Solana: Catching Opportunities Using Elliott Waves

By Elliott Wave International

The Elliott Wave Principle can help you anticipate price moves in financial markets. If you know where you are in the Elliott wave structure, you know what's likely to come next.

Here's the basic wave structure:

And here's a recent example of the Wave Principle in action. Check out this Solana forecast from Elliott Wave International (EWI):

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10/14/24 4:36 AM ET (Last Price 152.45): Favoring wave ((iv)) ended at 133.11, our immediate focus is higher in five waves for wave (i) of ((v)). We expect further impulsive price action in a third-of-a-third that must take prices towards at least the 1.618 projection multiple at circa 163.54.

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Result: Solana rallied to hit 177.26 on Oct. 24.

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Insights into a Major Stock Market Illusion

By Elliott Wave International

Not everything is what it seems. That includes the stock market. Elliott Wave International's October Financial Forecast takes you behind the curtain:

The chart below shows the DJIA in terms of real money, i.e. ounces of gold:

The left side of the chart shows the Dow’s rally from the meltdown low in March 2020, where the Dow was valued at 11.97 ounces of gold, to the January 5, 2022 high, where it was valued at 20.11 ounces of gold. In terms of U.S. dollars, the Dow declined 22% from January to October 2022. The index also declined 22% in terms of gold to an initial low on March 8, 2022. As the Dow in dollars then rallied to new highs, the index in terms of gold moved sideways in wide swings. While the Dow in U.S. dollars made a new all-time high on Sept. 25, so did gold. As the chart shows, the Dow relative to gold is still down 22% from the January 5, 2022 high, being currently valued at 15.82 ounces of gold. Last month, we showed world stock prices in terms of gold; the ratio this week closed at its lowest level in over four years. The Dow/gold ratio is now on the verge of breaking a two-and-a-half-year support shelf. Stocks are not gaining value in terms of real money; it’s an illusion caused by monetary inflation. The coming bear market will pop the illusion of wealth as stocks decline not only in terms of gold but also in terms of U.S. dollars.

On Oct. 11, 2007, the Dow hit an intraday all-time high -- and then dropped more than 50% in the next 2½ years. Could it happen now?

Get more free highlights of EWI's U.S. Stock Market coverage -- follow this link and select the Stock Market Highlights Issue >>.

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This article was syndicated by Elliott Wave International and was originally published under the headline Insights into a Major Stock Market Illusion. 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.

Pattern Recognition: Your First Step to Using Elliott Waves

By Elliott Wave International

At its most basic level, wave analysis is simply the identification of patterns in market prices.

The essential Elliott wave pattern consists of "motive waves" and "corrective waves." A motive wave is composed of five subwaves. It moves in the same direction as the trend of the next larger size. A corrective wave is divided into three subwaves. It moves against the trend of the next larger size.

As Figure 1 shows, these basic patterns build to form five- and three-wave structures of increasingly larger size (larger “degree,” as Elliott said).

In the above illustration, waves 1, 2, 3, 4 and 5 together complete a larger motive wave sequence, labeled wave (1). The structure of wave (1) tells us that the movement at the next larger degree of trend is also upward. It also warns us to expect a three-wave correction -- in this case, a downtrend. That correction, wave (2), is followed by waves (3), (4) and (5) to complete a sequence of the next larger degree, labeled as Wave 1 (circle). At that point, again, a three-wave correction of the same degree occurs, labeled as Wave 2 (circle).

Note that regardless of the size of the wave, each wave one peak leads to the same result -- a wave two correction.

That's just a snapshot of how the Wave Principle can help you understand and anticipate market price action. I invite you to learn more with this handy -- and free -- reference guide:

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Drawing directly from Frost and Prechter's Wall Street bestseller, Elliott Wave Principle: Key to Market Behavior, this concise, user-friendly guide gives you the key principles you need to understand and apply Elliott waves.

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• The 13 basic wave patterns that you'll spot in all liquid markets
• Key rules and guidelines that help you fine tune your wave counting skills
• Common price and time relationships that allow you to project high-confidence price targets and retracement levels

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We're Living in a Materials World

Gold's Breakout Signals the End of the Digital Assets Era and the Rise of Emerging Markets

By Mark Galasiewski
Editor, Asian-Pacific Financial Forecast
Elliott Wave International

Viewing global asset classes through the lens of emerging markets provides a perspective that is often missed by analysts who focus on developed markets. That perspective, which is colored by the role that commodities play in the global economy, has been invaluable during the past several years. For example, it helped us to predict, in February 2020, the end of the 2008-2020 bear market in the Bloomberg Commodity Index to within 2% of its price low two months later and then to correctly forecast "enormous upside for commodities, price inflation and interest rates," as we put it in September 2020, when the U.S. 10-year yield was 0.72%.

While the inflationary boom that has followed since that time caught most of the world off guard, most conventional observers still appear to see it as an aberration from the long disinflationary trend that preceded it -- a one-off byproduct of the Covid-19 pandemic. If only the Fed will continue to lower interest rates, so the conventional wisdom goes, then the trend toward lower rates of inflation will resume and the now AI-led good times will continue.

However, long-term patterns in commodities and interest rates beg to differ with that line of thinking. Conventional observers -- which means most people -- are completely unprepared for the extent of the long-term inflationary trend that began in 2020. Here are the most important trends that are likely to unfold in global financial markets for the next decade or longer based on long-term Elliott wave patterns in various asset classes:

• The global infotech sector, represented by America's Nasdaq Index, is approaching the end of a five-wave advance that began in 2003. The cryptocurrency sector, which was spawned by the infotech sector toward the end of the global financial crisis of 2008, has ebbed and flowed with infotech since that time.
• The leading cryptocurrency, bitcoin, which accounts for about 60% of the total market cap of all cryptocurrencies, is approaching the end of a five-wave advance from 2008 in line with the five-wave advance in the Nasdaq. The parallel trends in the Nasdaq and bitcoin are not a coincidence; they are a byproduct of the same animal spirits that have made infotech the dominant asset class of the past several decades.
• As the intangible or digital assets enter the final years of their era of dominance, they have begun to pass the baton to physical or material assets. The Bloomberg Commodity Index began a large third-wave advance in 2020 that could last as long as a few decades and will likely be paralleled by rising interest rates, such as the U.S. 10-Year Bond Yield. The dramatic rise in the prices of almost everything since 2020 is an early expression of this new era.
• The recent rise of gold, which is now the leading physical asset, marks it as the new bitcoin. The metal's breakout in early 2024 from a 13-year net sideways trend is as significant for materials as bitcoin's initial advance from 2009 and the Nasdaq's 2012 breakout were for infotech. The lagging behavior of gold miners in recent years -- it's typical of producers to underperform their underlying commodities early in bull markets -- simply confirms that most market participants are completely unaware of how large gold's bull market will be and how long the new inflationary trend will last.
• Gold's breakout is also a bullish sign for emerging markets, which -- like commodities -- underperformed infotech after 2011. In fact, gold has ebbed and flowed with the iShares MSCI Emerging Markets ETF (NYSE: EEM) since 2011. Our wave counts indicate that the two asset classes should continue to advance impulsively for years to come...

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For more market insights, check out Elliott Wave International's must-read Highlights Issue for Global Markets. Read it free now >>.