Bloomberg TV's Bernard Lo recently interviewed Mark Galasiewski, Elliott Wave International's Asian-Pacific Financial Forecast editor, about his outlook for Asian stocks. (You can find the interview in the EWI Press Room.) Lo began the interview with this comment:
"Last year [EWI] recommended going long just before the markets started recovering, so if you listened, you made money."
Not all of our forecasts hit the nail on the head, but this one certainly did, just as Lo pointed out. Major Asian markets have experienced a robust rally since last year's March low. Here is an excerpt from the February 2010 Asian-Pacific Financial Forecast that explains Galasiewski's prediction and shows you how neatly it unfolded.
Is the rally in Asia over? In Global Market Perspective, the same analysis that predicted the Asian rally gives you coverage of all major Asian markets like the MSCI Asia-Pacific Index so you can be one step ahead of the trend. Learn more >>
Excerpted from the Asian-Pacific Financial Forecast published January 29, 2010
We turned bullish on Asian-Pacific markets in March 2009. It was a forecast that few could even imagine at the time. In early 2009, the Asia-Pacific region was still trying to make sense of a host of negative events in late 2008:
- Singapore’s 2008 Q4 GDP had fallen 16% year over year, the worst decline in the nation’s history.
- Taiwan’s monthly exports in December had collapsed 42% year over year, their steepest fall on record.
- The number of job advertisements in major Australian newspapers had plunged at its fastest rate ever.
- Business and consumer confidence in Japan was at all-time lows.
- India was tending its wounds after a team of Islamic terrorists went on a killing spree in downtown Mumbai.
But to followers of the Wave Principle, those events made complete sense. We knew that the negative headlines were a product of the collapsing mood of the period, and we even showed how similar events in the past had in fact been bullish signals from a contrarian perspective. In the March 2009 issue, we showed how pattern, price, time and sentiment considerations in the region’s major indexes were pointing to the end of the declines from their 2007 or 2008 highs and alerted subscribers that a “massive rally could ensue in the near future.”
We formally turned bullish on the region in a special Interim Report on the SENSEX, dated March 23, 2009, in which we said that India’s stock market in particular “may offer investors a rewarding long-term opportunity.”
(Editor's Note: Some of the labels have been removed)
In the April 2009 issue, we then showed how pattern, price, momentum and sentiment conditions in the MSCI Asia-Pacific Index had confirmed our bullish view for the major regional indexes…. As prices broke out from the trend channel that had contained the index’s decline, we targeted the 38% retracement of the decline near 100 on log scale as a “likely minimum target” for the advance with other possible targets near 110 and 122 (the 50% and 62.8% retracements). As the index moved higher and eventually exceeded those levels, we correctly identified that higher prices lay ahead.
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