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Stock Market Turning Points: Has Wall Street Ever Warned You in Time?
Divorce yourself from the crowd. Independence is good.
By Bob Stokes
Wed, 11 Apr 2012 17:45:00 ET
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In the play "The Secret to Freedom," Pulitzer prize writer Archibald MacLeish had a character say this:
 
The only thing about a man that is a man is his mind. Everything else you can find in a pig or a horse.
 
MacLeish knew how to state the truth plainly.
 
And the truth is, you can use your mind in any way you wish.
 
Alas, when it comes to financial markets, most allow others to do their thinking for them. You've heard the phrase "the blind following the blind." Yes, they both fall into the ditch.
 
At Elliott Wave International, our mission is to keep our subscribers out of the ditch. To do so, we must first do our own financial thinking before offering our conclusions to subscribers.
 
Robert Prechter found it easier to think independently by being physically removed from Wall Street. In this excerpt from the book Prechter's Perspective, Prechter was responding to an interviewer who asked about Prechter living 60 miles north of Atlanta:
 
It’s an advantage in my opinion to be away from the storm of mass psychology that exists in the financial centers. I have purposely distanced myself from New York to avoid the overload of superfluous information that you are exposed to there. I am an observer of crowd behavior. I think it is extremely difficult to shield yourself from the crowd’s influence when you are part of it.
 
Now, we don't advocate contrarianism for its own sake. That would be just as big a mistake as letting the Wall Street crowd do your thinking for you.
 
That said, our financial analysis is born of deliberate independence.
 
Granted, the crowd might be right for a time, but generally not for long, and never at important turning points.
 
Our independent analysis strongly suggests that we're at a turning point now. We didn't arrive at this conclusion after this recent market price downturn. We announced our views to subscribers beforehand:
 
Stock market prices are taking the shape of a wedge. Wedges usually end with sharp reversals.
Elliott Wave Theorist, February 2012
 
Given its tired state of affairs, the stock market has held up amazingly well, but the signs point to an overextended advance that will change trend forcefully in the weeks ahead.
Financial Forecast, March 2012
 
Mind you, these analyses were provided when investor optimism was sky high, comparable to the days surrounding the Dow Industrial's all-time 2007 high.
 
But what do we see for the immediate weeks ahead? Find out via a limited-time special offer. See details below.  

 

  

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Tags: Elliott wave, herding, Robert Prechter, Wall Street
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The Elliott Wave Principle is a detailed description of how financial markets behave. The description reveals that mass psychology swings from pessimism to optimism and back in a natural sequence, creating specific Elliott wave patterns in price movements. Each pattern has implications regarding the position of the market within its overall progression, past, present and future. The purpose of Elliott Wave International’s market-oriented publications is to outline the progress of markets in terms of the Wave Principle and to educate interested parties in the successful application of the Wave Principle. While a course of conduct regarding investments can be formulated from such application of the Wave Principle, at no time will Elliott Wave International make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. Investing carries risk of losses, and trading futures or options is especially risky because these instruments are highly leveraged, and traders can lose more than their initial margin funds. Information provided by Elliott Wave International is expressed in good faith, but it is not guaranteed. The market service that never makes mistakes does not exist. Long-term success trading or investing in the markets demands recognition of the fact that error and uncertainty are part of any effort to assess future probabilities. Please ask your broker or your advisor to explain all risks to you before making any trading and investing decisions.