Why This “Excellent” Stock Market Indicator Should Be on Your Radar Screen Now
“No crowd buys stocks of other countries intelligently”
by Bob Stokes
Updated: February 11, 2021
Elliott Wave International's 25+ analysts regularly review more than 100+ market indicators to keep subscribers ahead of major turns.
Many of those are "technical" indicators. Others are "sentiment" related.
Let's focus on a key sentiment measure which has a stellar track record. As the book Prechter's Perspective says:
For decades, heavy foreign buying in the U.S. stock market has served as an excellent indicator of major tops.
This indicator also works elsewhere around the globe. For instance, in the late 1980s, after years of indifference, overseas investors became net buyers of Japanese stocks. This occurred right before the zenith of one of the biggest bull markets of all time.
But, getting back to the U.S., the heavy foreign buying (or selling) indicator certainly applied in 2007.
Let's take you back to this chart and commentary from the August 2007 Elliott Wave Financial Forecast:
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  produced what was easily the biggest gusher of net foreign buying in history. The record suggests that falling prices lie directly ahead for the U.S. market.
Well, just two months later, the DJIA topped and then tumbled 54% into March 2009.
The reason for calling your attention to this indicator here in 2021 is that our just-published February Elliott Wave Financial Forecast provides subscribers with the latest available data on foreign purchases of U.S. shares -- and it's stunning.
It's data that's very much worth your time to review and ponder.
Returning to Robert Prechter's words in Prechter's Perspective:
No crowd buys stocks of other countries intelligently.
Follow the link below to learn why this insight especially applies right now.
Here’s the “Four-Letter” Word in the Investment World:
Robert Prechter elaborates in his book, Prechter's Perspective:
Hope is a four-letter word in the world of investment. Only a cold reading of the pertinent factors can keep you on track for more time than you're off. [emphasis added]
Know that our just-published February Elliott Wave Financial Forecast provides subscribers with that "cold reading" of U.S. stocks, bonds, gold, silver, the U.S. dollar and more.
At this juncture -- when most investors are "hoping" for the stock market bull to continue -- grab hold of objectivity with all your might.
Learn what Elliott wave analysis suggests is next for stocks and other widely traded financial markets by following the link below.
U.S. Treasury yields aren't the only ones that have been rising. Just like here in the U.S., you can find a lot of "fundamental" explanations for the moves in German bonds. But watch how an Elliott wave pattern warned of these developments as they were just starting.
If you've ever applied technical indicators to a price chart, you know the challenge -- namely, where do you even begin? Watch our Trader's Classroom editor walk you through a "blank chart" of GRPN to show you how to spot simple levels of support and resistance, for starters -- and get an idea as to what's next.
This time-tested indicator provided a warning before the historic 2007 stock market top, and here in 2021, investors should focus on this indicator again. Find out why.