Since the start of the pandemic, millions of people have opened trading accounts. Perhaps, you have as well. When stocks only go up – as they have over the past year – trading seems easy. That’s why many traders today use lots of margin debt. And why not? Borrowing to buy stocks can work out well during an uptrend. Yet, highly leveraged portfolios can be deeply wounded during a fast-moving downtrend. When this bull run ends, we’ll hear lots of stories about traders who got caught completely unprepared. Don’t let it happen to you.
Too Many Bulls?
April 20, 2021 by Leave a Comment
We know from experience that whenever investor sentiment gets too lopsided — in other words, if there are “too many” bulls or “too many” bears — it inevitably means that a market reversal is near. Back in January, we ran an article on the extreme bullishness of the market and then we saw a correction but it didn’t last long enough and once again we are looking at a bullish etreme. Today we are bringing you an article from Elliott Wave International which looks at how bullish the current market is.
Bitcoin: Let’s Put 2 Heart-Pounding Price Drops into Perspective
February 27, 2021 by Leave a Comment
Bitcoin’s price fell hard, from above $58,000 to $45,000, and some are wondering if this is the start of a crash. Well, the word “crash” was also used back in January, when the cryptocurrency fell from $42,000 to below $30,000. However, prices bounced back. Let’s see how Elliott wave analysis can help put both price drops into perspective.
Spotting the Slide in Silver
January 26, 2021 by Leave a Comment
With bitcoin’s ups and downs stealing the spotlight lately, it’s easy to forget about gold and silver, the traditional “stores of value.” Meanwhile, action in precious metals has been quite lively lately, as well. For example, on January 6, the price of silver hit an intraday high of $27.97 and then took a swift slide. Here’s what the Elliott Wave has to say about it.
Market Participants are Extremely Bullish
January 11, 2021 by Leave a Comment
With the current political upheaval in this country, it is difficult to see how the market can be so bullish. In today’s article by Elliott Wave International, we see that the market has “Great Expectations” for 2021. But as we saw in the previous article, Why Most Investors Miss Major Stock Market Turns, often when market-participants are most bullish is at the peak. And its not just amateurs that make this mistake, even “professionals” get caught up in the euphoria. This makes sense in a strange sort of way. When everyone is “fully invested” there is no more money left to flow into the market so it has to go down. And when everyone has taken their money out of the market and put it in “safe cash” there is plenty of money available to drive the market up. Recently Forbes published an article entitled 4 Stock Market Sentiment Indicators: Euphoric-Plus. The old market adage “when everyone else is buying you should be selling” might apply here. Also at the end of this article, you can get free access to the online version (really free- no shipping) of the Elliott Wave Classic, Elliott Wave Principle: Key to Market Behavior ~Tim McMahon, editor
Bond Market: “When Investors Should Worry”
November 17, 2020 by Leave a Comment
You may recall hearing a lot about “credit default swaps” during the 2007-2009 financial crisis. As a reminder, a CDS is similar to an insurance contract, providing a bond investor with protection against a default.
In the past several months, the cost of that protection has fallen dramatically. The November Elliott Wave Financial Forecast, a monthly publication which provides an analysis of major U.S. financial markets, showed this chart and said:
Gold: See What This Fibonacci Ratio Says About the Trend
August 19, 2020 by Leave a Comment
Gold has been a star performer in the markets recently with gold making a new all-time high of $2067.15 on August 6th. From there it retreated to $1931 on August 12th before resuming its climb. On August 18th it closed just above $2000 and then retreated to $1927.90 on August 19th . So we have seen quite a bit of volatility this month in gold. It certainly would be nice to know beforehand where it would stop and turn.
Emerging Markets and Epidemics
May 21, 2020 by Leave a Comment
The global disruption associated with the pandemic far surpasses other major health scares in modern history.
Even so, you may recall 2009 news articles similar to this one from the New York Times (June 11, 2009):
It came as no surprise [on June 11, 2009] when the World Health Organization declares that the swine flu outbreak had become a pandemic.
The disease has reached 74 countries …
And, going further back in time, the World Health Organization provided this July 5, 2003 update on the Severe Acute Respiratory Syndrome, known as SARS:
To date, 8439 people have been affected, and 812 have died from SARS.
The reason for briefly reviewing the swine flu and SARS is to point out that, as surprising as it may be, both outbreaks marked not the start, but the end of a downtrend in emerging markets stocks.
Stocks: Is the Worst Over or is there Worse Yet to Come?
March 28, 2020 by Leave a Comment
Chris Ciovacco of Ciovacco Capital Management always presents a well-reasoned approach to the market in his “short-takes” video. He emphasizes that we need to look at the preponderance of the evidence but even that doesn’t “guarantee” any future market action. All that we can do is see what has happened in the past and determine the probability that it will happen that way again. Even if 90% of the time some indicator resulted in a rise (or fall) in the market one time out of ten the opposite could still happen so we need to be prepared and listen to what the market is telling us. In Yesterday’s video Chris Ciovacco looked at volatility (i.e. the VIX) and what it is telling us regarding the current state of the market. Interestingly, recent VIX activity was actually worse than in any other crash tracked since 1990 putting it on par with the 2008 crash and in terms of volatility it was actually worse than 2008.
Junk Bonds: 2 “Golden” Junctures
March 28, 2020 by Leave a Comment
The Golden Ratio — 1.618 or .618 — is ubiquitous throughout nature. You’ll find this mathematical proportion in the shapes of galaxies, sea horses, pine cones, the arrangement of seeds on a sunflower head, and numerous other natural phenomena… including the chart patterns of financial markets.
