EWT | The Elliott Wave Theorist
Editor: Robert Prechter
Published since: 1979
Markets: U.S. focus
Scope: Medium to long term
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Published continuously since 1979, Robert Prechter's Elliott Wave Theorist is more than the most-trusted, longest-lasting Elliott wave letter on the planet. It's guaranteed to be the most thought-provoking, well-researched and insightful 10 pages of commentary you read each month.
Every issue of the Theorist delivers a uniquely independent perspective on today's market activity.
Prechter has no living peer as an Elliott wave practitioner. From a record-breaking 444% gain in the U.S. Trading Championship to shockingly accurate, blow-by-blow forecasts of the ongoing global debt crisis, the predictive power of the Wave Principle speaks for itself.
Prechter's Theorist is the resource that will help you anticipate important trend changes in finance, macroeconomics, business, politics, entertainment, demographics and beyond – insights that can help you identify lucrative investment opportunities and avoid dangerous market risks.
The scope is wide, the content profound and the relevance universal. Whether you're an investor, community leader, executive or entrepreneur, The Elliott Wave Theorist reveals analytical insights that will help you survive and prosper both financially and physically in any market or social environment.
Put a Long History of Prescient
Forecasts on Your Side
In November 1978, the Dow Industrials stood at 790. But the brash forecast in Prechter and Frost's Elliott Wave Principle called for a Great Bull Market in the 1980s. It became a Wall Street best seller.
Since 1979, this book and The Elliott Wave Theorist have been the definitive leaders in Elliott wave analysis.
As a new Theorist subscriber, you get a FREE hardback copy (248 pages) delivered directly to your doorstep (plus a complete online version).
Prechter began publishing and distributing Elliott wave analysis in 1976 as a technical market specialist with the Merrill Lynch Market Analysis Department in New York, under the mentorship of Wall Street legend Bob Farrell. Since then, Prechter's Theorist – now the flagship publication of his research firm Elliott Wave International – has reached tens of thousands of subscribers in more than 100 countries.
The Theorist debuted in 1979 and has made Prechter one of the most well-known market analysts in the business. His contrarian perspective attracts criticism from the mainstream financial establishment. His matter-of-fact, myth-busting approach to market analysis makes him an icon to his subscribers. His ability to show the perfect chart at the perfect time is unmatched in the industry. And his long history of prescient forecasts cements his renowned status in the financial world.
In the midst of the extremely bearish environment of the late '70s, Prechter and fellow Elliott wave analyst A.J. Frost went against the herd with their book, Elliott Wave Principle – Key to Market Behavior, which predicted a roaring bull market for the 1980s. Today the Wall Street classic, called by reviewers "the definitive texbook on the Wave Principle," is required reading for any serious trader or technical analyst.
"Against a rising tide of doom and gloom, Prechter called for a powerful 1980s bull market," one media account says of Elliott Wave Principle. "He virtually stood alone as a stock market bull in 1982. The Dow was at 800, and he was calling for a rise to 3500-4000 and proclaiming the greatest bull market in history was coming."
The Elliott Wave Theorist in September 1982 called for the Dow to quintuple to nearly 4000 and on Oct. 6 announced, “Super bull market underway!” The Nov. 8 issue then graphed the forecast for the expected fifth wave up.
By the mid '80s the big bull market was in full force. The Theorist then turned its attention to the second half of the forecast from Elliott Wave Principle.
Make no mistake about it. The next few years will be profitable beyond your wildest imagination. Make sure you make it while the making is good. Tune your mind to 1924. Plan during these five years to make your fortune. Then be prepared to lock it up safely for the bad years that are sure to follow.
Excerpted from the November 1982 Elliott Wave Theorist
But as they did in the late '70s (when Prechter was uber bullish), the mainstream failed to recognize the significance of the Theorist's contrary outlook – until it was too late.
On Oct. 5, 1987, Prechter warned his subscribers.
Both investors and traders should sell now.
Excerpted from the October 1987 Elliott Wave Theorist
By then the investing public was drunk on stocks. Virtually everyone but Theorist followers had their portfolios positioned for ever-rising share prices. Almost no one was open to a contrary perspective. Consequently, the pundits who promoted Prechter as the Guru of the Decade turned on him. But even that Prechter anticipated years in advance.
I have no doubt that by the time this bull market is ending, our call for a huge crash ... will be laughed off the street. In fact, that's exactly what we should expect if there is to be any chance that we're right.
Excerpted from the August 1983 Elliott Wave Theorist
Two weeks later on Oct. 19, 1987, the Dow Industrials crashed 508 points (23%), crushing many individual investors' portfolios.
