Insights into This “Old Faithful” Indicator of Financial Peaks
Here’s when “supposedly informed corporate officers take the bait”
by Bob Stokes
Updated: March 07, 2023
Some stock market indicators have proven themselves market cycle after market cycle.
For example, one indicator which has stood the test of time is a jump in the level of foreign buying near or at a stock market top -- and that can be in any country. Right now, we're talking about the U.S., but looking back a few decades, it also occurred in Japan at the end of the 1980s.
Another Old Faithful indicator of financial peaks is an extreme in the zeal with which corporations buy back their own shares.
Our April 2022 Elliott Wave Financial Forecast noted:
Companies usually buy back their own shares at a record pace near major market peaks.
As historical examples, new extremes in quarterly S&P buybacks occurred around the time of the stock market peaks in the first quarter of 2000 and the third quarter of 2007. Another extreme accompanied the Dow and S&P tops in the first quarter of 2022.
Our just-published March Elliott Wave Financial Forecast provides an update with this chart and commentary:
[Here's an] Old Faithful indicator... a new monthly record of $131.5 billion of announced buybacks in January. This total is even higher than that of January 2021 and January 2022. It was also close to half of the record three-month total in the first quarter of 2022. As the Elliott Wave Financial Forecast said in April, "At the end of the greatest stock market advances, supposedly informed corporate officers take the bait."
Financial optimism is running so high that even a new tax has not slowed corporate officers from buying back shares. Here's a March 2 news item from the Wall Street Journal:
Executives largely shrugged off a new 1% tax on stock buybacks as the cost of doing business.
Keep in mind that the level of corporate buybacks is not a short-term timing tool for the stock market.
It's best to consult the market's Elliott wave pattern for insights into specific and important price junctures.
You can get those Elliott wave insights by following the link below.
Many Investors Focus on “Casino-Style” Bets
When people comment that Wall Street is just one big casino -- they're making the point that investing is risky.
Yet, a sizeable number of investors are, in effect, making bets.
Our just-published March Elliott Wave Financial Forecast describes what's been going on -- and says these bets will likely lead to a spike in stock market volatility.
Get the full story -- plus, get our Elliott wave analysis of U.S. stocks, bonds, gold, silver, the U.S. dollar and more, as you follow the link below.
Lockheed's (LMT) "Waterfall Decline" from Record Highs Fits Elliott Wave "Form" to a T
On April 18, aerospace/military defense giant and Big Board listee Lockheed Martin (LMT) soared to its highest level in its 28-year history. Where "fundamental" analysis was shapeless, Elliott wave analysis saw the stock's current form, and its price future.
Forget the Fed -- Watch the Waves
The Federal Reserve, and to a lesser degree the European Central Bank, have dominated the conversation about interest rates lately. But watch our Interest Rates Pro Service analyst Ivo Zhelev apply textbook Elliott waves to forecast the price of the UK's Long Gilt -- and, by extension, UK interest rates -- without a single glance at central bank statements.
Why a U.S. Recession May Foil Economists’ Expectations
A recent survey reveals positive expectations for the economy by a group of "professional forecasters." Learn why you may not want to bet the farm on that expectation. This chart compares leading economic indicators around the time of past recessions with what's going on now.