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U.S. Stocks: This Major Group of Investors is Sending a Signal

The same indicator has helped our analysts to identify ends of rallies many times before

by Bob Stokes
Updated: August 04, 2020

Elliott Wave International's analysts have long noted that governments tend to commit to a financial trend just when it's about to reverse.

There's also another big group of investors that you need to watch: overseas buyers.

As EWI president Robert Prechter explained years ago in his book Prechter's Perspective:

For decades, heavy foreign buying in the U.S. stock market has served as an excellent indicator of major tops.

Indeed, this observation has served subscribers to Prechter's monthly Elliott Wave Theorist well. For example, in the late 1980s, after years of disinterest, foreigners became net buyers of Japanese stocks. The Theorist used the inflow of overseas money to identify the termination phase of one of the biggest bull markets in history.

And, in August 2007, the Elliott Wave Financial Forecast, another monthly publication which is part of our flagship investor package, showed this chart and said:

ForeignersFlock

This chart of the Dow and foreigners' net purchases of U.S. equities shows how the correlation held for U.S. shares through the bull market of the 1990s. After briefly fleeing the U.S. market in a record net selling month last December, foreigners jumped into the U.S. market like never before in May. The new record was a full third higher than the old one, which was set in February 2000, one month after the Dow Industrials' 2000 peak and one month before the NASDAQ's all-time high. The first five months of the year produced what was easily the biggest gusher of net foreign buying in history.

Well, as you probably know, the DJIA topped in October 2007 -- just two months after that analysis.

There's a good reason for sharing these insights about overseas equity purchases at this time.

You see, our new, August Elliott Wave Financial Forecast presents a chart of overseas purchases of U.S. stocks that every market participant should ponder.

You are invited to review this chart, along with our updated Elliott wave analysis of the stock market, without risking a penny for 30 days.

Learn more by following the link below.

NASDAQ: Get Timely Insights – Now

Almost every stock market investor knows that the tech-heavy NASDAQ has been on a tear.

Yet, the big question is: What's next?

Our just-published August Elliott Wave Financial Forecast starts off with a special section that goes a long way toward answering that question.

Here's a brief quote:

There is an important difference between ... 2000 and 2020.

Of course, as you probably know, the year 2000 marked a milestone peak in the NASDAQ.

Learn about that "difference" and why it's important -- plus, get our insights into the stock market's Elliott wave pattern.

EWI happily offers a risk-free trial -- follow the link below to get the details.

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Chipotle 70%-plus Rally to Record Highs Was on the Menu -- Back in March!

"It's important to … look at the bigger picture. This stock is still on course for much higher prices." That was our forecast for Chipotle, in March 2020. Now see what happened in the months that followed.

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