Related Topics
Stocks , US Markets
Share This Page         

U.S. Stocks: What to Make of This “Back Up the Truck!” Optimism

Bull markets tend to end not on bad news but on great news.

by Bob Stokes
Updated: December 17, 2019

'Tis the season to be extremely joyful about the stock market, at least according to some observers.

Indeed, a Dec. 13 Marketwatch headline echoed the sentiment of a bank's chief financial economist:

'Back up the truck and buy, buy, buy'

The article goes on to mention the stated reasons for such a strong endorsement of stocks:

...a pair of geopolitical risks -- an elusive U.S.-China trade deal and yearslong wrangling over Brexit -- "thought to be strangling world economic growth" incredibly look to be getting resolved in a "big, big way."

But, investors would do well to reflect on these words from the Elliott Wave Theorist:

Bull markets tend to end not on bad news but on great news.

Recent financial history provides evidence to support this assertion.

Consider this CNBC headline from Jan. 12, 2018:

Trump economy's sustained growth pace unlike anything seen in 13 years

Well, two weeks after that great news, the DJIA topped and then lost about 10% of its value in just two weeks.

No, this was not an outright bear market, but it was a violent correction that took the majority of investors by surprise. You see, the Jan. 22, 2018 Daily Sentiment Index (trade-futures.com) registered 96% bulls for S&P futures, a then record going back to the start of the data in April 1987.

Of course, the last big bear market lasted from 2007 to 2009.

Just days before the historic 2007 top, the "back up the truck and buy, buy, buy" psychology was evident then too. Our October 2007 Elliott Wave Financial Forecast said:

According to one media account, "U.S. investors are returning from summer vacation to the cheapest stock market in almost 12 years, and some of the biggest fund managers say they're ready to load up on shares."

The stock market went on to surrender more than half of its value.

Of course, today's "back up the truck" mentality doesn't guarantee that stocks will immediately begin another historic slide or even a 10% correction.

However, our Elliott wave experts do have a message that you don't want to miss.

Look below to get started with our risk-free trial.

You Can Know What All of Wall Street Wants to Know …

...Namely, "What's driving the stock market now?"

That's the question Wall Street money managers and Main Street investors alike want answered.

The problem is: Most speculators look to the headlines for their answer. They're searching for the "trigger" that reveals the direction of prices.

But, EWI's extensive research reveals that news does not drive the stock market's trend.

What does?

The answer is: collective investor psychology. That's the insight that every investor, whether on Wall or Main Street, is seeking.

You see, Elliott waves reflect the repetitive patterns of this collective psychology. In other words, when an investor knows the message of the stock market's Elliott wave pattern, that investor can prepare for what's next with a high degree of confidence.

Learn what our analysts are saying about the Elliott wave pattern of the main stock indexes, risk-free for 30 days.

Coronavirus: Opportunities in the Chaos

Is the coronavirus really to blame for market mayhem? Might the chaos present opportunities for astute investors? EWI's Chief Asian-Pacific Analyst Mark Galasiewski and Socionomics Institute Director Matt Lampert explain how you can get answers.

Coronavirus: One reason NOT to Panic

Did you know that the largest two epidemics of the past two decades -- SARS and Swine Flu -- did not crash the stock market. In fact… well, we won't spoil the surprise. Watch our Asian-Pacific market expert, Mark Galasiewski, explain why the coronavirus outbreak may not be "bad news" for investors.

Junk Bonds: 2 “Golden” Junctures

The “golden ratio” is often found in the chart patterns of financial markets and often marks a key juncture. EWI’s Head of Global Research pinpoints not only one, but two “golden ratio” junctures in this chart.