THIS Is How Most Bear Markets Start
Does great economic news really portend a stock market boom? (Prepare to be surprised.)
by Bob Stokes
Updated: June 08, 2021
If you study stock market history to see when bear markets usually start in relation to economic news, you will find what Elliott Wave International has long shared with subscribers to be true.
Our June Elliott Wave Financial Forecast reiterates that point with this display and commentary:
We"ve said it before: "Bull markets tend to end on great news." It bears repeating now because as our collage of headlines illustrates, expectations of a booming economy have seldom been more pronounced. According to Bank of America"s global fund manager survey for May, "investors were increasingly positioned to what it called "boom expectations"--with exposure to commodities, banks, materials, industrial and emerging market assets at highs relative to the last decade." A record 69% of respondents expect "above trend growth."
Investors have read of such glowing economic scenarios before -- more than once.
This is from our August 2007 Elliott Wave Financial Forecast:
The economic outlook portrayed in several articles rivals the talk of a "new era" economy that reigned as stocks topped in 2000. Here are the headlines depicting this latest version of economic nirvana:
The Greatest Economic Boom Ever
--Fortune, July 12, 2007
The Best Economy Ever
--The Wall Street Journal, July 31, 2007
As you may recall, the stock market went on to top some two months after the August 2007 Elliott Wave Financial Forecast published.
Positive economic headlines might persist for a time before a bull market ends, so investors may want to consult the Elliott wave model for precision.
As Frost & Prechter"s Wall Street classic, Elliott Wave Principle: Key to Market Behavior, says:
It is our practice to try to determine in advance where the next move will likely take the market. One advantage of setting a target is that it gives a sort of backdrop against which to monitor the market"s actual path.
Learn about the price targets that our analysts are sharing with subscribers inside our flagship investor package.
You can gain instant access by following the link below.
Are You Expecting a "Normal" Pullback in the Stock Market?
If the answer is "yes"... beware.
In EWI's view, this is a high-risk strategy. Why?
Well, there is no such thing as "normal" in the stock market -- only patterns that unfold as part of a fascinating fractal.
EWI's job is to analyze the fractal patterns and provide you with our best conclusions.
Learn exactly what EWI's analysts are telling subscribers about what they anticipate next for stocks.
Look below to get started right away.
Commodity prices have taken a tumble during the past several days. A financial website says the decline is due to the "China crackdown" and "rising dollar." Yet, Elliott wave analysis foretold of the price drop when commodities were still rallying. Take a look at this chart.
See the Trader’s Classroom forecast and Elliott wave pattern that anticipated a rally which saw US Steel nearly double in price.
Ever heard of the acronym FOBI? It was coined here at Elliott Wave International and stands for the "fear of being in." Yes, just the opposite of the better-known acronym FOMO (fear of missing out). Here's an explanation.