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European Markets , Stocks

Why Monday's Sell-Off in Europe Was No Surprise

by Editorial Staff
Updated: February 24, 2020

Have you wondered why the news of coronavirus spreading and killing people all over the world didn't crash Europe’s markets -- until Monday?

For months, we all had multiple warnings from the CDC, the WHO, even the Fed about the severity of the crisis. Yet, stocks happily climbed higher, and higher, and higher still.

Until February 24. On that day, suddenly, some European markets tumbled as much as 4%.

Blaming coronavirus is a handy explanation for sure, especially if one doesn’t look too deep. But look instead at what Elliott wave patterns of investor psychology were showing just one trading day earlier, on February 21.

On Friday, our European Short Term Update noted:

"The market was waiting for European PMI data today and it came in better than expected. Despite that, European bourses declined today and on the week, underlining the reason why we follow the market price and not the news."

Editor Murray Gunn went on to show charts and forecasts for several European markets, saying things like:

[EuroSTOXX 50 Future] "...the short-term trend should be considered down."

[German DAX Future] "...the short-term trend is bearish."

[Russia RTS$ Index] "...increasingly likely that a larger decline is underway."

[DJ Greece Stock Index] "...probably in the early stages of a decline."

Gunn posted Monday's European Short Term Update at 1:25 pm London time and opened with this:

"Italy led the dramatic declines across Europe today. Naturally, the media are assigning a causation to it of the increased coronavirus cases in Italy. ESTU subscribers know that the rally in European stocks was at, or very close to, an end -- in terms of Elliott Wave analysis."

So, what do you think sent markets lower?

Coronavirus fears? Or something else, something that enabled Elliott wave experts to identify the coming move before news of the outbreak in Italy surfaced?

We are convinced there’s no more likely explanation than waves of social mood.

And there’s no more critical time to monitor the waves around the world... than right now.

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