Why you should expect an increase in popularity :: InvestMacro

– Here takes place a “rebirth of interest” in cycles and waves

by Elliot Wave International

You probably know that the term “technical analysis” refers to the analysis of the behavior of financial markets themselves – Like the stock market – unlike “fundamental” analysis that relies on news and events the outside from the financial markets.

Well, in recent years, technical analysis has been out of date.

traditional Elliot Wave Nazera monthly publication providing analysis of financial markets and cultural trends, and explains why:

When bear markets mature, technical analysis becomes all the rage. When bull markets mature, they are not even on investors’ radar.

The stock market has been in a bull market for more than a dozen years, so news releases based on technical analysis struggled. You might meet a market technician interviewed on financial television or for a print article here and there, but most of the interviewees provided “fundamental” analysis or external reasons for their market forecast. You see, “fundamental” analysis tends to be popular when the stock market is rising because people feel that the “society machine” and the market are connected and that both are working as they should. In bear markets, people start to feel that the “fundamentals” have failed, so they turn to other forecasting tools.

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This graph and commentary are from Robert Prechter’s historical book, The social theory of financeIn this article, he reveals how the popularity of financial theories has waned and waned with the trend of the stock market:

The graph shows that in times of increased positive social mood – such as the 1920s, 50s, 60s, 80s and 90s – people in finance tend to believe in human rationality and the ability of humans to control social trends. In times of heightened negative social mood – such as the 1930s, 1940s, 1970s, and 2000s – there is a rebirth in interest in irrational human behavior and the existence of cycles, waves, and even extraterrestrial influences such as sunspots.

You probably know that Elliott wave analysis is a form of technical analysis. It tracks a market pattern, which repeats in predictable ways.

If stock market prices continue to trend downward, expect a jump in the popularity of the Wave Principle.

Of course, you don’t have to wait to start using Elliott Waves. In fact, individuals were previously The Elliott Wave Pattern was created following the message of the Elliott Wave Pattern Before The downtrend in the Dow Industrials and the S&P 500 started in January.

In fact, the first part of January Elliot Wave Nazer (Posted December 31, 2021) He referred to the Elliott wave pattern when the post said:

The diagonals occur at the end of the larger sequences. If this diagonal proves to be correct, the market is poised for a reversal straight into a bear market.

After only two days of trading (January 5), the Dow Jones reached an intraday high and then “turned around”. The main index has been trading lower since then.

By contrast, a January 5 article was published in the mainstream financial press titled (Marketwatch):

Why the bull market will survive in 2022…

The article referred to the comments of three of the market newsletter writers, and these comments were largely focused on “fundamental” analysis, such as economic growth forecasts, earnings, drug sales, GM’s development of electric vehicles and so on.

There is no perfect analytical method, including wave theory. However, over decades of careful observations of the market, Elliott Wave International has concluded that the Elliott wave model is the most useful Analytical method available – in bullish or bearish markets.

If you would like to delve into the details of wave theory, we encourage you to read Frost & Prechter’s book, The Elliott Wave Principle: The Key to Market Behavior. Here’s a quote from the Wall Street classic:

Although it is the best prediction tool in existence, wave theory is not In the first class Forecasting tool It is a detailed description of how the markets will behave. However, this description conveys an enormous amount of knowledge about the position of the market within the behavioral chain and thus about the possible path it follows. The fundamental value of the wave theory is that it provides a Context for market analysis. This context provides a basis for disciplined thinking and perspective on the overall market situation and prospects. Sometimes their accuracy in identifying, and even anticipating, changes in trend is almost unbelievable. Many areas of mass human activity display the wave theory, but it is more common in the stock market.

Good news: You can access the full online version of the book for Free Once you become a member of Club EWI, the largest Elliott Wave learning community in the world (nearly 500,000 members worldwide and growing in number).

Club EWI membership is also free and unlocks access to a wealth of Elliott Wave investing and trading resources. At all times, you are under no obligation as a Club EWI member.

Simply follow this link to get started right away: The Elliott Wave Principle: The Key to Market Behavior – Free access.

This article was published by Elliott Wave International and was originally published with the headline Technical Analysis: Why you should expect an increase in popularity. EWI is the world’s largest market forecasting company. Its staff of full-time analysts led by Certified Market Technician Robert Prechter provides 24-hour market analysis to institutions and private investors around the world.

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