The World Has Suddenly Surrendered to Mass Optimism. Should You?

Home > Stocks
The World Has Suddenly Surrendered to Mass Optimism. Should You?
History shows that at market extremes many of the most opinioned bears and bulls surrender to popular opinion. The market then moves violently AGAINST popular opinion.

By Editorial Staff
Fri, 06 Apr 2012 12:15:00 ET

Get investable insights sent to your inbox at least once a week – for free. Challenge the way you think about investing with The EWI Independent.

Privacy

Consider this.

A week after the Dow's all-time high in October 2007, Robert Prechter went on Bloomberg to describe "extremes that exceed 1929 or 1987...these are the harbingers of a change to the downside for the stock market."

A week before the major low in March 2009, he went on CNBC to say "it's getting crowded on the bear side...we've been in a short position for a long time, I recommended that people get out of it." S&P futures traders were a record 98% bears (only 2% bulls) on the very day Prechter went on TV to call for a major turn to the upside. In other words, people were telling you to sell at the worst possible time.

History shows that at market extremes many of the most opinioned bears and bulls surrender to popular opinion. The market then moves violently against popular opinion.

We have a track record of standing our ground while those around us are surrendering their opinion.

And we're doing it again.

Generally speaking, economists and money managers are typically one-note bulls. They always give you a rosy forecast. But look how much you lost in your real estate investments, and how much you are still losing, thanks to them. Look how much you have lost in your stocks since 1999, too. But did they ever tell you to sell? No, never. And they still won't say it. On the contrary, now that the stock market has more than doubled, they're telling you that it's safe to load the boat. That's what they said in 1999 and 2006, throwing you under the bus both times.

Today everyone who was bearish on stocks in March 2009 is back to being bullish. Consider these recent headlines:

Global Strategists Abandoning Bearish Views –Bloomberg
Stop the Presses, Dr. Doom is Turning Bullish – Bloomberg
BlackRock...Says Investors Should Be 100% Equities – Bloomberg
Iran Anxiety No Match for Central Bankers Sedating Investors With Cheap Cash – Bloomberg
...Nasdaq Bull Market, Leaves Bearish Outlook Behind – Bloomberg
...Low Volume Means Bull Run May Last: Chart of the Day – Bloomberg
Warren Buffet: Why Stocks Beat Gold and Bonds – Bloomberg
Enter the Bull – Barron’s

Who's left? We are.

That's right. The financial media say bears are extinct or in hiding. But not here at Elliott Wave International! We are back on our mountain peak, standing tall and roaring. We are not shy about it. We are not apologetic. We are not tentative.

We have 300 years of market history and 50 years of market indicators on our side. Everything else is a waste of time. And we can tell you: The stock market today is overleveraged, over-owned and overvalued. That is why, at this time, we are unequivocal bears.

We don't care if the market grinds a bit higher this year. It is just lulling the optimists further into complacency, so they can siren-call their followers to self-destruction, again. But right now we recommend a whole different stance. Yes, we expect to identify another good market bottom when it arrives, but now is not it.

Wake up! We did not have a "Great Recession" that is over; we are in a depression.

We did not just start a multi-decade bull market; we are near the end of a bear market rally.

We are not in the comforting arms of endless "liquidity" from a generous Fed; we are on the precipice of a looming worldwide credit crisis.

Do you think this language is too strong? We think it's conservative. We save what we really think for our subscribers.

If you can't handle this kind of talk, exit now. We'll be happy to have you join us later, when the S&P is having 40-point down days.

But if you are that rare individual who is ahead of the crowd, who thinks there is something wrong with the Pollyanna picture, then you have found your home: Elliott Wave International, which, for now at least, is the home of the bears.

Someday we will again be the home of the bulls. And we'll be just as lonely as we are today. But not until our work says it's time.

Until then: Are you safe? Are you confident? Did you know that you can make money much faster in a bear market than a bull market? Do you know what to do? If not, join us and find out, while the opportunity is still here.

This discussion is mostly about the stock market. What about currencies? What about precious metals? What about commodities? What about Treasury bonds? What about cash and T-bills? Yes, we are bullish about some things. Find out what. Find out why. Join us today.

SPECIAL OFFER -- SAVE 57% NOW:

Get instant online access to the latest Elliott wave forecasts for 3 full months for just $99 >>

Tags: Bear market, Bob Prechter, bull market, Elliott wave, Elliott Wave Principle, Elliott Wave Theorist, Elliott Wave trading, herding, market crash, market forecasts, Robert Prechter, quantitative easing, Robert Prechter, S&P 500, stock indexes, stock market cycles, U.S. Federal Reserve (the Fed)

Aug. 15-17

San Francisco Money Show

Nov. 10-13

New Orleans Investment Conference

Stay Ahead of the Trend in U.S. Stocks

EWI's Financial Forecast Service equips you to think, trade and invest independently from the crowd. Here's what you'll get, risk-free:

Short Term Update -- Intensive forecasts and analysis 3x/week for U.S. stocks, gold, silver, bonds and the U.S. dollar.
Financial Forecast -- In-depth, intermediate-term perspective on U.S. stocks, gold, silver, bonds and the U.S. dollar.
Theorist -- Bob Prechter's monthly big-picture insights.

Put the Financial Forecast Service on your screen in minutes, risk-free>>

Most Read

Highest Rated

Free Video Course

Learn the Why, What and How of Elliott Wave Analysis

Financial media use news and economic events to explain market moves. Steer clear of this misguided approach. Take part in the Elliott Wave Crash Course to learn what really moves the markets.

CLOSE [ X ]

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.