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Global Stocks: Don't They Always Move in Sync?
Different markets? Expect different Elliott wave patterns.
As you learn Elliott wave analysis, at some point you'll start to do your own wave counts. That's when you may discover that sometimes, the counts in different -- but related -- markets don't quite "line up."
That can be a puzzling moment. After all, shouldn't related markets move in sync? We often receive this question at EWI's Message Board from subscribers who read both our U.S.-focused publications and also those focused stocks in Asia or Europe.
For answers, let's turn to Chris Carolan and Mark Galasiewski, editors of our Asian-Pacific Financial Forecast Service.
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Chris Carolan
The Asian-Pacific Short Term Update
March 15, 2009, excerpt
A great crash with all of the characteristics of third waves engulfed all of the world's equity markets in 2008. Following that crash, a corrective period of extended back-and-forth price movements, marked by decreasing volatility, also occurred uniformly in all markets. In many cases, it took the form of an Elliott wave pattern called a triangle -- yet in others, the specific rules of a triangle formation did not apply.
What was clear, though, is that some type of a fourth-wave correction was at work. And the Wave Principle is clear on that: As a fourth wave ends, look for a fifth wave move lower (while acknowledging that it can be short and sharp). Again, the global stock markets fulfilled our expectations as prices broke lower. That's despite the fact that there were individual differences in Elliott wave patterns across the globe.
We now have a situation where a technically healthy rally is unfolding across many markets from deeply oversold conditions. Some stock indices have completed important five-wave declining structures, covering many months and large percentages. Yet there are other indices where we can "fit" similar structures through application of the Wave Principle's "right-look" guidelines, to give us a more uniform outlook across the region.
Mark Galasiewski
The Asian-Pacific Financial Forecast
April 2009, excerpt
During the U.S. bear market from January 1966 to July 1982, the DJIA lost 14%. Over the same period, Japan’s Nikkei 225 gained 389% and India’s stock market gained 233%. Smaller markets such as Hong Kong and Singapore achieved even bigger gains.
In the words of Bob Prechter, "[The major world indexes] tend to ebb and flow together, but that doesn’t mean that their structures are exactly the same." Those words aptly describe the present relationship of Asian-Pacific markets compared with those in other parts of the world, including the United States.