London Stock Exchange … Stock: Predicting the Collapse of a “Parabolic Rise”
Five-waves up signaled a turn for this stock’s steep upward climb
by Bob Stokes
Updated: April 19, 2022
The first part of the Cambridge dictionary's definition of "parabolic" is: "having a type of curve like that made by an object that is thrown up in the air... ."
It's not straight up vertical but the trajectory is steep. Many investors have seen charts of financial markets which show such a parabolic rise.
Now, let's add the second part of the Cambridge dictionary's definition to the first part: "having a type of curve like that made by an object that is thrown up in the air and falls to the ground in a different place." [emphasis added]
Indeed, many investors have seen how this second part also applies to the price charts of financial markets at times.
Our September 2019 Global Market Perspective called attention to a parabolic rise in the stock price of the London Stock Exchange Group (LSE). Here's the chart and commentary:
The London Stock Exchange Group has been riding along an upward parabolic curve that has generated a 20-fold increase in the stock price since the late 2000s. Parabolic advances are inherently unsustainable, and this one is even more precarious given that we can count five waves up since the LSE's public debut.
As you may know, the completion of five-waves -- up or down -- signals the start of a new trend, which, in this case, would be down.
Well, here's an update on the price path of LSE from our just-published April Global Market Perspective:
The cited fifth wave turned out to be Minor wave 5 of Intermediate wave (3), one degree smaller than we originally anticipated. Intermediate wave (4), the ensuing decline, initially bounced off support, and [Intermediate] wave (5) completed an ending diagonal at 10,010 on February 16, 2021. [Afterwards], LSE Group dropped 30% in six weeks, and a countertrend rally peaked in June 2021.
As noted, sometimes an Elliott wave practitioner must adjust the wave count as a market's action unfolds. After all, the Wave Principle is an "exercise in probability." Having said that, the Wave Principle can sometimes offer amazingly "precise results."
Learn how our global analysts are applying the Wave Principle to 50-plus global markets as you follow the link below this video.
Don't React: Use EWI’s Global Analysts to Anticipate.
Have you noticed?
Most market prognosticators base their market forecasts on the news because...
...They believe financial prices react to news.
Elliott Wave International's exhaustive research has proven otherwise!
Decades of observations show that market prices are governed by Elliott waves, not exogenous causes.
This is how EWI's analysts anticipate.
Learn what our Elliott wave experts anticipate next for global stock markets (U.S., Europe, Asian-Pacific and beyond), rates, cryptocurrencies (including Bitcoin), metals, energy, forex and much more.
Follow the link below to get started right away.
Global Market Perspective
Gives you clear and actionable analysis and forecasts for the world’s major financial markets.
Get insights for the U.S., European and Asian-Pacific main stock indexes, precious metals, forex pairs, cryptos (including Bitcoin), global interest rates, energy markets, cultural trends and more.
Mood Riffs: Civil War in Pakistan? Plus, the Art of Vandalism
Our Video Mood Riffs feature goes beyond the markets to examine social and cultural trends. The new episode explains what Pakistan's stock market trend says about the country's civil war prospects, plus brings you a one-of-a-kind take on why we've seen so many cases of art vandalism lately.
Commodity Prices: After 1 Year of Declines, What’s Next?
Commodity prices and emerging markets tend to move together. Watch our Global Market Perspective contributor Mark Galasiewski walk you through a chart of Invesco DB Commodity Index Tracking Fund (DBC) to show how well it's been following its Elliott wave path.
“One of my favorite Elliott wave patterns”
How many euros does one Swedish krona buy? That's not your everyday question -- unless you're a forex trader. Watch European Short Term Update Editor Murray Gunn walk you through a EUR/SEK chart for some useful insights.