the FED’s raising interest rates has resulted in an “inverted yield curve” (i.e. short rates are higher than long interest rates) which puts extreme stress on banks and has resulted in some recent bank failures. In this article, the editors of Elliott Wave International look at the banking situation. ~Tim McMahon, editor
Why Investors are Consistently Fooled by the Stock Market
Stock market observers are trying to “make sense” of the wild price moves, which have mainly been to the downside.
As a May 12 CNBC headline says:
Traders search for answers as relentless selling on Wall Street looks to be detached from reality
Many market participants believe the “reality” of economic statistics, earnings and other factors external to the market govern the market’s trend.
However, that’s a fallacy.
Let’s get insights from a classic Elliott Wave Theorist, a monthly publication which provides analysis of financial markets and social trends:
Rise of the “Know Nothings”
With the longest “Bull market” in history in full swing young investors are flocking to the market with no experience of ever having seen a full-fledged crash only “corrections” that are quickly reversed into higher and higher valuations. Twenty-somethings were still in elementary school in 2008 so it is a distant memory… let alone 2002-3 or 1989. With no experience in dealing with a crash, they are plunging into the market at record levels.
Deflationary Psychology Versus the Fed: Here’s the Likely Winner
Most economists believe the Fed can prevent financial crises and depressions. [EWI’s analysts] disagree. Socionomic theory proposes that naturally fluctuating waves of social mood regulate financial optimism and the economy. They are unconscious and cannot be managed.
Want to See What’s Next for the Economy? Try This.
Don’t listen to the naysayers — there IS a way to forecast the general health of the economy. This method has repeatedly proven itself. Yes, you can anticipate the likelihood of a recession, even a depression — or, conversely, when major economic measures — like jobs — will be robust.
Are Falling Oil Prices Really Good for the Stock Market?
It makes sense that falling oil prices would be good for stocks, after all it should lower company’s cost for energy and therefore increase profitability. However, in October 2018 both Oil prices and Stock prices fell simultaneously. So, “What’s Up with that?” In today’s post the Editors at Elliott Wave International will look at the relationship between Oil and Stocks.
Robert Prechter Talks About Elliott Waves and His New Book
It’s been a long time since we’ve offered you an article featuring Robert Prechter directly. We’re especially excited to offer you this thoughtful interview Avi Gilburt conducted with Bob.