Longtime Elliott Wave Theorist subscribers are among an exclusive group of investors who were prepared to protect themselves from a market decline of that magnitude.
"I just want to say how much I appreciate the clarity of 'The Elliott Wave Theorist.' With a name like that I did not expect something so clear, so well presented and so practical." - Bruce C.
Catch and Ride Monumental Trends
You Will Not Hear About Elsewhere
As stocks and commodities fell precipitously through the end of 2007 and throughout 2008, you could hardly peruse a financial periodical or posting without reading about how “liquidity is driving up all the markets.” Yet this was not common knowledge back in 2002, when the Theorist first recognized and explained the developing trend – years before the mainstream experts caught on.
Later, the Theorist was the first to give the phenomenon a name: All the Same Markets.
Since then, the Theorist and other EWI publications have identified more than a dozen markets – from the Euro Stoxx 50 to China's CSI 300, even Emerging Markets and the World Stock Index (see second chart below) – that have followed a highly correlated, liquidity-driven trend. As usual, the Theorist shared eye-opening charts to show and tell the story no one else was talking about.
As shown in [the first chart], the Commodity Research Bureau (CRB) commodity index has tracked the S&P, with a slight lag, since mid-1998. Gold and silver have also joined in the latest stock rally. As I see it, this correlation means that most assets lately are moving up and down more or less together, probably as liquidity expands and contracts.
Excerpted from Conquer the Crash, 2002
This deeper, clearer understanding of a new trend in global liquidity explains how the Theorist can anticipate major trend changes in global stocks and commodities, and in turn give subscribers the information they need to position their portfolios for significant reversals in price.
For instance, in June 2008, with oil at $135 per barrel and mainstream "peak oil" experts calling for $200 and even $300 a barrel, the Theorist published this contrary forecast for oil.
One of the greatest commodity tops of all time is due very soon. Ideally, crude oil should end on a violent spike high in the $160-$189 range.
Excerpted from the June 2008 Elliott Wave Theorist
The next month oil spiked to an intraday high of $147. From there, prices tumbled 78% in five months, the biggest commodity drop ever.
No one saw the move in crude oil coming with the clarity and foresight of The Elliott Wave Theorist.
Whether it's in stocks, metals, commodities, bonds, crude oil or elsewhere, you can expect to read about the biggest risks and opportunities on the horizon in Prechter's Theorist – before they become news.
Just think: How might you benefit from anticipating major trend changes in the global markets and in society?
"I greatly enjoy reading The Elliott Wave Theorist and The Elliott Wave Financial Forecast every month. In fact, the clarity of your thoughts is so powerful that I typically read an issue at least a half dozen times."
Position Your Portfolio to Benefit
from the Big-Picture Perspective
Only the Theorist Can Provide
A New York Times best seller, Prechter's Conquer the Crash (2002), foresaw and explained the collapse in home prices, plunge in stocks, subprime debacle, liquidity crisis, the demise of Fannie and Freddie, the Federal Reserve's failure to turn the trend, and lots more – and that's only the first half of the book. The second half provides the "how to" and "should you" advice that will help you survive and prosper.
More than 100,000 people read Conquer the Crash in time to protect their wealth. As a new Theorist subscriber, you get a FREE hardback copy of the second edition (480 pages) delivered directly to your doorstep.
On the heels of the dot-com bust, Prechter published Conquer the Crash – You Can Survive and Prosper in a Deflationary Depression in 2002. It became an instant New York Times best-seller. But as stocks rallied off the 2002 lows, Prechter noticed something peculiar about the rally – namely, it was not "real."
Even as stocks priced in nominal U.S. dollar terms showed gains, stocks priced in real, tangible value (i.e., gold and commodities) were still crashing. In other words: Stocks priced in the amount of things you can buy with your shares never reclaimed their dot-com-era declines.
The mainstream media's most-trusted experts remained oblivious to the trend. Instead, they played the typical perma-bull cheerleader role as nominal stock prices skyrocketed through the mid-2000s. While grand forecasts for Dow 36,000 stole the headlines, in reality, a dangerous divergence between nominal and real prices was signaling a deepening secular bear market.
This rare divergence between nominal and real stock prices was an unmistakable signal to Elliott-minded investors.
In 2006, the Theorist updated readers about the dangerous state of real stock prices yet again in a special report called the "The Silent Crash and What Happens Next," which put the secular bear into historical perspective. The Theorist used these eye-opening charts to show and tell the story.
Had we, the United States, changed from paper money to real money in 1999, this is the exact picture that would be shown in The Wall Street Journal of the Dow Industrial Average since that time. Of course, that’s not going to happen any time soon. We are in a credit society, and that’s the way it is. The question is, what’s the ultimate resolution?
