The bosses here at Elliott Wave International finally did it: They’re offering our long running Elliott Wave Financial Forecast and even longer running Elliott Wave Theorist at a special combo price. Find out how you can take part in this offer below.

The latest issues of both publications – published just before the start of the big stock market drama — have some choice words to say about leverage, which investors are embracing wholeheartedly.

First, the National Association of Active Investment Managers Exposure Index recently hit 103.66, which means the average portfolio manager is not just “long,” as in betting on the upside – but leveraged-long, meaning they are using borrowed money to place their bullish bets.

The typical non-professional investor is also in love with leverage on the long side, despite the stock market’s selloff from mid-July which has now evolved into a global rout. The minds of investors big and small are dominated by sayings like “market drops are completely normal,” “selling would be the wrong thing to do,” “the stock market has a 100% success rate when it comes to recovering from downturns,” etc.

Here is just one example of how investors are expressing their optimistic psychology as our August Elliott Wave Financial Forecast showed this chart and said:

The Rydex Total Bull/Bear Ratio hit 48.7 on July 16, its highest reading since January 11, 2022, two days before that year’s high in the New York Composite Index. This month, the Rydex Total leveraged Bull/Bear Ratio was even higher, at 56.5, also on July 16. The last higher reading also came on January 11, 2022, when the ratio was at 62.4. The record readings for both ratios occurred on January 3, 2022. The index declined 28% over the next 10 months.

Employing Rydex funds is not the only way that leverage has infiltrated financial assets in recent months. The use of leverage is a two-edged sword and this next example shows how investors got hurt – badly. This is from Bloomberg (June 24):

Leveraged Wrong-Way Bet on Nvidia Lured $740 Million Before Rout

After pouring a record amount of cash into a leveraged-up ETF — a cohort of retail investors is facing big losses following the $400 billion wipeout in Nvidia Corp.

Indeed, as Nvidia’s chief executive officer was unloading his shares, the investing public was eagerly scooping them up.

That’s not to say that Nvidia can’t go on to loftier heights or that the broad market can’t recover from its recent sell-off.

On the other hand, how can you tell the difference between a temporary dip and the start of something bigger?

Get Elliott wave insights which are of the first importance as you take advantage of our special Combo price for The Elliott Wave Theorist and The Elliott Wave Financial Forecast. Just follow the link below.