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How the Stock Market Can Turn on a Dime

Investor psychology unfolds in the same patterns everywhere around the world

by Bob Stokes
Updated: October 31, 2019

An investor should never become comfortable with the stock market.

The bottom can drop out in the blink of an eye.

Financial history teaches valuable lessons, but I'm not talking about an example or two from long ago. I'm talking about 2019.

Review this chart and commentary from the August Elliott Wave Theorist:

ArgentineStocks

The Argentinian stock market, as represented by the S&P Merval Index plunged 38%. You read that right. It dropped by nearly 2/5 in the blink of an eye... The plunge in Argentinian assets is a warning to global investors that financial values today are precarious.

This was the second-worst single-day stock market plunge anywhere since 1950, according to Reuters. As the chart notes, it occurred from an all-time high.

With that in mind, one can't help but think about the longer-than 10-year bull market in U.S. stocks (the longest in history) and this sample headline from Oct. 28 (Washington Post):

S&P 500 hits all-time high...

Of course, U.S. stocks have hit many other all-time highs in the course of its longest bull market in history, and the main indexes have not seen a one day 38% plunge.

However, keep in mind that the patterns of investor psychology are the same everywhere around the globe and what happened in Argentina can happen anywhere.

Of course, some stock market moves might be more or less dramatic than others.

The beauty of the Elliott wave model is that it reflects these repetitive patterns. And, because these patterns do repeat, they are predictable.

Now is the time to learn what our Elliott wave experts anticipate next for the S&P 500 index.

You can do so risk-free for 30 days without any obligation. Look below to learn more.

How the Rules of Elliott Wave Analysis Can Help You

How does an investor make sense of the stock market's chart pattern?

Here's insight from Frost & Prechter's Wall Street classic book, Elliott Wave Principle: Key to Market Behavior:

Without Elliott, there appear to be an infinite number of possibilities for market action. What the Wave Principle provides is a means of first limiting the possibilities and then ordering the relative probabilities of possible future market paths. Elliott's highly specific rules reduce the number of valid alternatives to a minimum.

Our team of Elliott wave experts know the rules of Elliott Wave analysis like the back of their hands.

Learn what they expect next for stock market prices.

You can do so risk-free for 30 days. Click the link below to find out more...