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1) Uptrends terminate at resistance while downtrends terminate at support. Previous highs and lows often act as resistance and support.
In ALCOA Inc (AA), the September 2012 selloff found support near the previous July 2012 low.
The February 2013 peak occurred following a test of resistance at the January peak at $9.33.
2) Trendlines offer resistance and support for prices.
The 2008 advance in Gold found support numerous times near the trendline that connected the lows of the move.
Conversely, the trendline connecting the highs of Wheat's 2012-2013 decline provided resistance for countertrend price action.
3) Fibonacci ratios also identify resistance and support. As Elliotticians, we often look at retracements, the most common being .382, .500 and .618.
For more free trading lessons on trendlines, download Jeffrey Kennedy's free 14-page eBook, Trading the Line -- 5 Ways You Can Use Trendlines to Improve Your Trading Decisions. It explains the power of simple trendlines, how to draw them, and how to determine when the trend has actually changed. Download your free eBook.
Interest rates, oil prices, earnings, GDP, wars, peace, terrorism, inflation, monetary policy, etc. -- NONE have a reliable effect on the stock market
By Elliott Wave International
You may remember that after the 2008-2009 crash, many called into question traditional economic models. Why did they fail?
And more importantly, will they warn us of a new approaching doomsday, should there be one?
This series gives you a well-researched answer. Here is the conclusion of this 10-part series.
Myth #10: "Central banks and government policies control the markets." By Robert Prechter (excerpted from the monthly Elliott Wave Theorist; published since 1979)
Virtually everyone believes this statement; certainly most economists do. Keynesians and monetarists believe that authorities can control the money supply and interest rates, and most neo-Austrians believe that the Fed is all-powerful when it comes to inflating: Whatever inflation rate it wants, it simply manufactures.
Not long ago [in late 2008 -- Ed.] the U.S. government announced that it will fully back the debt of the mortgage companies it created (Fannie Mae, Freddie Mac); it pledged to use taxpayers' money and borrow unlimited amounts to fund banks that it deems "too big to fail," while pledging that the FDIC will fund shortfalls at all other banks. At the same time, the world's top central banks offered unlimited credit at near-zero interest rates, in other words, free money.
According to the exogenous-cause model, these historic pledges and bailouts should have had immediate results. Take a look at Figure 20. Can you tell where on this graph of stock prices authorities took these actions?
According to the economists' beliefs, the only rational place for them to have taken place would be at the bottom of the market. The minute the authorities began flooding the market with liquidity is the minute it should have turned up.
Figure 21 shows that in fact these actions took place in the early portion of the biggest stock market decline in 76 years. These actions did not push stock prices back up. The market finally bottomed months later, at a time when nothing along these lines happened.
It is no good to claim that these actions had results eventually. By that reasoning, any future turn in the stock market would prove the contention. Such reasoning is tautological, because the market fluctuates.
An exogenous-cause believer would do far better to explain this result by claiming that authorities' actions of this type must be bearish, because every time they acted, the market fell; and when they finally stopped, it rose.
Economists do not advance this argument, because they can't make sense of it. Instead, they cling to their traditional cause-and-effect logic, while the markets just do what they want.
Over the preceding pages, we have seen that interest rates, oil price changes, the balance of trade, changes in earnings, changes in GDP, the onset or termination of war, peaceful times, terrorist attacks, inflation, a central bank's monetary policy and a government's fiscal policy have no reliable effect on financial market prices. Sixty-four years ago, a financial modeler named Ralph Nelson Elliott, after observing markets for some time, concluded,
"Current news and political developments are of only incidental importance, soon forgotten; their presumed influence on market trends is not as weighty as is commonly believed."
According to our investigation, Elliott was too generous; they appear to carry no weight at all.
I am unaware of any exogenous-cause claim that holds up under scrutiny. An event that seems to affect stock prices one way in the present, when investigated in the past, fails to provide any consistently reliable relationship. Even claims that seem inescapably reasonable, if not irrefutable, fail the test of even moderately rigorous empirical observation.
I have tested every exogenous-cause statement or assumption I have heard, not all of which are included here. So far, none of them work. Many exogenous-cause statements contradict others, as we saw throughout this discussion. Proponents often adopt one argument and then the other, to fit market events.
