Here’s Why New IPOs Will Likely Dwindle to Near Zero
“The IPO market is fizzling”
by Bob Stokes
Updated: June 23, 2022
Big daily selloffs have occurred since the stock market's downtrend began in January.
For instance, on May 18, the Dow Industrials closed lower by 1,161 points -- a 3.6% drop. The S&P 500 shed 4% on the same day.
Yet, most investors aren't exactly shaking in their boots. Panic is absent.
After the market close on May 18, our U.S. Short Term Update showed this chart and said:
Traditional measures of investor complacency and panic, such as the CBOE Volatility Index (VIX), remain somewhat subdued relative to prior extremes over the past six months. One of the ways we measure the level of investor panic is to compare the one-month VIX futures contract to the three-month VIX futures contract, which is shown by the histogram at the bottom of the chart. When investors are rattled, they bid the short-term contract (one month) above the longer-term contract (three month), feeling as if they need "protection" from a falling market now versus later (see grey ellipses).
During the most vicious phase of a major bear market, the spread between the one- and three-month futures contract should dramatically soar.
In the meantime, there was this headline just two days after that big May 18 selloff (CNBC, May 20):
These are the cheapest stocks in the S&P 500 that could be buying opportunities
Yep, many market participants are still viewing the drop in prices as a time to go bargain hunting rather than running for the hills.
Memories of the longest bull market in history die hard. Remember, it started back in March 2009.
However, panic will set in when the downtrend reaches a "third of a third" Elliott wave. If you're new to Elliott wave analysis, the third of a third is the strongest part of a trend -- both up and down.
As Frost & Prechter's Elliott Wave Principle: Key to Market Behavior, says:
Third waves are wonders to behold. They are strong and broad, and the trend at this point is unmistakable... The third wave of a third wave... will be the most volatile point of strength in any wave sequence.
Our latest Elliott wave analysis will help you to anticipate the juncture of that third of a third wave.
You can access our Elliott wave analysis of the U.S. stock market by following the link below.
Avoid This Big Mistake (Even Pros Make It)
Decades of research show that whether the market goes up, or down, or sideways... corporate earnings will not be the cause.
Even so, a widespread assumption on Wall Street is that "earnings drive stock prices." It's a huge mistake to factor this proven fallacy into your investment decisions.
The stock market's trend is governed by the Elliott Wave Principle, not outside "causes" like earnings, trade wars, higher interest rates, etc.
Our flagship Financial Forecast Service gives you eye-opening insights into where the stock market is expected to head next.You can be reading it in a matter of moments as you follow the link below.
Financial Forecast Service
All month long, Financial Forecast Service helps you stay ahead of the waves in the U.S. markets on the timeframes that matter the most. FFS covers the stock indexes, bonds, gold, silver, the U.S. dollar, as well as market psychology and cultural trends. It is our most popular service.
Comprises the monthly Elliott Wave Financial Forecast, 3x-per-week Short Term Update and at least 12x-per-year Elliott Wave Theorist.
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