by Bob Stokes
Updated: May 14, 2018
One of the best ways to stay ahead of financial markets, especially on a daily basis, is to use the many tools of technical analysis. We've shown examples of that hundreds of times on these pages.
Yet, let's not overlook other important signals, which may serve to support (or not support) your technical analysis conclusions.
For example, research shows that business people tend to place their biggest bets on the future around the time of major stock market tops. That's when optimism is at its highest.
If several grandiose business projects are underway when the DJIA's Elliott wave price pattern points to a top, those business projects strengthen the message of the DJIA's price pattern.
For example, several ambitious Las Vegas casino and hotel plans were launched in the years just before the 2007 stock market top. But the onset of the Great Recession that followed saw many of those projects cancelled before work even started.
With the above in mind, consider what's going on today (Bloomberg, May 8):
More than $5 billion worth of construction investment has poured into "Sin City" recently-resulting in such flashy ribbon-cuttings as the $375 million T-Mobile arena ... and plans for an NFL team to play in a glitzy, new $2 billion stadium.
That's just sports. The convention center ... is being overhauled and expanded at a cost of $1.4 billion, and hotel mainstays, from the Palms to Caesars, are getting nine-figure renovations.
It's a boom unlike any the city has seen in almost 30 years. [emphasis added]
But the nation's mega-business plans go beyond Vegas.
Across the country in sunny Florida, a Miami-Herald headline says (May 7):
The largest mall in America is getting closer to approval in Northwest Miami-Dade
American Dream Miami is a six-million-square-foot retail theme park with a $4 billion price tag.
Let's conclude with what EWI has long noted: Very tall buildings are often constructed through major stock market peaks. And, today, that signal is as strong as ever.
After mentioning that Central Park Tower in New York City is slated to rise 1,550 feet when it is completed next year, the May Elliott Wave Financial Forecast notes:
The current "tallest building" signal is much broader than at any point in human history, as New York City is far from alone in its towering ambitions. The tallest residential buildings in San Francisco, the Western U.S, New England, Texas, the East Coast (south of New York), the Midwest, Canada, Western Europe, the Mideast, Asia, China, Russia and India are also currently under construction.
What are the odds that all of the ambitious projects that we just discussed get completed uninterrupted by a recession, or worse?
Well, history suggests that those who are betting on a continuation of the big bull market trend may be sorely disappointed.
Find out what our analysts are saying about the stock market's chart pattern to learn why.
Who says you HAVE to "be in" risky financial markets at all times?
When you hear someone say this, run the other way.
In EWI's view, this advice is unsound -- whether it's described as "stocks for the long run," or "diversify your portfolio," etc., etc.
Yes, do embrace financial opportunity when it presents itself. But, it's just as important to know when to be OUT of the market.
Learn what EWI's analysts are saying about an array of risk-assets at this juncture, risk-free for 30 days.
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