Reality hits people the hardest when they are expecting fantasy. That explains the shock too many investors felt on the recent day when the Dow Industrials dropped some 1,000 points within moments (Thursday, May 6). What made that reality even more shocking, however, was the realization that a peak may already have come -- on April 26, 2010.
For more than a year, economists and other experts were doing their best to tell the public that we were back in a bull market. They jumped on every optimistic event and used it to strengthen their claim. Yet here's the ironic truth: the bull market advocates were making their loudest claims -- evidenced by examples such as Newsweek’s “America’s Back” cover story in April -- at precisely the time the market peaked.
There is a large difference between looking for something vs. finding it. The over-optimism of these bull market economists amounted to looking for reasons to say that the bear market was a thing of the past. Elliott Wave International wants nothing to do with "looking"; our analysis is all about finding solid evidence to make clear, rational forecasts. An obvious example is the head and shoulders pattern that we identified.
In the April issue of The Elliott Wave Theorist, Robert Prechter showed subscribers the head and shoulders pattern unfolding in the Dow Industrials -- and he explained what it meant in full detail. The conclusion of this well-known technical pattern produces a significant change in the trend. The peak to the market rally in April came as a shock to many, and bullish economists still refuse to believe it.
"In late April, one scribe stated that the coast was clear for a continued stock rally because the sentiment readings never hit 'maximum exuberance. In short, investor sentiment doesn’t seem to be at a peak of euphoria.'"
Eduard Hamamjian
GeaSphere
877-351-4902
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