The Risks of a Stock Market Deflationary Crash
Stock-Markets / Financial Crash Oct 21, 2013 - 12:01 PM GMTBy: EWI
Dear Investor,
So many financial markets; so little time to follow them. The one forecaster I know who will put it all in perspective is EWI's Robert Prechter. Read his reports and you will get a clear idea of what really drives the markets and the U.S. economy – and why the Fed is beating its head against the wall.
Here’s a great example: A six-page report adapted from a recent issue of Bob’s monthly Elliott Wave Theorist. This report explains why the risk of deflation is mounting – which is the opposite of what the Fed wants – and how you can see it coming in the prices of gold, gas, real estate, crude oil and other markets. He also explains why the stock market recently rose to a new high. And this is done with the support of 16 charts – all of which tell a story on their own.
As usual, Bob Prechter’s analysis is a lightning-fast read that cuts through the noise, debate and doubt to offer a perspective that everyone can understand. And for a limited time, you can read it FREE.
Read it and see what you think. If nothing else, you will understand why the price of gas doesn’t always do what we think it will. In the big picture, you may even question whether inflation is inevitable and decide to prepare instead for deflation.
Download your free report from Robert Prechter now >>
Regards,
About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world's largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.
How to Find Trading Opportunities in ANY Market
How to Find Trading Opportunities in ANY Market
Learn ways to spot trading opportunities using wave analysis and other technical analysis methods
Senior Analyst Jeffrey Kennedy is the editor of our Elliott Wave Junctures and one of our most popular instructors. Jeffrey's primary analytical method is the Elliott Wave Principle, but he also uses several other technical tools to supplement his analysis.
In this trading lesson, Jeffrey demonstrates how to determine when an Elliott wave trade setup becomes a trade.
You can apply these methods across any market and timeframe.
Lesson 1: Ready, Aim ... Fire: Knowing When to Place a Trade
A very important question you need to answer if you are going to use the Wave Principle to identify high-confidence trade setups is, "When does a wave count become a trade?"
To answer this question, let me draw upon the steps required to fire a firearm:
Step 1 (Ready) -- Hold the rifle or pistol still...very still.
Step 2 (Aim) -- Focus and align your sights.
Step 3 (Fire) -- Pull the trigger without tensing your hand.
If you follow these steps, you should at least hit what you're aiming at, and, with a little practice, you should hit the target's bull's-eye more often than not.
As an Elliottician and a trader, I employ a similar three-step approach to decide when to place a trade. Figure 1 shows a schematic diagram of a five-wave advance followed by a three-wave decline -- let's call it a Zigzag. The picture these waves illustrate is what I call the Ready stage.
In Figure 2, prices are moving upward as indicated by the arrow. At this stage, I begin to aim as I watch price action to see if it will confirm my wave count by moving in the direction determined by my labeling.
Once prices do indeed begin to confirm my wave count, I then determine the price level at which I will pull the trigger and Fire (that is, initiate a trade). And, as you can see in Figure 3, that level is the extreme of wave B.
Why do I wait for the extreme of wave B of a Zigzag to give way before initiating a position? Simple. By waiting, I allow the market time to either prove or disprove my wave count. Moreover, once the extreme of wave B is exceeded, it leaves behind a three-wave decline from the previous extreme.
As you probably know, three-wave moves are corrections, according to the Wave Principle, and as such, are destined to be more than fully retraced once complete. An additional bonus of this approach is that it allows me to easily and confidently determine an initial protective stop, the extreme of wave C.
Remember, all markets have a wave count; however, not all wave counts offer a trading opportunity. So the next time you think you have a wave count, rather than just blindly jumping in, first steady yourself, wait while you aim, and then -- if price action does indeed confirm your wave count -- pull the trigger.
Also, it is important to note that this is my way of applying the Wave Principle practically, but it's by no means the only way.
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If you are ready for more lessons on how to become a more successful technical trader, get Jeffrey Kennedy's free report, 6 Lessons to Help You Spot Trading Opportunities in Any Market. Jeffrey has taught thousands how to improve their trading through his online courses, his international speaking engagements, and in his trader education service Elliott Wave Junctures. This free report includes 6 different lessons that you can apply to your charts immediately. Learn how to spot and act on trading opportunities in the markets you follow, starting now! |
This article was syndicated by Elliott Wave International and was originally published under the headline How to Find Trading Opportunities in ANY Market. 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.
About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world's largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.
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