We are proud to announce that Timer Digest has just named the editors of Elliott Wave International's monthly Elliott Wave Financial Forecast, Steven Hochberg and Peter Kendall, the #1 bond-market timers during the past 12 months.
With the permission of Timer Digest, we are providing a full reprint here. (Visit www.timerdigest.com for subscription information.)
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Timer Digest, June 25, 2007
Featured Advisor
The Elliott Wave Financial Forecast
It’s been a roller-coaster ride for the bond market over the past twelve months, as U.S. Treasury yields declined into the end of 2006 and rose thereafter. Subscribers of The Elliott Wave Financial Forecast (EWFF), a monthly financial letter co-edited by Steven Hochberg and Peter Kendall, have been ahead of the twists and turns for nearly the whole ride.
The Elliott Wave Financial Forecast is published by Robert Prechter’s Elliott Wave International in Gainesville, Georgia (www.Elliottwave.com). Prechter was the Timer Digest 1984 Timer of The Year. Hochberg and Kendall work closely with him to develop financial and social forecasts for subscribers. Most of the insights from Elliott Wave International are not available anywhere else because their approach to the market, which is based on price patterns, is unique.
EWFF’s bond market outlook is part of a larger financial market theme its editors refer to as “All the Same Market.” Prechter’s NY Times bestseller Conquer the Crash identified this phenomenon in the spring of 2002, and Prechter and Kendall wrote about it in Barron’s two years later. In their view, historically disparate markets such as stocks, commodities, precious metals, housing and foreign currencies were locked together in an ascent that carried them all higher through the middle of 2005. At that point, a transition from up to down began with the housing peak, as the growth in credit inflation, the chief driver of the all-the-same-markets trend, started to wane.
According to their forecast, the impetus for the global credit boom is an optimistic social mood in which an expanding confidence in present conditions is expressed by a rush of money into highly leveraged bets on ever-riskier financial assets. As the mood turns, credit expansion will give way to credit contraction, and all the markets that had formerly rallied together will go down together.
”It’s a work in progress, but the forecast has been slowly falling into place since the U.S. Dollar initially bottomed in December 2004 and housing topped in 2005,” says Hochberg. Commodities have stalled,” he adds, “and one day the stock averages will succumb on a grand scale.”
Kendall and Hochberg say that the turn lower in asset markets is being led by the housing sector because it is heavily reliant on the boom in credit. With respect to bonds, the duo believes that once mood turns more pessimistic the spread between low grade and high-grade debt will explode in a widening trend that will likely set a record for spreads. “This should be the biggest financial event ever to hit the bond market,” Hochberg adds.
“The last time EWI was a ‘Featured Advisor’ in Timer Digest was March 2001,” says Kendall. “At the time, Bob noted, ‘We were bearish way too soon.’” But the 2000-2002 bear market turned out to be worth the wait for bears, as the then-favored stock indexes lost between 33 percent and 74 percent of their entire value. “The breadth and depth of the unfolding bear market patterns suggest that the next leg lower will be even larger,” says Kendall.
The Elliott Wave Financial Forecast claims that in some ways the next decline will be an extension of that initial drop from 2000-2002. While the Dow Jones Industrial Average priced in nominal terms (i.e., dollars) has continued to rally due to credit inflation, priced in real terms (i.e., gold) it has plunged 64% since July 1999 and is still down by well more than half. Steve and Pete note that, historically, nominal returns tend to play catch up to real returns. For instance, when the DJIA was pushing to a new high in January 1973 in nominal terms, the index was plunging in real terms, which set up the great bear market of 1973-1974 when the index lost 47% of its nominal value. Likewise, when the nominal DJIA was down 25% from April 1981 to August 1982, the real DJIA was soaring from a January 1980 low. That led to the Great Bull Market of the 1980s-1990s. So they remain resolute that a major stock market decline in dollar terms is approaching.
Hochberg started his career with Merrill Lynch in 1983 and joined Prechter at Elliott Wave International in 1994. He has lectured extensively around the world on the Elliott Wave Principle and is considered one of its foremost experts. As Chief Market Analyst for EWI, Steve’s views have been sought by numerous financial publications as well as CNBC, MSNBC and Bloomberg Television. He teamed with Kendall for the inaugural issues of The Elliott Wave Financial Forecast in July 1999. Hochberg also publishes a three-times-a-week web-based Short Term Update, which bridges each issue of their monthly newsletter.
Pete Kendall graduated with a degree in business from Miami University in 1981. He then worked as a journalist for 10 years, and he continued to write a financial column, On the Money, when he joined EWI as a researcher in 1992. He was drawn to the firm by Prechter’s work applying the Wave Principle to broader social trends, which has since broadened into the new field of socionomics. Kendall serves as EWI’s Director of Cultural Studies and his social-trend observations and forecasts remain one of the most popular features, according to subscribers. They are included in most issues of The Elliott Wave Financial Forecast and are regularly updated at Sociotimes.com. Like the housing sector, various social cues—including record low approval ratings for George W. Bush and a grinding war in Iraq—signal the imminence of something that has more in common with the bear market rally of 1968 or 1972 than another leg up.
The Elliott wave website is full of resources that help any investor interested in technical analysis. On the site you’ll find special reports, a free Elliott wave tutorial, a message board for questions, free daily commentary, books, and a free club that you can join with added benefits and special offers. Steve says, “We’re adding new and exciting features all the time, such as video tutorials and audio commentary to go along with our electronic newsletters.”
You can visit them at www.Elliottwave.com, or by calling 800-336- 1618. International investors can visit the website or call 800-472-9283.
Timer Digest has been following The Elliott Wave Financial Forecast since 1984 and it currently is the number 1 Bond Timer over the most recent 52 weeks, see page 4.
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