EWI has observed that when bear markets mature, technical analysis is all the rage. When bull markets mature, it’s not even on investors’ radar.
Robert Prechter’s landmark book, The Socionomic Theory of Finance, reveals how the popularity of financial theories has waxed and waned with the trend of the stock market: “The chart [below] shows that in times of increasingly positive social mood—such as the 1920s, the 1950s-1960s and the 1980s-1990s—people in the field of finance tend to believe in human rationality and humans’ ability to control social trends. In times of increasingly negative social mood—such as the 1930s-1940s, the 1970s, and the first decade of the 2000s—there is a rebirth of interest in non-rational human behavior and the existence of cycles, waves and even extraterrestrial influences such as sunspots.”
Elliott wave analysis is technical and tracks the market’s repetitive patterns. We analyze these chart patterns to determine what’s next for major financial markets.
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