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.

Insights into This "Ultimate Harbinger" of the Bear Market

Enthusiasm for U.S. IPOs seems to be dramatically decreasing

By Elliott Wave International

Back in early 2021, many investors were chomping at the bits to invest in entities about which they knew next to nothing.

These entities are known as Special Purpose Acquisition Companies (SPACs), which may be described as shell companies which raise money through an initial public offering to acquire another company. Investors' enthusiasm towards them has waned, but they are still around.

The amazing thing is that people who invest in SPACs don't know the identity of the company to be acquired. Yet, they eagerly invest anyway.

It's a reminder of Charles Mackay's book, Extraordinary Popular Delusions and the Madness of Crowds, in which he described the extreme bullish sentiment way back in 1720:

"[A]n undertaking of great advantage came to market, but nobody is to know what it is."

In March 2021, when several athlete- and celebrity-sponsored SPACs hit the market, the Elliott Wave Financial Forecast, a monthly publication which covers major U.S. financial markets, called it:

The ultimate harbinger of the next bear market.

Yes, the major stock indexes held up for another nine months or so -- yet the IPO market had already started to show weakness.

Today, that weakness has morphed into an outright bear market. The June 2023 Elliott Wave Financial Forecast provides a review with this chart and commentary:

The chart shows the Renaissance IPO Index, which records the aftermarket performance of U.S. IPOs. The index peaked on February 16, 2021 and declined 69%. The total number of IPOs peaked a month later at 135, also an all-time high. For 2022 and the first four months of 2023, the average monthly total is only 15 U.S. IPOs.

As Barron's stated back in March:

The Tech IPO Well Has Run Dry. It's Likely to Stay That Way.

The diminishing number of IPOs is by no means the only warning sign for stock investors.

Elliott Wave International's Financial Forecast Service discusses an array of indicators which may be of interest to you, as well as the message of the Elliott wave model.

An important point about the Elliott wave model is that it helps investors to identify turning points in the trends of financial markets.

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

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

Here's the good news: You can access the entire online version of the book for free once you become a member of Club EWI, the world's largest Elliott wave educational community.

Club EWI is free to join without any obligations and members enjoy free access to Elliott wave resources on financial markets and investing, including exclusive articles and interviews with Elliott Wave International's analysts.

Click on the link to get started right away: 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 Insights into This "Ultimate Harbinger" of the Bear 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.