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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:

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 [2007] 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:

"Hope."

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.

EXCLUSIVE

Bitten by FANG? Clocked by Cryptos? -- 'Air Pockets' Everywhere

Down more than 25%, the NASDAQ is "officially" in bear-market territory. "Big whoop" as they used to say -- some of the hi-tech darlings have already been cut in half and then some. Bet the folks down 50% or more in their so-called investments are glad to hear they're "official." And now Bitcoin, the King of Cryptos, has hit an "air pocket" of its own and fallen below $30,000. Wonder if that's officially a bear market, too? This excerpt from our new, May Financial Forecast explains how it all fits together.

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Bitcoin: How to Spot Signs of Fast Reversals

Bitcoin and other cryptocurrencies are no strangers to volatile, sharp reversals. If you get caught up in one unprepared, it's not a good feeling. But watch our Crypto Trader's Classroom instructor show you how Elliott waves can help take the "surprise" out of crypto "surprises."

EXCLUSIVE

EUR/USD: How to 'Trade with the Trend'

The euro vs. U.S. dollar is most-traded forex pair -- and lately, the euro has been losing, pushing EUR/USD lower and lower. At moments like that, many FX traders will try to catch the bottom. Watch our Currency Pro Service editor show you what Elliott wave evidence you need to do that with less risk.