We still await exogenous-cause proponents to make any statement of stock-market causality -- or social-mood causality -- that holds up consistently throughout the historical record. ...
This article was syndicated by Elliott Wave International and was originally published under the headline Don't Get Ruined by These 10 Popular Investment Myths (Part X). EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
“Over-the-hill” in Corporate America is getting a lot younger. There are many more Americans turning 55 in recent years than turning 25. Many of the 78 million Baby Boomers are asking the question, “What am I going to do with the rest of my life?”
These later-in-life career changers don’t care about taking it easier and often will work as hard or harder than they did in the jobs they left behind.
As Bernard Baruch once said, “Age is only a number, a cipher for the records. A man can’t retire his experience. He must use it. Experience achieves more with less energy and time.” Knowing who you are and whatyou want to achieve in your second career matters.
Deep in a forest in northern Canada, a radio crackles to life and Pvt. Mike Hunter is ordered to stand down and return to base. Pvt. Hunter, of this Canadian army training exercise, is aged 79, and on maneuvers.
Old soldiers never die. In Canada, some don't want to retire either. Retirement is not for everyone; it is perfectly alright to work until you die, if that is what turns you on.
For example, Roy realized that there would be bloodshed if he hung around the house with his wife all day. He was lucky: he found part time work, a 20-minute drive from home. When he was asked, "Why not retire?", he would give the same answer every time. "Work keeps me alive."
Joanne, a 68-year-old woman, worked doing odd jobs for her friend's real estate company. When she had free time, she enjoyed playing golf and spending time with her husband. After taking a six month trip across the USA, she said, "Now it is time for me to get to work." And she was off, happy and focused on the present.
What these stories illustrate is that work plays more than just a monetary role in our lives. It helps us feel connected within society. It gives us a focus for some of our energy. It helps us feel a sense of worth and value, and sometimes it is our identity.
What people come to realize is that the ideal situation is a balance of work and leisure with the shift moving heavily into leisure (if you can afford it). If we have our health and if we have developed leisure activities, we can greatly enjoy old age.
Today's business environment has begun to appreciate the knowledge and contribution that older workers bring to the workforce. There is no reason that an older individual cannot make substantial contributions in less strenuous positions to almost any business well into their 70s and, for some individuals, even longer.
Gain the ultimate advantage with our FREE eBook "How to use the Wave Principle to Boost Your Forex Trading"
By Elliott Wave International
The foreign currency exchange market, known as forex, is the most liquid financial market on the planet -- liquid to the tune of $5.3 trillion traded per day!
That basically means every single day in forex is the day after Thanksgiving -- a.k.a. "Black Friday" -- with a stampede of traders pounding at the front door come opening bell, and then frantically racing up and down the market aisles in search of opportunities.
It's madness. Market turns are lightning fast. You have to be faster. You have one single goal: Get there before they're gone.
That goal, however, is difficult to attain if you're following the blueprint of mainstream financial analysis; which tells you to look outside the market for clues as to where prices will go next. The trouble with this strategy is that when you have your eyes focused outside the markets, you often miss high-confidence trade set-ups developing on the price charts themselves.
Take, for instance, the recent near-term performance in the euro/Canadian dollar exchange rate, forex name EURCAD. On November 20, the EURCAD took a nasty fall and continued slipping to a one-month low on November 21. Mainstream analysis identified the "cause" of the move after prices had already started to reverse:
"The euro weakened against other major currencies after data showed that Germany's private sector activity expanded at the slowest pace since July last year."
Now, on November 19 -- before the EURCAD began to turn down -- Elliott Wave International's Currency Pro Service identified one of the most exciting Elliott wave trade set-ups on the EURCAD price chart: An ending second wave. Once complete, the stage would be set for the most powerful part of the wave sequence -- a third wave decline:
"The upward pattern is still anticipated to end and thereby complete a larger circled second wave correction. Therefore, we will continue to look for an impulsive five-wave decline back toward 1.4035 to signal that an expected circled third wave decline had probably started."
The next chart shows you how EURCAD fulfilled its third wave script by falling to a one-month low.
You've just seen how Elliott wave analysis has a very real place in the world of forex trading.
