per share for S&P 500 companies soared for six quarters in a row, during which time the S&P suffered its largest decline since 1937-1942. This is not a small departure from the expected relationship; it is a history-making departure. ... Moreover, the S&P bottomed in early October 1974, and earnings per share then turned down for twelve straight months, just as the S&P turned up!

A more recent historical example is from the December 2009 Elliott Wave Financial Forecast, a publication which covers major U.S. financial markets.

... quarterly earnings reports announce a company's achievements from the previous quarter. Trying to predict future stock price movements based on what happened three months ago is akin to driving down the highway looking only in the rearview mirror.

You'll notice on the chart that in Q4 2008, the S&P 500 had its first negative earnings quarter ever. According to conventional logic, stocks should have crashed afterwards.

Instead, a rally started in March 2009, which stretched all the way into early 2022.

If earnings and other factors outside of the market do not determine the trend of stock market prices, what does?

The answer is the Elliott wave model.

If you'd like to learn about Elliott wave analysis, read Frost & Prechter's book, Elliott Wave Principle: Key to Market Behavior. Here's a quote:

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 minimum.

If you'd like to find out about "Elliott's highly specific rules," you can do so 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 free Club EWI membership. Also know that Club EWI members enjoy free access to a wealth of Elliott wave educational resources without any obligations.

Join the approximately 500,000 Club EWI members who are already gaining insights into trading and investing from an Elliott wave perspective by following this link: Elliott Wave Principle: Key to Market Behavior(get free access now).

This article was syndicated by Elliott Wave International and was originally published under the headline Here's What You Need to Know About Earnings Season. 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.

Pay Attention to This Group of Investors (They Know More)

The stock market actions of corporate insiders is revealing

By Elliott Wave International

It stands to reason that executives of a corporation know more about the goings-on of their business than outsiders.

So, it's wise to pay attention to their stock market actions regarding their own shares.

Yes, the stock market has been rising. As I write, the Dow Industrials is up for the eighth day in a row.

However, trends can turn on a dime, and if the action of insiders is a clue, that turn may be arriving sooner than many stock market participants anticipate.

Here are just a few Yahoo! Finance headlines from the past few weeks:

• American Express Insiders Sold US$9.9m Of Shares Suggesting Hesitancy (July 17)
• Possible Bearish Signals with Lockheed Martin Insiders Disposing Stock (July 12)
• International Business Machines Insiders Sell US$5.6m Of Stock, Possibly Signaling Caution (July 4)

These are by no means all the corporations where insiders have been selling company shares. I just picked out three well-known names as examples.

The July Elliott Wave Financial Forecast, a monthly publication which covers major U.S. financial markets, discussed corporate insider selling and said:

Insiders may sell for various reasons, but one of them isn't that they believe their firm's share price is going higher.

That doesn't mean that insiders are always right or that their market timing is perfect, but as the July Elliott Wave Financial Forecast also notes, it's best not to ignore the actions of insiders. The publication also showed this chart and added:

There is one group of investors that is selling shares: insiders. ... When insider block sales surged in the early months of [a big down wave], the August 2000 Elliott Wave Financial Forecast noted, "Insiders want out." As the bear market of 2000-2009 illustrated, when insiders sell, it's best not to pooh-pooh their stance.

In addition to the Insider Transaction Ratio, also pay close attention to the stock market's Elliott wave structure.

If you're unfamiliar with Elliott wave analysis, or simply need a refresher, here's a quote from the Wall Street classic book, Elliott Wave Principle: Key to Market Behavior, by Frost & Prechter:

The primary value of the Wave Principle is that it provides a context for market analysis. This context provides both a basis for disciplined thinking and a perspective on the market's general position and outlook. At times, its accuracy in identifying, and even anticipating, changes in direction is almost unbelievable.

Enjoy free access to the online version of Elliott Wave Principle: Key to Market Behavior by becoming a member of Club EWI, the world's largest Elliott wave educational community. Club EWI is free to join and allows you complimentary access to a wealth of Elliott wave resources on investing and trading.

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

This article was syndicated by Elliott Wave International and was originally published under the headline Pay Attention to This Group of Investors (They Know More). 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.

Euro Stoxx 600: "Following the Script"

"If the 2007 analogue holds, the current rally [will] persist ..."

By Elliott Wave International

On Oct. 24, 2022, Bloomberg said:

Forget about a Santa rally to rescue European stocks from their doldrums, say strategists from Goldman Sachs Group Inc. to Bank of America Corp.

A week and a half later, our November 2022 Global Market Perspective offered a different view:

If the 2007 analogue holds, the current rally [will] persist ...