Excerpted from the December 2006 Elliott Wave Theorist
To answer this all-important question, Prechter looked to market history. He found an example from the early 1970s.
From the 1970 low to the peak in January of 1973, the Dow made a new all-time high. … So there was a lot of celebration. There was a headline in Barron’s that very week called, "Not a Bear Among Them." …
But if you look … you will see that the real value of stocks was falling during the end of that rally, and falling from a higher point way back in 1966-68. So you had declining values in real terms … with rising values in nominal terms. …
How did it resolve? It resolved with a collapse from January 1973 to December 1974, a 47 percent decline in the Dow, 49 percent on the S&P. In other words, the nominal prices played catch-up with the plunging prices in real terms.
Excerpted from the December 2006 Elliott Wave Theorist
The Theorist showed subscribers that the nominal bull market of the 2000s was in fact the last vestige of the greatest period of investor optimism in recorded human history. It would resolve itself in a similar outcome to the 1973-74 example, only on a much larger scale. The real decline began in 1999, and the nominal race to catch up began in earnest in August 2007. Global markets haven't been the same since.
It took 10 years for the mainstream to name this trend the "Lost Decade," but Theorist subscribers were prepared for it back in 2002 and updated in 2006. By the time mainstream experts caught on, it was several years too late – the Silent Crash was starting to make noise, and the Lost Decade was already 10 years old.
Just think: How could your portfolio have benefitted from advanced knowledge of the Lost Decade? Only Theorist subscribers are privy to this kind of big-picture market insight.
"Obviously it may take a hundred or two years, but at some point history will have no choice but to recognize the extreme importance and near (?) genius of your work."
- Joe S.
, Oak Lawn, IL
Spot Trends Early and Anticipate Once-In-A-Lifetime
Turning Points 99.9% of Investors Miss
After being bullish for most of the 1980s, The Elliott Wave Theorist recognized the technical indicators that said the upside was waning.
Two weeks before the 1987 crash, the Theorist recommended that traders and investors sell their long positions. But even Prechter didn't realize the magnitude of the imminent sell-off. In his very next Theorist, he made a candid admission.
My greatest professional disappointment is that we were not able to get positioned for the most profitable short sale in stock market history. Had I recognized [it,] we could have … profited as much in two weeks as we had in the previous nine months.
Excerpted from the November 1987 Elliott Wave Theorist
Yet followers of Prechter and the Elliott wave model of market forecasting, including billionaire trader Paul Tudor Jones, did take advantage of this epic shorting opportunity. The PBS documentary "Trader" shows Jones tripling his money during the crash using large short positions. Elliott wave analysis reportedly played a role in Jones' Black Monday trades.
Almost exactly 20 years later, the market offered Prechter a rare second chance to alert his readers to the biggest short trade ever – in fact, an even bigger one. This time he made it happen.
On July 17, 2007, Prechter published a half-page Special Interim Report with the following recommendation:
In July 2007, the Theorist recommended that aggressive traders take a fully leveraged short position in U.S. stocks. In February 2009, the Theorist recommended traders cover their shorts. The 19-month trade strategy netted the largest number of short-side S&P points ever.
Aggressive speculators should return to a fully leveraged short position now. We may be early by a couple of weeks, but the market has traced out the minimum expected rise, and that’s enough to act upon.
Excerpted from the July 2007 Interim Elliott Wave Theorist
Over the next several months, the crash started to unfold in nominal terms.
By February 2009, the S&P had plummeted more than 50%. Market pessimism was wide and deep. Most investors and their advisors were preparing for even steeper declines.
In trademark contrarian fashion, Prechter turned near-term bullish. He told subscribers to cover their shorts, locking in 800 downside S&P points, the largest number of points anyone has ever made, or will ever make, in the S&P futures in 19 months – maybe ever.
I recommend covering our short position at today’s close. ... Probabilities for further decline immediately ahead have shifted. … The market is compressed, and when it finds a bottom and rallies, it will be sharp and scary for anyone who is short. I would rather be early than late.
Excerpted from the Feb. 23, 2009, Elliott Wave Theorist
The next week, Prechter went on CNBC to call for a major turn to the upside.
It's getting crowded on the bear side. ... We've been in a short position for a long time; I recommended that people get out of it.
Quoted from Feb. 27, 2009, CNBC interview
That very day, S&P futures traders were a record 98% bears (only 2% bulls). In other words, the experts were telling you to sell at the worst possible time.
Just a few trading days later, on March 9, 2009, stocks bottomed and began a sharp and extended rally.
