RATE-ing In Vain: The Fed Is Not In Control
Bob Prechter reveals that interest rates do not drive stock prices

All Is Quiet On The Global Front -- For Now
Volatility index VIX may be telling us something important.

The financial news these days clearly shows that the world economy is on shaky ground. You'd think that because of that, the markets would be as jittery as some of the news anchors are. But they aren't. The DJIA, the world's benchmark stock index, has rallied since early February. And the Chicago Board Options Exchange’s VIX index (the "fear" index) also shows that the markets are not nervous. What does that tell us? Let's look at some historical evidence...

US Dollar Rally: On The Wings Of A Hawk?
Fed easy-money policy wasn't the reason for the dollar's weakness, nor is the Fed's latest move a reason for its strength.

Same Day. Same Event. Same Market. Different Story!
"There is no group more subjective than conventional analysts" -- Robert Prechter

Elliott wave analysts sometimes hear the criticism that patterns in market charts can be "open to interpretation." Does that happen? Absolutely. (Although, there are tools an Elliottician can always employ to firm up the wave count.) But here's the real question: What's the alternative? Here's Bob Prechter's take on it.

Where Few Dare To Tread
When the Fed can no longer keep interest rates down, the U.S. will have to face its demons.

What options do we have regarding U.S. deficits? President of the Federal Reserve Bank of Kansas City gave three of them in his February 16 speech: doing nothing, inflating our way out of at least some of the debt... but there was also a third option.

Robert Prechter on Herding and Markets' "Irony and Paradox"
To anyone new to socionomics, the stock market is saturated with paradox.

"Have you ever watched a dog interact with its owner? The dog repeatedly looks at the owner, taking cues constantly. The owner is the leader, and the dog is a pack animal alert for every cue of what the owner wants it to do. Participants in the stock market are doing something similar. They constantly watch their fellows, alert for every clue of what they will do next. The difference is that there is no leader. The crowd is the perceived leader, but it comprises nothing but followers. When there is no leader to set the course, the herd cues only off itself, making the mood of the herd the only factor directing its actions."

Forex: How to Trade Around Fed's Decisions on Interest Rates
You can navigate volatility on big news days with Elliott wave analysis

Around data releases, forex; traders often buy the U.S. dollar -- but then sell it just as quickly (or vice versa). Trading at such moments can be dangerous, but it helps if you know Elliott wave analysis. Watch this classic free 8-minute video where the editor of EWI's intensive Currency Specialty Service Jim Martens explains how.

Japan's Deflation: A Great Case Study For The U.S.
GDP growth can happen even amidst a deflationary collapse.

Can The Fed Ensure Economic Recovery? RATE-ing In Vain

EUR/USD (Forex): How to Forecast Market Moves Before They Occur
Not every Elliott wave forecast works out. But the method's objectivity still trumps most discussions about "market fundamentals."

News stories move the markets -- that's what just about every investor believes. But can you predict what the market will do before the news is released? Let's look at a fresh example: the actio in the EUR/USD on November 4, when the Federal Reserve Bank announced its latest decision on the U.S. interest rates.

No Slave To Fashion
It's the lack of monetary enforcement that will likely save Europe from overspending.

European Central Bank President Jean-Claude Trichet has proven throughout this financial crisis that he is his own man when it comes to navigating the euro-land banking system through the deflation and debt deleveraging storm. And will likely save Europe from overspending.

The New Carry Trade
How long the new "carry trade" funded by low U.S. interest rates may last?

As the recession has taken hold, short-term U.S. interest rates have been pushed down to .25% or lower. This encourages those who want to borrow to do so in U.S. dollars, which is exactly how the low Japanese interest rates of the past boom cycle encouraged borrowing in yen. But markets can move fast when they head down, and when a carry trade unwinds, few things move faster.

Illusion of Control: Central Banks and Interest Rates
A quick look at the right chart can make things crystal clear.

On October 6, the Reserve Bank of Australia surprised the global financial community with a .25% interest rate hike. Only 1 in 20 surveyed economists expected it. But if conventional economists would simply plot central banks’ decisions on a chart of bond yields, they would make a "shocking" discovery that could save them a lot of surprises...

The Fed Leaves Rates Unchanged: Now What?
Or, an even better question: So what?

What an interesting day of trading we saw in stocks on Wednesday (Sept. 23.) On the same day, we had: 1. A single event -- the Fed's interest rate announcement; 2. The stock market's bullish -- and -- bearish "reaction" to it, and 3. Several news stories explaining why stocks rallied -- and -- declined after the event. One question remains: Where will stocks go from here?

Interest Rates: Think Central Banks in Control? Think Again.
What do the Fed, European Central Bank and Reserve Bank of Australia have in common? Answer: They don't control interest rates.

If you believe that central banks' "potent directors" carefully watch economic indicators and deftly adjust interest rates accordingly, this will come as a shock: Central banks are no more in control of interest rates than they are of the weather. Three examples prove this point.

June 24 FOMC Meeting: Can the Fed Defeat the Bear?

t's Federal Open Market Committee time again. And, even before the June 24 meeting adjourned, word-parsers were dissecting the "minutes" like a high school biology student with a frog. In short: While everyone with a pulse guesses at the meaning of Bernanke-speak, ALL of them hope his words give the stock market something to celebrate.

Prechter on T-Bonds, THEN and NOW
Yes, Interest Rates DO Drive the Fed

That was in 2002. Jump ahead to 2008 and early 2009 -- we've seen the gargantuan size of the U.S. government's bailout schemes, and watched the Federal Reserve's unprecedented steps to keep interest rates low. Clearly the time had come for Prechter to focus again on government debt...

5 Markets Where the Wave Principle Forecasts Best -- and Why

Gold in particular follows the Wave Principle impeccably, at least in a world of fiat paper currencies. Gold is a wonderful reflector of the Wave Principle because unlike, say, pork bellies, it is traded by people around the globe, so the prime mover is the psychology of human beings at the most shared and basic level.

How to Trade Forex around Major News Releases
As the saying goes, you miss 100% of the shots you don't take.

Any experienced forex trader will tell you that trading currencies when a major economic report gets released can be treacherous. Probably the most infamous of all scheduled news releases -- infamous for its treachery, that is -- are the U.S. interest rate announcements by the Federal Reserve Bank. But market action on those days can also mean opportunity for a forex trader who is properly positioned BEFORE the announcement. Here are some thoughts on how to do that...

Europe: Not As Lucky As U.S.
The U.S. may be bankrupt, but the Treasury still enjoys robust bidding at every bond auction.

The United States enjoys funding its ever-increasing debt in its own currency as the dollar, for better or worse, remains the world’s reserve currency. Because the euro and the pound sterling do not enjoy this status, the smaller economies under the European Union's stability pact are having trouble attracting investors for government debt. The only answer is to offer higher yields in order to attract investors...