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The Best is Yet to Come…
If You’re Prepared!
Are you weary of sorting through all the “good news – bad news” dialogue? The financial media would have you believe that everything is coming up roses. First it was the green shoots. Now they tell us the housing market is stabilizing. In other words, it’s not dropping like a rock anymore. And the credit crisis? That’s improving too. From bone-dry liquidity to a molasses-like consistency. There have also been some positive earnings reports. Then of course there’s the stock market – roaring ahead to new highs on the move.
On the other side of the ledger, there are the dismal unemployment numbers; the foreclosures, with more to come as additional sub-prime mortgages re-set; more bank failures every weekend; and the reality of the residential and commercial real estate market.
As you may already know, trading or investing based on the “news” can be detrimental to your fiscal health. Technical analysis – market forecasting based entirely on price action – attempts to be purely objective. It presumes to let the markets tell you where they are going. Elliott Wave analysis takes this approach several steps further: we use chart patterns to identify tops and bottoms as well as trends and their probable length and duration. Applied correctly, charts can strip away emotion, bias, and ego. What’s left is price as the final and ultimate authority, and price unfolds in recognizable and repeating wave patterns. These patterns represent the prevailing psychology in all time frames.
In the current issue of the Elliott Wave Theorist, Bob Prechter presents a clear and compelling argument for a substantial psychological turn in the stock market. The charts he includes show that history may not always repeat itself but it frequently rhymes.
Our “All-the-same-market” theme is evident as well in Bob’s analysis of gold and the dollar. The premise is that in a deflationary environment, as credit contracts, the lack of liquidity causes people and institutions to sell their assets to get dollars. This includes gold, oil, stocks, property, everything!
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