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Market Trend? See These 2 Charts
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By Susan C. Walker
Fri, 30 Sep 2011 15:30:00 ET |
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You can stare at short-term and medium-term price charts all day long, but if you want to get a good picture of where the markets are trending in the long term, then STEP AWAY from the price charts.
Instead, find a graphic that shows the President's economic approval rating. Look at how it's been trending. As our charts show, when President George W. Bush's economic approval headed downhill, so did the Dow. Now President Barack Obama's economic approval rating has dropped to the same low point that Bush's had in February 2008. Pete Kendall explains what this means in the September 2011 issue of The Elliott Wave Financial Forecast, which is excerpted below the charts.
CULTURAL TRENDS
[Excerpted from the September 2011 issue of The Elliott Wave Financial Forecast]
A quick transition toward a negative social mood is clearly visible in the political realm as well. The popularity of the U.S. president can be a useful indicator. In October 2007, for instance, the Dow was approaching its all-time peak when The Elliott Wave Financial Forecast pointed to a new low in George W. Bush’s popularity and speculated that the stock market would follow the president’s ratings to much lower levels. A market decline started a few days later.
Once again, the U.S. president’s approval rating is sliding fast. This week [August 29, 2011], a Gallup poll places him at a new low of 38%. “President Obama’s political implosion from supernova to deadened black hole” is even more pronounced than Bush’s. The chart shows the approval rate for his handling of the economy, which just plunged from 38% in May to 26% now, a point lower than where Bush’s rating was in February 2008 (vertical line on chart), just as the bear market started to bite. These ratings, amazingly, are a tad ahead of the stock market and are telling us the direction of the trend for equity prices.
In October 2007, we quoted pollster John Zogby as saying, “The mood is not just dark. What’s darker than dark?” Well, whatever it is, it’s even blacker now. It’s not uncommon for voters to be dissatisfied with Congress, but a majority has always liked their own Congressman. In every poll from 1977, when The New York Times started asking the question, to early August, more than 50% of respondents stated that they would vote for their own member of Congress. In early August, however, the percentage plunged to 41. Pollster Pat Caddell says Americans are “pre-revolutionary.”
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