India, Pakistan, Sri Lanka, Indonesia: How Elliott Wave Analysis Turned BULLISH When Few Dared, Part II

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India, Pakistan, Sri Lanka, Indonesia: How Elliott Wave Analysis Turned BULLISH When Few Dared, Part II
EWI's Asian-Pacific stock market analyst explains the unique benefits of Elliott wave analysis for emerging market investors

By Vadim Pokhlebkin
Wed, 02 May 2012 14:00:00 ET

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This is Part II of my interview with EWI's Mark Galasiewski, a monthly contributor to the "Asian-Pacific Stocks Section" of our Global Market Perspective -- a comprehensive, 50-page monthly publication for global investors. You can read Part I here.

Vadim Pokhlebkin: Mark, you use Elliott wave analysis as your chosen forecasting method. Why Elliott? Why not just watch the news like most investors do?

Mark Galasiewski: Well, the example I already showed you how we turned bullish on India in early 2009 demonstrates why watching the news can be futile -- in fact, counterproductive. The economic news from the Asian-Pacific region in early 2009 was simply terrible. If anything, it would have pushed you to sell your India holdings, not add to them. Elliott wave analysis was unequivocally bullish at the time. (And not just on India -- Bob Prechter turned bullish on U.S. stocks in late February 2009, too.)

If you want to use Elliott as your method, you must first accept that the Wave Principle is how the market works. Financial markets are non-rational and counter-intuitive. That's why investing according to conventional assumptions eventually leads to financial ruin, since the market too often does the opposite of what most people expect. Even thinking contrarily is insufficient, because sometimes it’s necessary to run with the herd. The Elliott Wave Principle helps you to determine which psychological stance is most appropriate at any given time.

VP: Do you have a fresh example of how wave analysis helped you see an opportunity in one of your markets?

MG: The 2011 lows in the Asian-Pacific region are a good example. Global markets had fallen for at least half a year, most by double-digits. The declines were largely blamed on the Greek debt crisis. If you go back and read the news reports of the time, you’ll see that most analysts and reporters had a bearish bias -- across the globe, not just for Europe. Even some major bulls were throwing in the towel. But the nearly-completed wave patterns in the Asian-Pacific region told us that a bullish leg up was waiting just around the corner.

We showed subscribers this chart in the October 2011 Global Market Perspective. It suggested that the 5-wave decline in Asia was nearing an end, and it was time to start turning bullish. (Some Elliott wave labels erased for this article -- Ed.)

VP: Thanks. Of course, no forecasting method is fool-proof, and neither is Elliott. How does Elliott help you know when the forecast may be wrong, so you can quickly limit your exposure risk?

MG: On almost every chart of the Asian-Pacific markets published in Global Market Perspective, we provide “alternate Elliott wave counts” to indicate to subscribers what may be happening if prices do not behave as we expect them to.

Personally, I think it’s important that investors keep in their minds at all times at least one alternate count, to make sure that they don’t invest too much emotion or money in any one particular forecast. A little success with Elliott can be a dangerous thing, since it makes you feel like your next trade will also be correct. But the reality is often quite different. The basic rules of discipline in trading -- cut your losers quickly and let your winners run -- apply when using Elliott as well.

VP: What is the one opportunity in your markets you see ahead?

MG: You want me to give away my best ideas for free? Can't do that! But you can see them in the April issue of Global Market Perspective, which is online right now. The new, May GMP publishes on Friday (May 4 --Ed.), by the way, so stay tuned, too. New subscribers, if they aren't happy with their subscription, have an option to cancel it within the first 30 days for a full refund.

Still, I hope they will stay with me for a long time because I believe our long-term Elliott wave counts offer the best road map -- bar none -- for navigating "the Asian Century." After each major correction, emerging Asia should be the place to invest for the long run. But there will be some excellent opportunities available in the more developed markets in the region as well.

VP: What if you’re wrong about that?

MG: Well, keep your losses small.

VP: Right :) Thank you, Mark.

MG: Thank you.

Yours risk-free for 30 days:

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Tags: Asia Dollar Index, Asian-Pacific Short Term Update, ASX All Ordinaries, Bank of Japan, diversification, Elliott wave, Elliott Wave trading, Greek debt, Indian markets, Indian Rupee, investment strategy, Korean Won, Nikkei, risk management, SENSEX, Shanghai Composite Index, Singapore Dollar, Taiwan index, technical analysis

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