How the Wave Principle Improves Trading: It Provides Price Targets

By Elliott Wave International

Technical studies do a good job of illuminating the way for traders, yet they each fall short for one major reason: they limit the scope of a trader’s understanding of current price action and how it relates to the overall picture of a market. Most technical studies simply don’t reveal pertinent information such as the maturity of a trend and a definable price target — but the Wave Principle does.

Here is one way the Wave Principle provides perspective:

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Provides Price Targets

What traditional technical studies simply don’t offer — price targets — the Wave Principle again provides. R.N. Elliott observed that the Fibonacci sequence is the mathematical basis for the Wave Principle. Elliott waves, both impulsive and corrective, often adhere to Fibonacci proportions, as illustrated in the chart below. These price targets allow traders to set profit-taking objectives or identify regions where the next turn in prices will occur.

See 4 more ways the Wave Principle improves trading — plus the kinds of trading opportunities Elliott waves identify and how to use waves to set protective stops — in Elliott Wave International's free Special Report. Create your free account to access Learn How the Wave Principle Can Improve Your Trading.

This article was syndicated by Elliott Wave International and was originally published under the headline When Junk Bond Spreads and Stocks Diverge. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

When Junk Bond Spreads and Stocks Diverge

By Elliott Wave International

What happens when junk bond spreads and stocks stop moving in sync? This excerpt from Elliott Wave International's July Financial Forecast explores a divergence their analysts are watching closely.

EWFF has long noted that junk bond credit spreads and stocks tend to trend and reverse together. In the event of bankruptcy, junk debt is one rung above equities in the pecking order of who gets paid. When the trend between the two assets diverges, it is meaningful.

"[The chart below] shows the S&P 500 and the CCC-rated junk bond spread, which is the yield on CCC-rated debt — debt that has a high risk of default — minus the yield on comparably dated U.S. Treasuries. To align junk debt spreads with the S&P, we inverted its scale.

… Starting in late January, [junk bond spreads] widened sharply. … Equally important, the widening in junk spreads has broken a trendline from October 2022. … This is just one of many signals EWI's analysts are tracking.

See 18 more red flags inside EWI's newly updated free report>>.

This article was syndicated by Elliott Wave International and was originally published under the headline When Junk Bond Spreads and Stocks Diverge. 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.

Catching The 'Third of a Third' in AI BEFORE the Rest of the World

By Elliott Wave International

Paying attention is good. Knowing WHERE to pay attention is even better.

Leading market sectors often reveal what’s really happening beneath the surface.

In June 2017, Elliott Wave International's Global Market Perspective showed this chart and wrote:

“Leading sector indexes often provide important evidence to support or even to inform a wave count for the broader market. Nothing could be truer right now for the MSCI Emerging Markets Asia Infotech Index.

The index is leading Asian stock markets higher in a third-of-a-third-wave advance.”

What exactly did that imply?

A third wave is typically the strongest phase of a market advance. A third wave within a larger third wave—often called a “third of a third”—is where trends can accelerate dramatically.

What happened next?

As of June 2026, the MSCI Emerging Markets Asia Infotech Index has risen from roughly 500 to more than 3,500 — as in, a $10,000 investment would be worth close to $70,000.

That’s the value of paying attention in the right place.

Every month, EWI's Global Market Perspective analyzes more than 50 global markets—including stocks, commodities, currencies, bonds and emerging markets—to identify potential opportunities and risks across the globe.

The question isn’t what Global Market Perspective said in 2017.

The question is: What opportunities is it identifying today?

Subscribe to GMP today and find out >>.

Or, if you'd like to learn to spot third wave setups in your charts, this handy free resource teaches you the Elliott Wave basics in just 30 minutes >>.

This article was syndicated by Elliott Wave International and was originally published under the headline Catching The 'Third of a Third' in AI BEFORE the Rest of the World. 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.

Bob Prechter calls this setup a 'wonder to behold'

By Elliott Wave International

What’s your favorite Elliott Wave setup?

For many traders, the answer is simple: third waves.

As Elliott Wave International founder Robert Prechter puts it, third waves are “wonders to behold” because they are typically the longest, most powerful waves in a move.

Of the 5 waves in an Elliott wave impulse, the 3rd wave is the one you really want to catch -- and you definitely don’t want to be on the wrong side of one!

This idealized chart shows you what I mean:

You can see exactly what we’re talking about in these three examples. All of them are from the May 2025 issue of EWI's Global Market Perspective. And all of them happened to be bullish -- but the set-up works just as well on bearish moves.

The charts below show you when the forecast was made and what happened after:

Right now, the June 2026 Global Market Perspective identifies 12 markets showing third-wave behavior already underway - or just beginning to unfold.

See ALL 12 third-wave setups now inside EWI's Global Market Perspective >>

This article was syndicated by Elliott Wave International. EWI is the world's largest indepedant 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 If You Could Spot One of History’s Fastest Rallies Before It Began?

