Elliott Wave InternationalmyEWISocioniomics.Net
Home > European Markets

European Sovereign Debt: Crisis Over for Europe's Markets in 2011?
Answer: Seems to Depend on the Day

By Bob Stokes
Fri, 18 Feb 2011 17:30:00 ET
Add to Facebook Add to Twitter Email to a friend Printer Friendly

The latest price action of European bourses raises the all-important question of what drives financial market trends.
 
Let's begin with what does not drive the buy and sell decisions of investors in freely traded markets. Consider this headline about European markets from CNBC (Feb. 17):
 
"European Shares Hover Near 29-Month Closing High"
 
Another mainstream financial website headline offers the apparent reason:
 
"European stocks gain, buoyed by U.S. data"
 
The article went on to report:
 
"European stocks eked out gains...as upbeat manufacturing data from the U.S. boosted sentiment late in the trading session, helping the markets erase earlier losses."
 
But consider this headline from the very same website, published just a week earlier (Feb. 10):
 
"Debt fears sink Europe..."
 
That earlier article went on to report:
 
"Renewed worries over the euro zone’s sovereign debt problems weighed down European stock markets..."
 
So the question becomes: Is U.S. manufacturing data so influential that within only a few days time, it totally trumps the worries over Europe's debt problems? "No" is the obvious answer. The notion that news drives markets violates logic and common sense.
 
What actually does drive the price trends of European bourses (and other financial markets)? Here's what Robert Prechter offers in the February Elliott Wave Theorist:
 
"Elliott waves regulate mass psychology."
 
Brian Whitmer, editor of the European Financial Forecast, fully understands the role of Elliott waves, mass psychology, and price trends. Here's what he wrote in the February European Financial Forecast:
 
"[Europe's] stock investors sit in a state of suspended exhilaration. The last few drops of anxiety have left the market, and the bulls remain as convinced as ever that stocks represent a one-way upward path...Politicians in the eurozone are busy hammering out new and improved plans to deal with future financial crises."
 
Indeed, the January 31-February 6 issue of Bloomberg Businessweek features a currency story with this headline: "Where Have All the Euro Bears Gone?"
Here's a quote:
 
"Speculators placing bets against the euro are retreating in the face of tough talk from German Chancellor Angela Merkel. Traders are starting to believe her when she says Germany will do whatever it takes to safeguard Europe's common currency."
 
But do politicians drive market trends? No more so than does the latest U.S. manufacturing data or European sovereign debt.
 
European Financial ForecastUnderstand what really is driving the European markets, when you read the latest European Financial Forecast -- risk-free. When you do, you'll gain instant access to Brian Whitmer's NEW 32-minute webinar recording.
 
Brian talks about the DAX, FTSE, CAC and Eurostoxx. You'll also hear his unconventional commentary on the sovereign debt crises, currencies, deflation, and more.
 

Rating: - based on [13 rating(s)]
Rate this content:
  


EFFThe European Financial Forecast gives you an invaluable big-picture outlook for major European bourses to give you an edge over the investing herd.

Each monthly 10-page issue gives you timely, Elliott wave analysis and forecasts of the DAX, FTSE, CAC, Euro Stoxx 50 and more, plus commentary on economic and social trends.

Preview the Latest European Financial Forecast Now>>
Free Report


The European Debt Crisis

The European Debt Crisis is affecting investments across the globe. Our new free report offers commentary from February 2010 through November 2011 that will help you to better understand what could be in store in the coming months and years.
Download your FREE report now.

European Markets


© 2014 Elliott Wave International

The Elliott Wave Principle is a detailed description of how financial markets behave. The description reveals that mass psychology swings from pessimism to optimism and back in a natural sequence, creating specific Elliott wave patterns in price movements. Each pattern has implications regarding the position of the market within its overall progression, past, present and future. The purpose of Elliott Wave International’s market-oriented publications is to outline the progress of markets in terms of the Wave Principle and to educate interested parties in the successful application of the Wave Principle. While a course of conduct regarding investments can be formulated from such application of the Wave Principle, at no time will Elliott Wave International make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. Investing carries risk of losses, and trading futures or options is especially risky because these instruments are highly leveraged, and traders can lose more than their initial margin funds. Information provided by Elliott Wave International is expressed in good faith, but it is not guaranteed. The market service that never makes mistakes does not exist. Long-term success trading or investing in the markets demands recognition of the fact that error and uncertainty are part of any effort to assess future probabilities. Please ask your broker or your advisor to explain all risks to you before making any trading and investing decisions.