Why Asia's 10% Plunge Was Predictable -- with the Right Tools

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Why Asia's 10% Plunge Was Predictable -- with the Right Tools
May 2012 should have been a stellar month for Asian markets -- but Elliott waves told a different story

By Nathaniel Williams
Fri, 25 May 2012 12:30:00 ET

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Sometimes, studying the financial fundamentals simply doesn't cut it.

By all accounts, May 2012 should have been a stellar month for Asian-Pacific stocks. Almost every Asian-Pacific market surged in the first fourth months of the year. Plus, consumer confidence rose in 68% of global markets in the first quarter, according to a survey done by consumer information company Nielsen, with India leading the pack. The fundamentals were strong.

Alas, something went strangely awry. Instead of stellar, Asian-Pacific markets have been nothing short of abysmal. Instead of rising in May, some indexes have plunged more than 10% so far -- despite the solid fundamentals.

Does this mean that the drop in Asian markets wasn't predictable? Not at all. In fact, the drop was quite predictable -- if you had the right tools.

In the May 2012 Asian-Pacific Financial Forecast, Editor Mark Galasiewski (pronounced gala-SHEV-ski) began the publication with a striking chart of four emerging markets and this critical note to his readers about their wave patterns (emphasis added):

"Our wave counts indicate that the proverbial warning to 'sell in May and stay away' does apply. By month's end, most stocks in the region will have either ended their rallies or at least enjoyed the best part of their remaining advances."

Galasiewski's prescient forecast was fiercely contrary in light of the fundamentals. But it was dead-on. Asian-Pacific stocks have plunged as much as 11% since he published his forecast on May 4. And India, which had the highest consumer confidence in the first quarter, has seen the Sensex drop more than 9% to date.

So how did Galasiewski make such a forecast? He didn't need to look at the news or the fundamentals. Instead, the only tools he needed were the Wave Principle's objective rules and guidelines. And when the crystal-clear Elliott wave patterns he was tracking in Asian markets were complete, he knew to expect a sharp reversal.

Now, the most important question is: What's next for Asian-Pacific stocks? You can see what we see -- and get an independent perspective you won't find anywhere else -- via a risk-free subscription to the Asian-Pacific Financial Forecast Service. Learn more below.

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