As it turned out, not only did the rally in the Euro Stoxx 600 persist through the holiday season, it carried well into 2023.

The just-published July Global Market Perspective, an Elliott Wave International publication which offers forecasts for 50-plus financial markets, provided an update with these charts and commentary [keep in mind that wave labels are available to subscribers]:

The charts bring the forecast up to date. In April and May, the Stoxx 600 briefly exceeded its 75% retracement level. On June 18, prices fell back below it and have yet to look back. The wave structure shows a complete zigzag at the May 19 high (see Elliott Wave Principle, p. 41, for the definition of a zigzag). A decline beneath the wave B low ... will confirm the onset of [the next Elliott wave] down.

The July Global Market Perspective mentions that specific price level which will confirm the next sizeable leg down.

Do know that not all our forecasts work out so well. At the same time, the Elliott wave model is the best analytical tool of which we're aware so we'll continue to base our forecasts on the repetitive patterns of investor psychology.

As Frost & Prechter noted in Elliott Wave Principle: Key to Market Behavior:

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.

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This article was syndicated by Elliott Wave International and was originally published under the headline Euro Stoxx 600: "Following the Script". 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.

Robert Prechter Interview for the Ages: Quick Takes on Big Financial Trends

'That's not even the craziest indicator on this chart. Look at the bottom graph.'

By Elliott Wave International

Robert Prechter's June 23 interview with GoldSeek.com, which is under 15 minutes, covers a variety of financial topics.

They include stocks with an emphasis on the technology sector (including artificial intelligence), bitcoin, gold and silver, corporate bonds and the prospects for deflation.

You can look below to learn how to listen to the entire interview for free.

But, first, let me share with you just one of the interview topics, and that's the stock-market sentiment which was on display leading up to the January 2022 top in the blue-chip indexes.

Relatedly, in the GoldSeek interview, Robert said:

Sentiment indicators... can tell you the extent to which [people] are extremely optimistic or pessimistic. Well, 2021 was a year like no other. Finally, in December 2021, I put out an issue called "A Stock Market Top for the Ages."

Here's one of the sentiment charts that the December 2021 Elliott Wave Theorist showed along with the commentary (The Elliott Wave Theorist is a monthly publication which covers major financial and cultural trends):

The middle graph is the ratio between the amount of money that Rydex investors have put into bullish funds versus bearish funds. Look toward the left, and you'll see the words "normal range."

[Fifteen] years ago, the ratio was around 1:1 or 2:1... In general there was a bit more money in bull funds than in bear.

Investors have been going crazy in the last five years. On November 19, the ratio reached 62:1...

That's not even the craziest indicator on this chart. Look at the bottom graph, which depicts the ratio of leveraged bullish funds versus leveraged bearish funds. It shows that there is 82 times as much money in the leveraged bullish funds as there is in the leveraged bearish funds.

So, it wasn't surprising that the Dow Industrials and the S&P 500 index topped early in the very next month.

Getting back to the GoldSeek interview, learn how you can access it for free by following the link.

This article was syndicated by Elliott Wave International and was originally published under the headline Robert Prechter Interview for the Ages: Quick Takes on Big Financial Trends. 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.

Platinum's May-June Selloff: When the "Fundamental" Chips Fall

In May, a "record supply deficit" should've sent platinum prices soaring. So much for the best laid "fundamental" plans.

By Elliott Wave International

If I had a nickel for every time someone asked me what value "fundamentals" serve in navigating financial markets, well... let's just say I could've retired to the Poconos years ago.

And the short answer I give to this question hasn't changed in 18 years; namely, none.

This can be hard to accept, considering how fundamental "fundamental" market analysis is for mainstream finance. Pick the equivalent "Wall Street" of the country you live in, ask any pundit on that particular "street," and they'll insist the main driver of market trends is the news circulating outside those markets. That includes anything from weather patterns, political unrest, earnings reports, and so on.

But the reason I and we as Elliott wave analysts take such a radical stance against the value of "fundamentals" is simple: These news events don't occur in a vacuum. They're filtered through the lens of human beings, and very rarely do those humans see eye-to-eye on what a certain event means for a market's future.

Or whenever there is a consensus on how a certain event will affect prices, the market goes ahead and does the exact opposite of that consensus.

When you start paying attention to this pattern of markets ignoring the news that's supposed to move them, you can't un-see it.

What we as Elliott wave analysts do see, however, is that market trends are driven by investor psychology, which unfolds as measurable wave patterns directly on price charts.

A recent example of this comes from platinum. In May, the industrial metal used in everything from catalytic converters to AI medical technology made the front page of major news outlets from The New York Times to Fortune Magazine.