By Elliott Wave International

On April 2, while bearish sentiment was extreme and many expected lower prices, subscribers to Elliott Wave International's Intraday Stocks Pro Services were shown a very different setup in the S&P 500.

In his 3:35 p.m. intraday update, analyst Robert Kelley posted this chart and wrote:

“The larger count labels today’s low as the bottom of a second wave pullback. That’s due to the clear three-wave drop into today’s low. If this count is right there will be a sizable advance next week. For now prices need to hold above 6501.90, the .786 retracement of wave iii so far, to keep this scenario in preferred status.”

The setup was classic Elliott wave analysis: a completed five-wave advance followed by a corrective three-wave decline — a pattern that often signals the trend is preparing to resume.

And notably, this wasn’t a vague bullish opinion. It came with a clearly defined risk level.

What Happened Next?

The labeled wave ii low held. And prices exploded. From that April 2 low, the S&P 500 surged to 7123.76 — a move of roughly +8.8%, part of what Kelley called “one of the fastest rallies in history.”

This illustrates how Elliott wave analysis can help identify important market turning points before they become obvious in price or headlines.

Learn the Wave Principle with Robert Kelley

Want to better understand patterns like this? Study with Robert, and 5 other instructors, in Trader’s Classroom. LIMITED TIME — Try Trader's Classroom for 30 days for just $30 >>.

This article was syndicated by Elliott Wave International and was originally published under the headline What If You Could Spot One of History’s Fastest Rallies Before It Began?. 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.

Elliott Waves Subsume Classic Technical Chart Patterns

By Elliott Wave International

Traditional technical-analysis chart patterns fit within the broader framework of the Elliott wave model.

Elliott waves subsume head and shoulders tops and bottoms, rounding tops and bottoms, triangles, rectangles, double and triple tops and bottoms, diamonds, falling and rising wedges, pennants and flags.

Let’s take just one example: the head and shoulders top. The excerpt below, from Elliott Wave Principle, shows how it fits within the Wave Principle:

In a normal wave development, wave five of 3 and wave 4 form the “left shoulder” of the pattern, wave 5 and wave A form the “head,” and wave B and wave one of C form the “right shoulder.” Wave two of C creates the return to the neckline that is typical of the pattern (below).

So, if you’re a fan of traditional technical chart patterns, the Wave Principle can consolidate them under a single model and help you determine which formations are most likely of real significance.

To learn more about Elliott wave analysis, read the definitive text on the topic -- it’s free.

This article was syndicated by Elliott Wave International and was originally published under the headline Elliott Waves Subsume Classic Technical Chart Patterns. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

The Idea that Peace and War Drive Stock Prices Is a Myth

By Elliott Wave International

Does an event as momentous as war affect the trend of the stock market?

Most people think so.

But the data don’t back it up.

Wars have no consistent causal effect on stocks: Sometimes the stock market rises during large-scale conflicts. Sometimes it falls. Sometimes it does both!

Just examine these charts:

There’s no reliable connection between war and stock prices. It’s a MYTH.

Chapters 1 and 2 of The Socionomic Theory of Finance debunk 12 more myths that most investors fall for.

You can read the chapters for FREE now.

This article was syndicated by Elliott Wave International and was originally published under the headline The Idea that Peace and War Drive Stock Prices Is 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.

The Idea that Peace and War Drive Stock Prices Is a Myth

By Elliott Wave International

Does an event as momentous as war affect the trend of the stock market?

Most people think so.

But the data don’t back it up.

Wars have no consistent causal effect on stocks: Sometimes the stock market rises during large-scale conflicts. Sometimes it falls. Sometimes it does both!

Just examine these charts:

There’s no reliable connection between war and stock prices. It’s a MYTH.

Chapters 1 and 2 of The Socionomic Theory of Finance debunk 12 more myths that most investors fall for.

You can read the chapters for FREE now.

This article was syndicated by Elliott Wave International and was originally published under the headline The Idea that Peace and War Drive Stock Prices Is 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.

Silver’s Volatility Is Flashing a Familiar Signal

By Elliott Wave International

Silver is living up to its reputation for volatility as the new year begins.

Silver’s one-month implied volatility has surged, a development that has historically coincided with important highs and lows in the metal’s price. Since 2020, similar volatility spikes have tended to appear near key turning points rather than during quiet, trending phases.

At the same time, the silver/gold ratio has also jumped, showing that silver began outperforming gold late in last year’s rally. In past cycles, sharp advances in this ratio have often accompanied tops in silver prices.

What makes the current setup notable is the interaction between these two measures. Spikes in volatility have frequently aligned with turning points in the silver/gold ratio, while spikes in the ratio itself have tended to appear near major price peaks.

Will history repeat once again — or is this rally still unfolding? Elliott wave analysis helps place these extremes into a broader market context and assess what typically comes next when conditions look like this.

Elliott Wave International has identified 18 charts that are flashing “warning” signals – check out their free report to prepare for what’s next..