As far as we can tell, only Elliott-minded investors were alerted to this monumental turn – not to mention the once-in-a-lifetime opportunities that accompanied it.
"Your lucid writing makes complex subject matter, that most of us would never tackle, downright accessible. Thank you – you make us smarter."
Transcend the Limits of Conventional Analysis
to Make More Independent, More Confident
Decisions about Your Financial Future
Mainstream economists and market experts claim every day that asset prices react to major (and sometimes even minor) news items. Moreover, they claim that Black Swan events, such as terrorist attacks and financial scandals, shape market sentiment and drive price trends.
These canonical notions are false.
The Enron scandal is a good example. As early as 1998 and at least a half-dozen times before the scandal broke, the Theorist and other EWI publications warned investors specifically about a negative mood environment ripening for financial and social scandal – particularly in the area of corporate accounting.
The Theorist's sister publication, The Elliott Wave Financial Forecast, put it succinctly in July 2001 – just three months before the scandal broke in October.
The bull market's attendant accounting gimmicks will get a lot more ink as the blinding light of the new era gives way to sober reflection and recrimination.
Excerpted from the July 2001 Elliott Wave Financial Forecast
Let's be clear: Scandal cannot be defined as misdeeds themselves, which occur in secret. Scandal is the recognition of misdeeds, the outcry of recrimination and the public display of outrage. Yet when the Enron scandal broke, mainstream analysts immediately – and haphazardly – forecast that the "ripple effect" of the scandal would "discourage investors," "shred investors' faith" and "crush stock prices and eviscerate pension plans."
Consequently, many investors were advised to take a bearish stance and prepare for a negative near-term environment.
Prechter recognized this widespread outlook as utterly false. The Theorist set the record straight.
The graphic below reveals:
- Investors in general knew nothing about Enron's malpractice prior to or anytime during
the stock market's decline, and …
- Throughout the drama of the Enron scandal, the market advanced, and related psychological
This graphic shows the key events surrounding the Enron scandal plotted
the stock market's progress and two measures of investor sentiment.
Anyone who posits event causality in this instance is boxed into a corner. Given the facts before our eyes, he has no choice but to conclude that the Enron scandal was bullish for stock prices and that it caused investors' mood to improve! [emphasis added] ...
The only antidote to such perversity is the socionomic insight. ... The Enron scandal was not causal to any aspect of social mood whatsoever; it was a result of a change in social mood. ...
By the time the results of that negative mood trend brought the Enron scandal to light, the near-term negative mood trend was already ending. The S&P 500 completed five waves down on September 21, and it was time for the largest rally since the high in March 2000 (as forecast in The Elliott Wave Theorist on Sept. 11, 2001).
Excerpted from the June 2002 Elliott Wave Theorist
The Enron scandal is far from the only example.
Just a few months earlier, mainstream analysts published similar bearish forecasts in response to the Sept. 11, 2001, terrorist attacks, which, as indicated in the above chart, also occurred after stocks declined sharply for several months.
These examples – and countless others like them – lead to a conclusion that Prechter understood from the earliest days of his career: Social mood drives events, not the other way around.
This insight is not complex, yet it is counterintuitive – most people see the world the "other way around."
Once you grasp this insight, it transforms your ability to understand and anticipate every conceivable trend – both financially and socially. It's the secret weapon to the false notion that news predicts future circumstances, which invariably puts investors on the wrong side of the market at the worst possible time – right before major turning points.
To rely on conventional analysis and forecasting is to be woefully unprepared for major junctures, powerless to anticipate the waves of social mood and investor sentiment that drive society and the markets.
The Elliott Wave Theorist is the alternative that stands up to real-time scenarios.
Bob Prechter calls his social and financial forecasting model the socionomic insight. It explains how Theorist readers are prepared for more than major moves in the financial markets; but also for significant trends in society at large, including:
Turmoil and the eventual breakup of the European Union,
The vilification and increased taxation of the rich,
The character of shocking terrorist attacks like 9/11,
Declining U.S. birth rates,
Major bank failures worldwide,
New political parties gaining strength and press coverage,
Increasingly violent Mexican drug cartels,
Wars and destabilization in the Middle East,
State and local government bankruptcies,
A nationalistic dictator in Russia,
Rising political and social unrest,
And much, much more – all before they became the news they are today.
With The Elliott Wave Theorist, you will be able to see financial and social events – and their implications – through a clearer lens. Put simply, you will equip yourself to anticipate, prepare for and benefit from next month's news today.
"'Get Ready' for [The Theorist's] practical message of steps to take should the 'financial nuclear winter' come, and for it's short-range social predictions based upon socionomics."
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