Technical Analysis Training

The Elliott Wave Principle: A “Marvel” of Technical Analysis
Our FREE webinar “How to Spot Reliable Trade Setups in Any Market and Any Time Frame” is back by popular demand

By Elliott Wave International

Just when you thought there’d been every possible adaptation of the Marvel comics movie franchise, we’ve thought of one more: A Marvel installment based on financial market analysis.

At one end of this Marvel market universe is Technipede: Like the insect he’s named for, Technipede uses hundreds of technical disciplines to stand on for evaluating a market’s strength or weakness. Bollinger bands, candlesticks, pivot points, TRIX, harmonics, advance/decline, and on — a different technical “leg” for each market and each time frame.

On the other end is bulging muscled Fundamentalist: Hero of the mainstream, Fundamentalist mines the news for every story that may affect future price action — supply/demand data, earnings, scandals, profits, political disruptions, weather patterns, and so on.

But neither one of these figures is any match for the most powerful character in this Marvel market universe — Jeffrey Kennedy, editor of our Trader’s Classroom and Commodity Junctures Service. Jeffrey’s strength comes from 25-plus years of mastering the Wave Principle and its ability to identify high-confidence trade setups in any market, across any time frame.

Every trading day, Jeffrey delivers the benefits of Elliott analysis to subscribers, via price charts in a wide variety of real-world markets. Take, for example, the retail king Amazon Inc. In the fall of 2018, Amazon was falling hard amidst a broader “meltdown” in FAANG stocks. Wrote one October 29 Bloomberg:

“How long can they go? That’s the key question for traders looking at some of Wall Street’s largest technology and internet stocks. People keep calling bottoms and getting hurt; they’re trying to catch falling knives.”

But in his October 30 Trader’s Classroom video lesson, Jeffrey showcased one of the five principle benefits of Elliott wave analysis; namely, its ability to determine the maturity of a trend. There, Jeffrey identified Amazon’s 2018 selloff as a fourth -wave correction.

Using the Elliott guideline of the depth of corrective waves, Jeffrey pinpointed a probable end to Amazon’s selloff “at or near the prior fourth wave extreme,” namely the lows seen in February and March of 2018. That meant Amazon had “another $100 or $200 bucks to the downside” before bottoming. (Jeffrey’s chart reprinted below)

AMZN 1997-2018

From there, Amazon continued its selloff into late December before settling 177 bucks lower, just as Jeffrey anticipated, a beautiful opportunity for traders.

What about a smaller time frame? Here, we go to the August 15 Trader’s Classroom where Jeffrey used one of the three cardinal Elliott wave rules to manage near-term risk in Dollar General (DG). He identified a wave 4 pullback, which, if correct, meant prices could not enter the price territory of wave 1 — 126.55. This established a clear, make-or-break level to place a protective stop. (Jeffrey’s chart reprinted below)

Dollar General 1999-2019

If prices stayed above that level, then DG would present a strong “buying opportunity” in a fifth wave rally to the “150-155 area.” And that’s exactly what happened via a powerful gap up and weeks long rally into Jeffrey’s upside target window.

Dollar General Corp 180

What about an even smaller time frame for one of the most volatile commodity markets — crude oil? In the Sept 13 Daily Commodity Junctures, Jeffrey showed a core Elliott wave pattern on crude’s price chart — a contracting triangle. This pattern lingers sideways for a frustratingly long time, only to resolve in a powerful thrust. Armed with this knowledge, Jeffrey set the stage higher and said, “I won’t be surprised to see it pop up into the 60’s.” (Jeffrey’s chart reprinted below)

Crude Oil NYMEX 1999-2019

The next trading day, crude gapped up in its largest single-day rally since the 1991 Gulf War.

Okay, there’s obviously no such thing as a Marvel market universe. Elliott wave analysis is not akin to Iron Man’s shield of invincibility. But as these examples from Jeffrey Kennedy show, having Elliott in your trading arsenal makes it very possible to identify high-confidence opportunities in actual markets.

Which is why we’ve decided to rebroadcast one of the most invaluable resources of Elliott education — “How to Spot Reliable Trade Setups in Any Market on Any Time Frame,” co-taught by — you guessed it — Jeffrey Kennedy.

In this 45-minute long webinar, Jeffrey joins EWI’s Interest Rate Pro Service editor Jordan Kotick, to offer a comprehensive and engaging presentation of the most important aspects of the Wave Principle, including:

  • What is Elliott wave analysis and why should somebody pay attention to it?
  • How Elliott provides specific points of invalidation for every trade
  • The 5 core Elliott wave patterns that appear in prices 80% of the time
  • The 3 most common pitfalls of trading which thwart success

— And much, much more

The best part is, this 45-minute webinar is FREE to Club EWI members! You may not walk away a superhero; but you will have a supreme understanding of all things Elliott and its ability to identify trade setups in any market, on any time frame.

