When seemingly unforeseen market events occur -- like the Nikkei's 7% one-day drop on May 23 -- we immediately want to know why. In this case, the financial media has suggested a number of causes: weak data from China, Bernanke's plans to slow quantitative easing, the strength of the yen.
But this kind of reasoning is ultimately unsatisfying. Whether the drop was caused by China, Bernanke, the yen -- or the boogeyman -- these explanations don't help you at all, because they come after the fact. They only help you lick your wounds, rather than avoid the punch in the first place.
Here at EWI, though, our analysts don't fall back on such after-the-fact explanations. That's because they apply the objective rules and guidelines of the Elliott Wave Principle, which states that markets are patterned and predictable. As a result, our analysts don't need to look at financial news or fundamental data -- but they can peek around the corner by looking at the price charts themselves.
Case in point: In fall 2012, the Nikkei was stuck in a three-year rut, and Japan's just-released GDP numbers revealed a 3.5% economic contraction. This was hardly the time for a bullish forecast. But on Nov. 2, 2012, EWI's Asian-Pacific Financial Forecast
studied the Nikkei's Elliott wave patterns and told readers about a specific stock market correlation that was "bullish for Japanese stocks as a whole.
One month later, with the Nikkei still below 10,000, The Asian-Pacific Financial Forecast
reiterated its bold contrarian forecast and proclaimed that "long a sleeping giant, Japan will probably surprise the world in 2013.
These forecasts went against the grain of conventional opinion, the market fundamentals, and the financial media -- but they were spot-on. The Nikkei rocketed more than 70% from the initial forecast.
(Editor's note: Wave labels have been removed.)
"The [Nikkei] has continued advancing on lower momentum and volume than seen earlier in the rally. In addition, sentiment as measured by the Nikkei 225 Daily Sentiment Index, remains near elevated levels that have coincided with significant tops in the past. Thus, our main indicators are signaling that the rally since late 2012 is near its end."
And on May 21, two days before the Nikkei's massive fall, The Asian-Pacific Short Term Update
cautioned readers that "this rally is beginning to have that unsustainable vertical look to it.
So you didn't have to wait for after-the-fact explanations. The Nikkei's price charts were telling the whole story all along -- and EWI's Asian-Pacific market analysts were one step ahead of the trend the entire way.
You don't have to miss the next major move in the Nikkei. Put yourself ahead of the trend with EWI's comprehensive Asian-Pacific Financial Forecast Service, completely risk-free. Details>>
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The same wave analysis that accurately anticipated key moves in Japan's Nikkei can equip you to ride trends in China, India, Australia, Korea, and more.
Put three veteran analysts, including Robert Prechter, to work for you and get a critical perspective for any forward-thinking Asian-Pacific investor.