Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
How to Capitalise on the Robots - 20th June 24
Bitcoin, Gold, and Copper Paint a Coherent Picture - 20th June 24
Why a Dow Stock Market Peak Will Boost Silver - 20th June 24
QI Group: Leading With Integrity and Impactful Initiatives - 20th June 24
Tesla Robo Taxis are Coming THIS YEAR! - 16th June 24
Will NVDA Crash the Market? - 16th June 24
Inflation Is Dead! Or Is It? - 16th June 24
Investors Are Forever Blowing Bubbles - 16th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24
Bitcoin Trend Forecast, Crypto's Exit Strategy - 31st May 24
Zimbabwe Officials Already Looking to Inflate New Gold-Backed Currency - 31st May 24
India Silver Imports Have Already Topped 2023 Total - 31st May 24
Gold Has Done Its Job – Isn’t That Enough? - 31st May 24
Gold Stocks Catching Up - 31st May 24
Time to take the RED Pill - 28th May 24
US Economy Slowing Slipping into Recession, But Not There Yet - 28th May 24
Gold vs. Silver – Very Important Medium-term Signal - 28th May 24
Is Gold Price Heading to $2,275 - 2,280? - 28th May 24
Stocks Bull Market Smoking Gun - 25th May 24
Congress Moves against Totalitarian Central Bank Digital Currency Schemes - 25th May 24
Government Tinkering With Prices Is Like Hiding All of the Street Signs - 25th May 24
Gold Mid Tier Mining Stocks Fundamentals - 25th May 24
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Here's a Potential Signal for What May Be Next for U.S. Stocks

Stock-Markets / Stock Market 2022 Sep 09, 2022 - 10:10 PM GMT

By: EWI

Stock-Markets

This action by investors resulted in "the highest total since 2014, and probably ever"

Frost & Prechter's Wall Street classic book, Elliott Wave Principle: Key to Market Behavior, first published nearly 45 years ago and said:

"Eight years of a raging bear market have taught today's investor to be cautious, conservative and cynical. Defensiveness is not in evidence at tops."

Considering this description of investors' mindset in the late '70s and early '80s, many market observers were not contemplating the start of a big bull market.

Yet, Elliott Wave Principle did forecast a major uptrend and that's what happened.


Bull markets are generally born after investor sentiment has reached a negative extreme.

Here in the late summer of 2022, there's the opposite mindset. Instead of playing "defense," investors are aggressively on the offense -- and in at least one sector -- by a record degree.

Consider this chart and commentary from the August Elliott Wave Financial Forecast, a monthly publication which provides coverage of major U.S. financial markets:

The depth of the dip-buying zeal is evident by a late-July retail surge into technology stocks. Investors pushed about $580 million into a basket of tech stocks, the highest total since at least 2014, and probably ever. "I'm extremely bullish tech stocks," one 27-year-old investor told The Wall Street Journal. The FAANG stocks -- Facebook (Meta), Apple, Amazon, Netflix and Google (Alphabet) -- and various ancillary issues are once again the big favorites.

Some professional investors are also gung-ho on tech stocks (CNBC, August 28):

[Famous Market Pundit]: I will not abandon tech stocks because the end of their downturn is near

This well-known stock picker might be right. Yet, keep in mind that stocks which lead on the way up tend to lead on the way down.

Also keep in mind that stocks in the technology sector are not the only focus of investors. According to a poll by deVere Group, a Zurich-based asset management firm, "56% of Investors Plan to Buy More Stock Before 2022 Ends."

And here's another CNBC headline (August 26):

S&P will be at 4,400 by year end, says "chief equity strategist"

In other words, the complete lack of "defensiveness" is likely a signal that stocks are not set to kick off another major uptrend.

The stock market's Elliott wave pattern can help you gain more insight into what to expect next for the main indexes.

If you'd like to learn about Elliott wave patterns, or simply need a refresher, the book which was mentioned earlier -- Elliott Wave Principle: Key to Market Behavior -- is an ideal resource. Here's a quote:

In the 1930s, Ralph Nelson Elliott discovered that stock market prices trend and reverse in recognizable patterns. The patterns he discerned are repetitive in form but not necessarily in time or amplitude. Elliott isolated five such patterns, or "waves," that recur in market price data. He named, defined and illustrated these patterns and their variations. He then described how they link together to form larger versions of themselves, how they in turn link to form the same patterns of the next larger size, and so on, producing a structured progression. He called this phenomenon The Wave Principle.

You may be interested in knowing that you can read the entire online version of the book for free.

The only requirement for free access is a Club EWI membership -- which is also free. In case you're unfamiliar with Club EWI, it's the world's largest Elliott wave educational community and members enjoy complimentary access to a wealth of Elliott wave resources without any obligation.

Get started by following this link: Elliott Wave Principle: Key to Market Behavior -- get instant access, free.

This article was syndicated by Elliott Wave International and was originally published under the headline Here's a Potential Signal for What May Be Next for U.S. Stocks. 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.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in