Learn More and Sign Up Now.

How to Capitalize on Market Corrections

How to Capitalize on Market Corrections

By Elliott Wave International

How to Capitalize on Market Corrections

By Elliott Wave International

90% of traders throw in the towel. One of the main reasons is because they don’t have a method. Elliott Wave Principle is one of the most popular investment method books ever published. Now, we’re working with Elliott Wave International to celebrate the book’s 40th anniversary by giving you free access to Bob Prechter’s bestseller. Get this must-have book now.

Fed to Cut Rates Soon

Elliott Wave: Market Signaling Fed to Cut Rates Soon
We have tracked the U.S. Federal Reserve’s interest rates decisions for years. This week, the Fed once again decided to keep the funds rate unchanged. We expect the Fed to change course soon.

By Elliott Wave International

We have tracked the U.S. Federal Reserve’s interest rates decisions for years.

In December, we wrote an article titled “Interest Rates Win Again as Fed Follows the Market,” where we observed that although most pundits believe that central banks set interest rates, central banks actually follow the freely traded bond market in their rates decisions.

We noted that the December federal funds rate hike followed increases in the three-month and six-month U.S. Treasury bill yields set by the market.

In March, we pointed out that the Fed followed the market yet again. T-bill rates had gone sideways since November, and the Fed correspondingly kept the federal funds rate unchanged.

This week, the Fed once again decided to keep the funds rate unchanged. We expect the Fed to change course soon.

The chart shows the fed funds rate (red line) and the yield on both 3-month and 6-month U.S. T-bills (yellow and green lines, respectively). The latter two rates are freely-traded, while the former rate is set by the Fed. Observe the growing gap between the yield on short-term T-bills and the present fed funds rate. The market is leading the Fed to lower its fed funds rate.

The same behavior occurred in 2007. By June 18, 2007, the 3-month U.S. T-bill yield had declined to 4.52% since trending sideways after the Fed raised the fed funds rate to 5.25% in June 2006. The market was leading the Fed to cut rates. The spread between the two became even wider, and at its September 2007 meeting, the Fed finally acquiesced to the market and lowered the funds rate from 5.25% to 4.75%. The Fed chased T-bill rates lower in a series of rate cuts all through 2008, finally dropping the fed funds rate to 0.25% in December 2008. Meanwhile, the DJIA declined more than 50% during the entire episode, highlighting the central bank’s impotence in controlling markets.

Based on current dynamics, the market is signaling that at some point in the coming months, the Fed will lower its Fed Funds rate to align with T-bill rates. We’ll be watching.

See Chapter 3 of The Socionomic Theory of Finance for more examples of central banks’ acquiescence to markets around the world.

This article was syndicated by Elliott Wave International and was originally published under the headline Elliott Wave: Market Signaling Fed to Cut Rates Soon. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Discover 5 Reliable Setups in Just 26 Minutes (Free Video)

Did you know 60-80% of price action unfolds in just 5 core Elliott wave patterns? It’s true. If you can get familiar with just those five, you’ll be able to quickly scour you price charts. When one of those patterns shows up, you will have identified a potential high-confidence set-up. So says Elliott Wave International’s senior instructor and Trader’s Classroom editor Jeffrey Kennedy. Jeffrey’s FREE video lesson “Discover 5 Reliable Setups in Just 26 Minutes” is designed to reveal those five patterns to you. In his free 26-minute video, Jeffrey uses five well-known stocks to show you the core patterns. And he shows you what those set-ups mean for the immediate future. This is one of Elliottwave.com’s most popular videos on its website. Now, we’re making it available to you. Don’t miss it. Watch it now — free.
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When the Wealthy Bash the Wealth Gap

When the Uber-Wealthy Bash the Wealth Gap, It’s Time to Worry

By Murray Gunn

Multi-billionaire hedge fund manager Ray Dalio recently published a 7500-word call to reform American capitalism. Noting that the nation’s wealth gap is the “highest since the 1930s,” Dalio wrote that rather than distributing income equally, capitalism is “producing self-reinforcing spirals up for the haves and down for the have-nots” which “pose existential threats to the United States,” and amount to a “national emergency.”

Parts of Dalio’s message sound eerily close to another article authored by another uber-successful capitalist, John J. Raskob. In his piece “Everybody Aught to Be Rich,” Raskob writes:

“A man is rich when he has an income which is sufficient to support him and his family in a decent and comfortable manner. That amount of prosperity aught to be attainable by anyone. … It is quite true that wealth is not so evenly distributed.”

