Elliott Wave University

Sometimes the investment weather forces you to ‘buy a coat,’ says Robert Prechter

When it’s sunny, you head outside without a thought, but when it’s rainy, you look for your umbrella.

When the markets are trending up, you don’t worry about your investments much, but when the markets turn bearish … what do you do?

In an interview with Jeff Sommer of The New York Times in July 2010, Robert Prechter said that he is convinced that a “market decline of staggering proportions” is on its way, and that individual investors should get out of the market and into cash and cash equivalents, such as Treasury bills.

“I’m saying: ‘Winter is coming. Buy a coat,’” Prechter said. “Other people are advising people to stay naked. If I’m wrong, you’re not hurt. If they’re wrong, you’re dead. It’s pretty benign advice to opt for safety for a while.” Read the rest of this entry »

Elliott Wave International Chief Market Analyst Steve Hochberg Sheds Light on a Feared Technical Indicator

On Aug. 12, volatile market action coincided with a technical signal called the Hindenburg Omen, whereby a relatively high number of new highs and lows in individual stocks occur at the same time.

This indicator instantly gained an enormous amount of media attention. So we sat down with Steve Hochberg, EWI’s chief market analyst and close colleague of Robert Prechter, to ask him about the now-infamous Hindenburg Omen.

EWI: Steve, recently a market indicator called the Hindenburg Omen has been in the news, what is going on? Read the rest of this entry »

Of all the belief systems of Wall Street, few can claim the devoted following of the Efficient Market Hypothesis, the idea that stock prices adhere to the same laws of supply-and-demand that govern retail products. Once coined the theoretical “Parthenon” of economics, this notion has consistently endured the test of time —– until now. Academics and advisors across the globe are currently exposing crack after crack in the “Efficient” model so deep as to bring the entire theory crashing to the ground.

“The EMH is not only dead,” writes a July 29, 2010 news source. “It’s really, most sincerely dead.” (Minyanville)

As to what caused the theory’s collapse — one recent business journal offers this insight: Read the rest of this entry »

In the August issue of his Elliott Wave Theorist, market forecaster Robert Prechter alerted readers that the U.S. stock market was slicing the neckline of a classic head-and-shoulders pattern in technical analysis, and that this may send the market into critical condition.

Prechter said that when the Elliott wave count and a head-and-shoulders pattern are saying the same thing about the stock market, it’s best to pay attention.

Here’s how the August issue of the Elliott Wave Financial Forecast, the sister publication to Prechter’s Theorist, described the head and shoulders pattern unfolding in the stock market: Read the rest of this entry »

Q&A with an experienced Elliott wave trader reveals seven common trading mistakes.

To be a successful trader demands knowledge.

If you’d prefer to become an unsuccessful trader, you can start by making the following common trading mistakes, detailed by a professional who spent 25 years in portfolio management, trading and forecasting in the financial capital of the world, New York City.

In 2002, Wayne Gorman, long-time Elliott wave trader and current head of trader education at Elliott Wave International, left his 35th floor Manhattan apartment and moved to the quiet of North Georgia. He’s been sharing his knowledge and skills with aspiring traders ever since — in both online seminars and before live audiences around the world.

Wayne graciously agreed to a Q&A about trading mistakes. In his interview, Wayne reveals seven common mistakes traders make. Read the rest of this entry »

August 9, 2010

The single most convenient untruth about the 2008 (and counting) financial crisis is that it was unforeseen. For two years policymakers have insisted “There was no way to know ahead of time” that the liquidity boom would come to a screeching halt. Back in November 2008, in fact, the usually tight-lipped Queen of England herself publicly described the turmoil of international markets as “awful” and openly asked a panel of experts from the London School of Economics “Why did nobody notice?“

Read the rest of this entry »

Stress test results for the biggest European banks were recently released, while the largest U.S. banks took their first stress tests in May 2009. But most people don’t really care how much stress their banks are under; they are more worried about their own stress levels. One thing that adds to personal stress is worrying about whether their deposits are in a safe place. Bob Prechter has encouraged people to find the safest banks for their money since he originally wrote his New York Times best-selling book, Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression in 2002. This excerpt explains why banks of all sizes are riskier than they used to be (think about portfolios stuffed with derivatives, emerging market debt and non-performing commercial loans). You can also get a list of the Top 100 Safest U.S. Banks — two banks per state — that was just updated in late June with the latest available data by joining Club EWI and receiving EWI’s Safe Banks report.

