Elliott Wave InternationalmyEWISocioniomics.Net
Home > Stocks

Stocks: Why Is "Good News" from Greece Not Good Enough for Investors?
The answer begins with knowing that the stock market is not moved by cold logic

By Vadim Pokhlebkin
Wed, 22 Feb 2012 14:00:00 ET
Add to Facebook Add to Twitter Email to a friend Printer Friendly

The February 21 agreement to bail out Greece came and went -- and investors are left wondering. Many think they need to weigh all the possible effects (good and bad) which this new development may have on the stock market. These headlines capture the uncertainty: 

  • "US Stock Futures Rise On Back Of Greece Bailout Deal"
  • "European stocks rise on Greek bailout hopes"
  • "London midday: Stocks continue to fall after Greek bailout"
  • "European Stocks Decline After Greek Bailout Agreement"
Wondering what we at EWI think about the Greek bailout effect on the market?
From an Elliott wave perspective, the answer is… well, this is the wrong question to ask.
This chart of the S&P 500 helps explain why. It shows you what happened after the previous two Greek bailouts:
That's right: Stocks fell after Greek bailouts #1 and #2. Our own Monday-Wednesday-Friday Short Term Update said this on February 10 when it showed the chart above:
"First comes the deal, then come the riots -- and rumination about why it will never work."
Why do you think investors lost heart after the previous two bailouts? After all, the European Union authorities have shown a strong commitment to not let Greece default. So, why worry?
The answer begins with the understanding of the Elliott Wave Principle's main idea: Markets are not moved by logic. The crowd's collective bias -- bullish or bearish -- is what creates broad market trends. Remember the 2007-2009 stock market crash, when the world's financial authorities threw everything they had at the crisis but stocks kept crashing anyway? When social mood turns negative, no amount of "good news" matters.
How do you know which bias the crowd has today?
You have to see the larger Elliott wave picture in stocks to answer that. You can do that now in the latest issues of our two flagship publications -- the February 2012 Elliott Wave Financial Forecast and Robert Prechter's just-published February Elliott Wave Theorist.  

Read them both online instantly via this risk-free offer to save 24% >>

Your risk-free subscription saves you 24% and gets you instant online access to:

1. Short Term Update (Mon, Wed, Fri)
You get latest forecasts 3 times a week, after the close.
2. Elliott Wave Financial Forecast (Monthly)
Tracks intermediate-term patterns in U.S. markets.
3. Elliott Wave Theorist (Monthly)
Prechter's cutting-edge view into when, where, and why the waves are unfolding.
Plus, Subscriber-Only Extras -- FREE
Advanced Elliott wave tutorial, classic EWI reports, market update videos, Message Board Q&As, educational tools, and more. Best of all, it's completely free.


Rating: - based on [18 rating(s)]
Rate this content:

FFSEWI's Financial Forecast Service equips you to think, trade and invest independently from the crowd. Here's what you'll get, risk-free:
  • Short Term Update -- Intensive forecasts and analysis 3x/week for U.S. stocks, gold, silver, bonds and the U.S. dollar.
  • Financial Forecast -- In-depth, intermediate-term perspective on U.S. stocks, gold, silver, bonds and the U.S. dollar.
  • Theorist -- Bob Prechter's monthly big-picture insights.
Get complete details and start your risk-free trial today >>
Free Video Course
Learn the Why, What and How of Elliott Wave Analysis

Financial media use news and economic events to explain market moves. Steer clear of this misguided approach. Take part in the Elliott Wave Crash Course to learn what really moves the markets.

© 2016 Elliott Wave International
TRUSTe online privacy certification

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.