Incredibly, Raskob’s piece was published 90 years ago in the July 31 issue of Ladies’ Home Journal — in the year 1929! The two men’s ideas on how to reconcile their generation’s income inequality couldn’t be more different. But they share one important commonality — each sounds the alarm about wealth disparity. And throughout history, that warning has signaled an end to the boom that begot the very wealth disparity in dispute. Case in point, the year of Raskob’s article — 1929 — saw the greatest stock market peak to date and subsequent period of wealth destruction known as the Great Depression.

This chart shows how broad the wealth gap has become in not just the U.S., but also across the pond in the U.K. It divides each country’s stock market by average earnings. In 2019, it takes the average U.S. citizen 123 hours of labor to buy one S&P share. In the U.K., it’s 305 hours to buy one share of the FTSE All-Share Index.

The chart also shows how the greater the wealth gap becomes, the closer the instrument of that wealth — the stock market — gets to significant peaks. Note the last two times when hours needed to buy one share reached a similar extreme. The first time was in 1999-2000. That year marked the peak in both measures, when it took 407 hours for the average Brit to buy one share of the FTSE All-Share and 108 hours for an American worker to buy one share of the S&P 500. That period also saw a wave of Dalio-esque rebukes of capitalism with a raft of articles like “New Politics of Inequality” (Sept. 22 NYT), “Globalization Widens Rich-Poor Gap” (July 13 NYT), and a 1999 United Nations report warning “the world is heading toward grotesque inequalities, neither sustainable nor worth sustaining.”  In November 1999, we cited the “growing gulf between haves and have-nots” as a profound signal of a boom cycle nearing its end and wrote:

“A bear market is nature’s way of redistributing wealth, but apparently, at a trend change as big as this one, people just cannot wait to get in there and lend a hand.”

Two months later, the dot.com bubble bust and the Dow Jones Industrial Average dropped 40%, 2-year long bear market.

The second extreme in hours needed to buy one share came near peak territory in 2006-7. Again, main street cited corporate America’s failures, as the widening wealth gap became a “chasm” and social media became a soap box for anti-capitalist rebukes:

“Wealth Gap Has Widened More than 50%” (August 29 CNN Money)

“Haves and Have-Nots: Income Inequality in America” (Feb. 5 NPR)

“The Rich, the Poor and the Growing Gap Between Them” (June 15 Economist)

By year’s end, the December 2006 Elliott Wave Financial Forecast went on bearish red alert and said:

The timing of the last wealth disparity alarm makes a more important point. They tend to arrive at big peaks.” (See the full commentary here.)

Two months later, the KBW Bank Index peaked, heralding in the global financial meltdown — in October 2007 came the deepest stock market decline since the Great Depression. At the February 2009 bottom, the hours-work-per-share in the U.S. and U.K. dropped to 184 and 39 respectively.

Today, the lint of acrimony over the widening gulf between the 1% and everyone else is smoldering once again, as these 2019 headlines evince:

“America’s 1% Hasn’t Controlled This Much Wealth Since Before the Great Depression” (Feb. 24 MarketWatch)

“Wealth Inequality is Way Worse Than You Think” (Feb. 29 Forbes)

“Richest 1% on Target to Own Two-Thirds of All Wealth by 2030” (April 7 The Guardian)

But as Dalio himself observed: “Most everything happens over and over again through history, and by observing and thinking through these patterns, one can better understand how reality works and acquire timeless and universal principles for dealing with it better.” I couldn’t agree more. Dalio himself is both observer and part of the boom-bust pattern underway now, one in which I fully anticipate the concerns over inequality to disappear as the playing field becomes inexorably leveled.

Follow this link to read our previous commentary on the wage gap and stock market peaks, published just months before the 2007-2008 financial crisis began.

Stock Market and the Fed

Elliott Wave: Fed Follows Market Yet Again

By Steve Hochberg and Pete Kendall

Back in December, we wrote an article titled “Interest Rates Win Again as Fed Follows Market.”

In the piece, we noted that while most experts believe that central banks set interest rates, it’s actually the other way around—the market leads, and the Fed follows.

We pointed out that the December rate hike followed increases in the six-month and three-month U.S. Treasury bill yields set by the market.

What happened with this week’s Fed announcement? Well, you guessed it—the Fed simply followed the market yet again.

The chart above is an updated version of the one we showed in our last article. The red line is the U.S. Federal Funds rate, the yellow line is the rate on the 3-month U.S. T-bill and the green line is the rate on the 6-month U.S. T-bill. The latter two rates are freely-traded in the auction arena, while the former rate is set by the Fed.

Now observe the grey ellipses. Throughout 2017-2018, the rates on 3-and-6-month U.S. T-bills were rising steadily, pushing above the Fed Fund’s rate. During the period shown on the graph, the Fed raised its interest rate six times, each time to keep up with the rising T-bill rates. The interest-rate market is the dog wagging the central-bank tail.