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Excerpted from Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression, by Robert Prechter

Many major national and international banks around the world have huge portfolios of “emerging market” debt, mortgage debt, consumer debt and weak corporate debt. I cannot understand how a bank trusted with the custody of your money could ever even think of buying bonds issued by Russia or Argentina or any other unstable or spendthrift government. As At the Crest of the Tidal Wave put it in 1995, “Today’s emerging markets will soon be submerging markets.” That metamorphosis began two years later. The fact that banks and other investment companies can repeatedly ride such “investments” all the way down to write-offs is outrageous. Read the rest of this entry »

By John C Burford

Ralph Elliott, an American market analyst, discovered the basic principles in the 1930s studying the Dow Jones Index. He noticed that when prices move in the direction of a major trend, they take place in five waves, called Waves 1,2,3,4, and 5. Waves 1,3, and 5 are motive waves, while Waves 2 and 4 are corrective waves. When these 5 waves had exhausted, there was a period of retracement of at least part of move made by the 5 waves. These retracements take place in three waves and very often comply with a Fibonacci ratio.

Using this knowledge, it is possible, if you know where the market is in relation to the prevailing wave structure, to forecast (with a high degree of accuracy) the most likely direction of the market! This is invaluable knowledge to a trader, especially when used in conjunction with just one other technical indicator that I use.

I have a chart of a recent move in the Dow Jones Index (on a 5-minute chart). I have identified the start of a 5-wave Elliott Wave move when the momentum indicator shows a positive divergence to the price – a good sign, after a strong down-move – that the market is getting ready for a counter-trend rally.

I wish to trade with the main (down) trend, so I wait for the five up waves to play out. At the same time as the market is making its 5th and final wave, the momentum reading is showing a negative divergence to the price (a very weak sign). This gives me confidence that the rally has played out, and is ready to resume the downtrend.

That is therefore a low-risk place to short the market. You can see that the market did, indeed, resume its downtrend. For a short-term trader, the next question is: Where to take profits? I will leave that difficult subject for another article.

That is how I trade by applying the Elliott Wave Theory in practice – together with a simple momentum indicator. This technique can be used on almost all markets, and I have used it successfully in trading the emini S&P 500, the FTSE Index, Gold, and especially the Euro/Dollar. It can work on any time-frame, and has given me excellent entry trades on daily and weekly charts as well.

If you ever wanted to know how to make money trading the financial markets, you have come to the right place. I was a professional futures trader for many years, and have seen just about everything the markets could throw at traders. Visit my website http://financialtradingstrategies.com where I offer resources that I personally recommend. To look over my shoulder and sneak a peek at my trading in real time, visit my blog http://financialtradingstrategies.com/wpblog/ FTSTrader

 

“Successful market timing depends upon learning the patterns of crowd behavior. By anticipating the crowd, you can avoid becoming a part of it.”

I pulled this quote directly from the opening paragraphs of the free Elliott Wave Online Tutorial. It’s critical to your understanding of how markets really work.

Now some might say, “What’s wrong with following the crowd? I’m just following the easy money, right?” The problem with this logic is that most investors follow the crowd (or herd) all the way up the mountain … then right off the cliff.

Look at today’s situation: How many people you know got out of the stock market before the October 2007 top? Heck, how many you know cut losses and cashed out even six months after the top?

 If you’re like most people, your answer ranges from “zero” to “very few.”

 Being a successful investor over the long-term means you must always strive to be part of that “very few.” Read the rest of this entry »

Mainstream financial analysts always look for ways to explain market action through news stories and events. Conventional wisdom states that news and inter-market correlations cause market booms and busts, but such explanations rely on selective presentation of the data. In this video, Elliott Wave International’s Asian-Pacific Financial Forecast Editor Mark Galasiewski shows you how Elliott wave analysis was able to predict Hong Kong’s late ’90s mania and its aftermath in real time — without looking at the news or the market’s “fundamentals.” Read the rest of this entry »