Bull Splatter on Wall Street: Our Investigative Unit Covers the Scene

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Bull Splatter on Wall Street: Our Investigative Unit Covers the Scene
Most market "investigators" look in all the wrong places

By Bob Stokes
Tue, 08 May 2012 17:00:00 ET

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Elliott Wave International investigates financial markets as carefully as forensic experts comb a crime scene.

Forensics work is essential because the who, what and why of a crime might not be as it appears. What looks obvious often proves to be obviously wrong.

Even so, most stock market investigators base their assessment on the obvious. The prime example is the common reaction to news: "good" news is why the market is up. When news is "bad" the opposite applies.

But financial markets do not work that way.

So we do not base our market forecasts on earnings reports, European election results, jobless numbers, terrorist threats, housing starts, what Warren Buffet says (or does), what President Obama says (or does), what a prominent hedge fund manager says (or does), or anything that's external to the market itself.

Well then, how does the market work? The most important thing to know is that the market's price pattern is endogenously (internally) regulated; it unfolds in Elliott waves.

So we base our forecast on Elliott waves. We also use a variety of technical analytical tools. These allow us to understand the "market's forensics."

On April 30, the Dow Industrials had a 15-point decline after rallying for most of the previous three weeks. Prominent market observers were calling for the rally to continue. Even so, that day's Short Term Update said

Stocks had to turn down early this week under the current interpretation of the wave structure: so far, so good. While the point total of today's decline was not large, the most important aspect of the selloff is that the major stock indexes appear to have traced out five waves down from Friday's high.

Yes, we study short-term, intermediate and long term price patterns. But we also dig deep for market clues. The above analysis came from looking at a 10-minute chart:

As we know, the bears so far have enjoyed a good May.

But what's next? What about the bigger Elliott wave structure?

We've investigated and would like to share our findings with you via an offer to save 57% on our most popular forecasting package -- The Financial Forecast Service>>

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Tags: Elliott wave, fundamental analysis, market forecasts, S&P 500, technical analysis

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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.