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Before Sell-Off, This Indicator Posted Its “Largest 1-Day Jump” in 10 Years

A revealing perspective on the stock market… and the “unexpected”

by Bob Stokes
Updated: March 05, 2020

Most investors are surprised when a big trend turn occurs in the stock market.

A big reason why is because most market participants tend to linearly extrapolate the current trend into the future. Indeed, instead of getting cautious as a trend persists, they tend to do the opposite and ramp up their expectations. This applies during both down- and uptrends.

Let's first look at an example when the stock market had been in a major downtrend. As you'll recall, the market's last major bottom occurred in March 2009. The then bear market had been going on for 17 months.

Just days before the bottom, these headlines published:

  • Dividends Falling - No Bottom in Sight (Seeking Alpha, Feb. 24, 2009)
  • The Dow's Bearing -- 6,000 and Under (CNBC, March 2, 2009)

As you can tell, these headlines reflected expectations that the bear market would persist. Instead, March 2009 marked the "lift off" of the longest bull market in history.

Yes, big trend turns usually happen just when stock market expectations reach extremes.

Now, let's look at expanding bullish expectations, and not just among retail investors.

Our February 2020 Elliott Wave Financial Forecast showed this chart and said:

ExpandingExpectations

The chart shows a bullish surge within [a] class of investment professionals, research analysts. According to SentimenTrader, analysts upgraded price objectives on a net 169 stocks on January 7, which is the largest one-day jump in the ten-year history of the indicator. So, analysts are chasing the rally, too.

Of course, as we know, those "expanding expectations" were thoroughly dashed.

So, what are mainstream analysts saying now?

Well, here's a March 3 headline from a major financial publication (Investor's Business Daily):

You Just Got A Second Chance At 10 Top Stocks, Analysts Say

In other words, buy the dip.

These analysts may turn out to be right. Then again, we urge you to review what our Elliott wave experts expect next for stocks. See, instead of chasing market "fundamentals" -- which are almost always one step behind, bullish near tops and bearish near bottoms -- Elliott waves let you track the waves of investor psychology, the true driver of stock market trends.

You can see what the waves are showing next right now, without risking a penny. Follow the link below to learn more.

U.S. Stocks: Damage Already Done … Or, Just Beginning?

Of course, that’s the $64,000 question: and the Elliott wave model can show you a credible answer.

You see, decades of market observation reveal that the stock market’s price patterns repeat at all degrees of trend. In turn, these patterns are predictable.

Right now, EWI’s analysts are delivering their near-term forecasts for U.S. stocks to subscribers.

Prepare for what they expect next by reviewing their market forecasts risk-free for 30 days.

Follow the link below to get started now.


Elliott Wave International’s Financial Forecast Service

All month long, FFS shows you the patterns in U.S. stock indexes, bonds, gold, silver, the U.S. dollar, as well as market psychology and cultural trends. We show you where the trend is now, and when prices should turn -- specifically, we show the pattern at multiple degrees of trend, with precise risk/reward calculations. If you have fewer surprises, you can be better prepared.

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Subscribe now and read the current issues.


 

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Your Financial Forecast Service Team Helps Put YOU in Control of the Market’s Trends and Turns


Your Financial Forecast Service guides -- three of the best-known market analysts in the world:

  1. 1. Robert Prechter, Author of 16 market-related books, New York Times Best-Selling Author and Editor of Elliott Wave Theorist
  2. 2. Steven Hochberg, Editor of the Short Term Update and Co-editor of The Elliott Wave Financial Forecast
  3. 3. Peter Kendall, Author of The Mania Chronicles and Co-editor of The Elliott Wave Financial Forecast

As featured in:



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