Now note what T-bill rates have been doing since November of last year; they’ve stopped rising. Rates have moved net-sideways, which was the market’s way of signaling that the Fed would not raise the Fed Funds rate this week.

Too many investors and pundits obsess over whether the Fed will raise or lower the Fed Funds rate and what it all supposedly means. First, if you want to know what the Fed will or will not do, simply look at T-bills, as shown on the chart. Second, whatever their action, it doesn’t matter because the Fed’s interest-rate policy cannot force people to borrow.

See Chapter 3 of The Socionomic Theory of Finance for more evidence.

5 “Core” Elliott Wave Patterns

Hershey (NYSE: HSY)

The choppy rise in the stock of Hershey — and the sharp recent breakdown — speak volumes to an observant Elliott wave investor. See if you can spot the tell-tale signs…

Click the chart below to download a printable PDF version:

Now that you’ve labeled your HSY chart, watch the rest of this video on elliottwave.com and compare your chart with your Trader’s Classroom instructor Jeffrey Kennedy’s labels.

You’ll also see where HSY should go next — watch now, free!

This article was syndicated by Elliott Wave International and was originally published under the headline . EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

How to Win in the Stock Market

How to Win Against the Dangerous “Herding Impulse”

By Elliott Wave International

We all love a bargain…

…Except when it comes to stocks.

The reason boils down to uncertainty. We know what our fruits and vegetables should cost at the grocer’s — but we’re far less certain about how much to pay for a blue-chip stock or shares in an S&P 500 Index fund.

So how does our mind work in decisions that involve certainty vs. uncertainty?

Robert Prechter and Wayne Parker, co-authors of the paper, The Financial/Economic Dichotomy in Social Behavioral Dynamics: The Socionomic Perspective” (Journal of Behavioral Finance, Vol. 8, No. 2, pp. 84-108, 2007) explain that in each situation, very different regions of the brain take over — literally.

When we spend money as consumers, we depend on the neocortex region of the brain, where our ability to reason resides.

For example, if we shop for groceries and see our favorite fruit on sale at a 40 percent discount, we think “That’s a good deal. I make the best use of my money by buying it now.” And, if we hang around to watch how other shoppers behave, we see that particular item sell out sooner than usual. In other words: The demand for consumer goods rises as the price falls.

But when we spend money as investors, our brain relies on the more primitive region — the basal ganglia — which drives unconscious behavior such as herding.

Let’s say that 30 minutes after the stock market opens, we see that the blue-chip stock we own is down 20 percent. We know that shareholders are fleeing the stock. The basal ganglia screams, “They know something I don’t. I’d better sell too.” In this case, demand for the asset FALLS as the price falls. Why?

Because in speculative markets, assets have no true utility. An investor buys it today in the hope that it will be worth more to another investor tomorrow. But that future value is uncertain, so the brain defaults to herding.

The sketch of the brain shows the locations of the conscious, reasoning neocortex and the unconscious, impulsive lower areas:

In other words, herding impulses force you to “buy high — and sell low,” precisely the opposite of what you should be doing.

Can you win? Yes.

Instead of getting wrapped up in the day’s news, when you study the collective psychology of market participants, you see the markets objectively — and separate yourself from the herd.

You can see the market’s psychology shift right before your eyes — when you look at price charts. The trends you see are not random; they are patterned according to the Elliott Wave Principle: 5 waves in the direction of the trend, and 3 waves against it.

When you know these patterns, you can make probability-based forecasts.

Elliott Wave Basic Tutorial

If you are prepared to take the next step in educating yourself about the basics of the Wave Principle — access the FREE Online Tutorial from Elliott Wave International.

The Elliott Wave Basic Tutorial is a 10-lesson comprehensive online course with the same content you’d receive in a formal training class — but you can learn at your own pace and review the material as many times as you like!

Get 10 FREE Lessons on The Elliott Wave Principle that Will Change the Way You Invest Forever.

This article was syndicated by Elliott Wave International and was originally published under the headline How to Win Against the Dangerous “Herding Impulse”. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Oil and Gold predictions

3 charts, 3 forecasts, in 7 fast minutes

By Elliott Wave International

See just how much you can learn from three simple charts.

Oil, gold, ETFs & more: FREE pro-grade forecasts

Are you paying attention to commodities? You should be.

Major moves in oil, gold and other commodities have offered up huge opportunities for traders in 2017.

Now through July 28, get free, professional-grade forecasts for gold, oil, ETFs and more inside the new Commodity Hotlist

This article was syndicated by Elliott Wave International and was originally published under the headline 3 charts, 3 forecasts, in 7 fast minutes. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.