The word "platinum" was practically clickbait, after the Biden administration floated a long-held and longshot Hail Mary idea for the U.S. Treasury to mint a $1 trillion platinum coin to avert the crashing of the debt ceiling.

At the same time on the investment front, platinum bulls were handed the big blue whale of supportive "fundamentals" -- not just low supply numbers amidst rising demand, but the lowest supply data on record care of rolling power outages in South Africa, the world's largest supplier of mined platinum.

The white metal seemed to be prime for a red-hot rally. Wrote Reuters on May 2: "Platinum prices surge as speculators bet supply will run short... We think this is the first year of serial deficits in the platinum market."

On May 16, Bullion Vault added: "Platinum Investment to Support $1000 Price on 'Record Deficit.'"

"Fundamental" signs pointed in a straight line going up. Elliott wave signs, however, aimed to help investors and traders manage the risk of participating in the metal's action.

On May 11, our Metals Pro Service showed this Elliott wave labeled price chart of platinum. There, our primary count was bullish, and called for "a new high." But that wasn't the end of our analysis. We then explained the exact steps price must take to confirm an uptrend. From Metals Pro Service:

"You would think it would've given us a new high, and yet price has fallen back to the low it achieved just hours ago. I'm going to stay bullish above the .382 retracement level. I'm not eager to call a top, but if it goes under the .382 retracement level of 1150, then the risk begins to become that a top is in place. I am inclined to call it a truncated fifth wave of wave 1 up.

The next day on May 12, platinum accelerated down, confirming that a truncated fifth wave top was in place. Metals Pro Service showed its newly updated chart and said:

"The outlook is bearish while price holds under its 0.382 retracement level. The farther price falls, the more likely it is that wave (a) of ii (circled) is underway.

And from there, platinum continued falling to a 4-month low on June 23.

Metals trading, as all markets, carries risk. And not all Elliott wave interpretations turn out to be accurate. But like this example shows, Elliott analysis does identify critical price levels to help manage the inherent risk.

"Fundamental" analysis can't say the same.

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This article was syndicated by Elliott Wave International and was originally published under the headline Platinum's May-June Selloff: When the "Fundamental" Chips Fall. 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.

This Trend Is Up a Whopping 10,240% Since March 2021

How millionaires are handling financial uncertainty

By Elliott Wave International

On March 1, 2021, the 6 Month Treasury Bill Rate was a measly 0.05%.

The March 2021 Elliott Wave Theorist, a monthly Elliott Wave International publication which covers major financial and social trends, said:

If the rise in interest rates finally spreads to the short end of the curve so that Treasury bill rates rise, too, it will be a boon for holders of interest-bearing cash equivalents. It hasn't happened yet, but it should.

The Theorist was spot on. As of June 30, 2023, the Treasury bill rate is 5.17%. That is a whopping 10,240% increase from March 1, 2021.

Many millionaires are saying, "What's not to like?"

Here's a quote from a June 28 Marketwatch article:

... rising interest rates, an uncertain economic outlook and the constant drumbeat of recession have led high-net-worth individuals to change their investing habits: they're keeping their money in cash and cash equivalents at the highest rate in more than a decade.

Specifically, the article notes, many millionaires put 34% of their wealth in cash and cash equivalents in 2022, up 10% from 2021.

So, the name of the game is wealth preservation while enjoying a relatively risk-free return of 5% without the drama of the stock market.

The global head of Capgemini Research Institute for financial services spoke of the cash and cash equivalents' allocation of high-net-worth people when he said:

"... the jump year-over-year has never been so high."

Perhaps these millionaires are onto something.

The recently published July Elliott Wave Financial Forecast, a monthly publication which provides analysis of major U.S. financial markets, discusses warning signs for the stock market, including momentum considerations:

Fewer NYSE stocks on average have been closing higher each day, indicating a thin advance ...

Another warning sign is the stock market's Elliott wave structure, as those who use Elliott wave analysis are well aware.

If you're unfamiliar with Elliott wave analysis, or simply need a refresher, read Frost & Prechter's book, Elliott Wave Principle: Key to Market Behavior. Here's a quote from this Wall Street classic:

The primary value of the Wave Principle is that it provides a context for market analysis. This context provides both a basis for disciplined thinking and a perspective on the market's general position and outlook. At times, its accuracy in identifying, and even anticipating, changes in direction is almost unbelievable.

You can get free access to the online version of Elliott Wave Principle: Key to Market Behavior by becoming a member of Club EWI, the world's largest Elliott wave educational community. Club EWI is free to join and allows you complimentary 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 This Trend Is Up a Whopping 10,240% Since March 2021. 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.