Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Have You Been Getting Run Over By This Stock Market Action?

Stock-Markets / Stock Markets 2018 Feb 16, 2018 - 10:53 AM GMT

By: Avi_Gilburt

Stock-Markets

"Stocks are going down because the economy is too good?"

How many times did you hear something like that quote over the last two weeks on television? And, it was accompanied by the barrage of reports proclaiming the demise of the bull market which began in 2009. But, if you are a thinking person, clearly you had to have been scratching your head.


Oh, and let’s not forget about how rising rates caused us to drop off the all-time highs. I wrote about how foolish this was last week, and CNBC has proven just how ridiculous these perspectives really are.

And, today, we were told that if the CPI would suggest inflation is rearing its ugly head, the market would continue to tank. Yet, the market held the support I noted to my subscribers to the penny and continued higher, as we added another 35 points to the SPX today. So, I ask you after today’s action, is inflation good or bad for the market?

Who cares. If you have not figured it out yet, all of this is simply noise. How can one truly be able to identify how the market will move based upon all of this “data?” Anyone that has been trying would certainly have been run over. I mean, would you drive your car looking out the back window?

But, as I have noted so many times before, the market is an emotional environment, and is not data driven. While news may act as a catalyst or cause a knee jerk reaction, it has no true lasting effect upon the overall trend. As Ralph Nelson Elliott noted 80 years ago:

“The causes of these cyclical changes seem clearly to have their origin in the immutable natural law that governs all things, including the various moods of human behavior. Causes, therefore, tend to become relatively unimportant in the long term progress of the cycle. This fundamental law cannot be subverted or set aside by statutes or restrictions. Current news and political developments are of only incidental important, soon forgotten; their presumed influence on market trends is not as weighty as is commonly believed . . . At best, news is the tardy recognition of forces that have already been at work for some time and is startling only to those unaware of the trend.”

As Robert Prechter also noted:

“once you realize that even if you got [the news] in advance, you could not forecast the stock market. Though these facts are counter-intuitive, it does not take a dedicated market student long to observe the acausality of news to the stock market.”

In fact, a commenter to one of my articles on Seeking Alpha made the following astute point regarding how news affects these subconscious herding trends:

“Compare the market to a stream of ants marching by in, generally, a single direction. Run a stick across their path and there will be some momentary confusion and reaction to the direct stimuli but very soon afterwards the original parade of ants continues and the stimulus is forgotten.”

So rather than chasing your tail after the next piece of news is released, maybe you should consider that there is something stronger out there that provides direction to our markets?

As far as such direction, our target for this pullback was the 2424-2539SPX region, and the market has now struck the minimal target I had set for this wave (4) correction. In fact, once we hit those lows, I guided my subscribers to be looking for a rally back towards the 2725SPX region.

However, I still have no clear indications that this correction has run its course. Much will depend on how the next drop takes shape, and that will likely be instructive as to whether we have begun a rally to our next higher target in the SPX between 3011-3223, or if this correction will take more time, and provide us with another loop to the downside. For now, I still favor another loop to the downside, but will be listening to the messages provided by the market, rather than the ones provided by the news.

See charts illustrating the wave counts on the S&P 500.

Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net (www.elliottwavetrader.net), a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.

© 2018 Copyright Avi Gilburt - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in