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A Revealing Insight into the "Personality" of the Stock Market's Unfolding Elliott Wave

In the stock market, this "has risen to the highest extreme since December-January"

by Bob Stokes
Updated: August 20, 2019

Each Elliott wave has its own "personality."

As you may know, the Wave Principle's basic pattern consists of five waves in the direction of the next larger degree of trend, and three corrective waves. Here are illustrations of that basic pattern in bull and bear markets:


Each wave reflects the dominant investor mood and accompanying price trend. For example, the most powerful wave in both bull and bear markets is wave 3. Strong price moves on high volume will most likely unfold during this wave. So, of course, that means major advances in a bull market and big declines in a bear market. That's just one example of what is meant by a wave's personality.

Now, let's get a glimpse of the stock market's current wave personality from our Aug. 16 U.S. Short Term Update:

The measure of volume in puts and calls on indexes and on individual equities has risen to the highest extreme since December-January. [The current wave is] attended by a psychology as emotional as that of a fifth wave.

Keep in mind that a fifth wave is an ending wave. Likewise, the wave now in progress is an ending wave. And, we've observed that ending waves tend to be highly emotional.

But, as the saying goes, "you ain't seen nothing yet."

That issue of the U.S. Short Term Update also notes:

These measures as well as others should become even more extreme by the time the [current] wave terminates.

So, obviously, this statement implies that the current wave is not over. However, given that it's an ending wave, expect a change of trend when it does terminate.

Our Financial Forecast Service, which includes the U.S. Short Term Update, gives you more insight into the current wave, how long it's expected to last and what we anticipate after it terminates.

Prepare for what we see ahead.

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Countertrend Moves Fool Lots of Investors: Don't Be One of Them

There are two kinds of financial market trends: the main trend and the countertrend.

When an investor gets the two mixed up, that investor is -- in a word -- lost.

The beauty of the Elliott wave model is that it identifies the main trend. So, investors who use the model will know that price moves in the opposite direction are countertrend, not the start of a new trend. When a new trend does start, the Elliott wave model is useful in identifying those turns as well.

All that said: EWI anticipates big moves in the stock market over the next two years -- in both directions!

Know which price move is in the direction of the main trend -- and which is not.

This one insight alone could make or break your portfolio.

Learn how to get this insight, and many others, without any obligation. Look below for details …

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