Sometimes an Elliott wave practitioner must adjust the wave count as a market’s action unfolds. After all, the Wave Principle is an “exercise in probability.” Having said that, the Wave Principle can sometimes offer amazingly “precise results.” And sometimes, the upward trajectory of a stock’s price seems to defy gravity. But “parabolic rises” are impossible to sustain.
The Market is Currently a “Mixed Bag”
March 31, 2022 by Leave a Comment
In the following video, Chris Ciovacco of Ciovacco Capital Management looks at several market indicators and the recent rebound.
Historically Investors Become “Long-term Buyers” at Precisely the Wrong Time
February 24, 2022 by Leave a Comment
Typically, unsophisticated investors tend to buy near tops and sell near bottoms… exactly the opposite of what they should be doing. And there is a very good psychological reason for this. They start out cautious and then as others begin making more and more money in the market the Fear of Missing Out (FOMO) takes over and eventually they get in to the market. They may make a little money and decide they are geniuses and commit more and more money. Eventually, everyone with available money has invested and there is no one left to buy so the market crashes. The unsophisticated investor holds on initially knowing the market will rebound as it “always” has. Then he holds on because he has “lost too much to get out now” and finally when he can’t stand it any longer he sells vowing never to invest again. This turns out to be the bottom, as there are no more people left to sell, and the market turns up. But “once burned, twice shy” so the unsophisticated investor once again refuses to buy until the market nears another top and “everyone is making money in the market”.
Why the “60 / 40 Balance” May Be Hazardous to Your Portfolio
February 17, 2022 by Leave a Comment
Financial advisors have long advocated a mix of 60% stocks / 40% bonds to cushion portfolios from downturns in the stock market. The thinking is that stocks go up in the long-term, hence, that’s where investors should allocate the most. At the same time, advisors acknowledge that stock prices can sometimes go down so “less risky” bonds will provide at least some protection. The problem with this investment strategy is that bonds can go into bear markets too. Moreover, they can do so at the same time as stocks. Let’s review what happened during the Great Depression of the early 1930s.
Is the Correction Over?
January 27, 2022 by Leave a Comment
After a fairly rapid correction in January 2022, the market has started to rebound. So does that mean it’s safe to jump back into the market? After all, we saw a worse crash in January 2020 followed by a rapid rebound to new highs. And even the 2018 correction was short-lived. So have market participants become accustomed to quick rebounds? Or is this just a brief counter-trend rally?
Has Crypto-Mania Finally Run Its Course?
December 14, 2021 by Leave a Comment
Typically when a Company gets naming rights to a sports stadium or their President gets to ring the bell at the New York Stock Exchange that company is at the top of its game. Unfortunately, when you are at the top there is nowhere to go but down. In today’s article, we are going to look at tops, tech, crypto, and stadiums.
Why a Financial “Panic” May Be Just Around the Corner
September 29, 2021 by Leave a Comment
Over the last few months, we’ve been warning that caution is the word of the day. The market was concerned that the FED’s September Statement would include provisions for tightening. That doesn’t seem to be their stance for the near future at least. But that doesn’t mean that the market is going to skyrocket either. As we can see in the following chart of the NYSE, the market definitely leveled off over the summer (despite the FED pumping $120 billion per month into the economy).
There’s one indicator that many investors overlook, and that’s the weekly change in “sight deposits” at the Swiss National Bank. This chart helps show when a financial panic could be building.
High “Beta” stocks … “Meme” stocks… and Index stocks… Oh My!
July 12, 2021 by Leave a Comment
High “Beta” stocks tend to move in the same direction as the overall market but at a multiple of the overall index. So for instance, if the overall market is up 2% a high beta stock might be up 3% or 5%, or even 10%. “Meme” stocks are those that have gotten a lot of publicity on Social Media and also tend to be high beta stocks as well. Index stocks are those that make up a particular index and are often most volatile when first added or removed from an index. Today’s article covers the convergence of all of these three factors on June 25th.
The Fear of Missing Out
June 23, 2021 by Leave a Comment
The fear of missing out (FOMO) is a powerful narcotic that often affects market participants near the top of a cycle. And before long, you hear the “bag-boy” at the supermarket bragging about his “portfolio”. When that happens it is time to follow Warren Buffet’s sage advice and “Be fearful when everyone else is greedy and greedy when everyone else is fearful.”
The Bitcoin Crime Wave Hits
June 11, 2021 by Leave a Comment
By Elliott Wave International The conviction gripping bitcoin’s ascendancy is so deep that children are now being indoctrinated into the bullish fold. We talked about this phenomenon with respect to the stock market last month. This Bloomberg column from May 16 signals its arrival in the cryptocurrency world: “Why I Pay My Seventh Grader in […]