Here's an excerpt from Jim's eBook, in which he teaches you how to prepare for a third wave move in advance:
"Here you see an idealized Elliott wave with five waves trending up, and three waves trending down. Which waves offer trading opportunities? Waves 3, 5, A and C offer the best opportunities, though I typically do not trade wave A. If I had to choose just one wave, it would be wave 3 because the third wave is usually the longest and the most powerful of the impulse waves. Trading the most powerful wave also offers the opportunity to trade with the best risk-reward ratio."
"Let's concentrate on trading wave (3) since it's usually the longest and strongest wave, and the trend is clear. That means we want to identify the wave (2) that will lead into a strong third wave."
"Based on one rule of the Wave Principle, I know where the count becomes wrong. Wave (2) cannot retrace more than 100% of wave (1). So I draw a line at the start of wave (1) (marked with a dashed line labeled "Protective Stop") and if the decline surpasses that level, I know that my count is incorrect. Elliot wave is one of few methodologies that give us an absolute number for our protective stop."
This article was syndicated by Elliott Wave International and was originally published under the headline Every Day is Black Friday in the World of Forex. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
As early as 2011, our analysis warned that Europe's deflation was coming -- here's why
By Elliott Wave International
For the economies of Europe, the past few months have felt like one long ice-bucket challenge that never ends: A perpetual state of shock induced by the bone-chilling fact that deflation
"...has become a reality in many European countries." (Oct. 24, New York Times)
At last count, eight European nations are now in outright deflation, including:
Italy's -0.1% annual inflation, the country's first descent into deflation since 1959
Spain's -0.3% annual inflation, the most serious deflation of any larger eurozone economy
France's near 0.0% core inflation, the lowest in modern history
And no, in case you were wondering, it's not the warm and fuzzy kind of "good deflation" being touted here in the United States, where the only consequence is lower prices. In Europe, it's the
"...pretty awful kind." "Titanic Europe headed for shipwreck" KIND OF awful (Nov.14, The Telegraph)
So, we ask you: What could possibly be scarier than deflation? How about -- not even being able to foresee it?
Yes, deflation was a surprise to the financial authorities. Says one Oct. 12 financial blog post:
"It seems the entire world is cooling off in ways most political leaders and central bankers never saw coming. Global finance ministers are now up against a beast none have known in their professional lives."
That's what should keep adults like you and me up all night -- the "never-saw-it-coming" part. Just how safe is our future if the people whose job it is to keep the world's economies stable lack the tools to predict one of the most dangerous economic conditions?
This recent lack of foresight jives with what former Federal Reserve chairman Alan "The Maestro" Greenspan said in 2008:
"We can tell a bubble only after it burst."
It also jives with what some big wig at the Organization for Economic Co-operation & Development said in 2012:
"The responsibility of the 'latest' financial crisis, which no one saw coming, should be borne by all of us."
But the fact is -- there was -- and is -- a way to see these deflationary economic sea changes coming.
This chart of the UK Consumer Price Index is a reliable bellwether for inflation in Europe. You can see that price expansion peaked in September 2011 at 5.2%:
At the time, the "D" word was completely off the mainstream radar. Soaring oil, grain, and commodity prices, alongside a stimulus-happy European Central Bank fueled widespread fears of runaway inflation.
One month before the top, Elliott Wave International's August 2011European Financial Forecast laid the opposing groundwork:
"We maintain our stance, however, that the looming threat is not inflation but deflation. Far from a sense of relief, the Banks' paramount feelings should soon develop into an unrelenting dread."
Here's what made us take a contrarian stance (among many other reasons):
[In the August 2011 issue,] for instance, we showed a chart of eurozone manufacturing production and British GDP growth. Both were falling, not rising, indicating Europe's likely return to economic contraction.
[This] chart is another key piece of deflationary evidence... It shows the relentless downward trajectory of Swiss, German and British 10-year bond yields, which is one of the thorniest problems for those who take the inflationist worldview.
Bond yields aren't just falling: 10-year Swiss, German and British yields collectively dropped to record lows last month. The unrelenting demand for Europe's safest debt is a smoking howitzer that is blowing the inflationists' case to pieces.
-- The European Financial Forecast, Sept. 2011
However, the widespread call for inflation only continued to intensify in the mainstream finance. In fact, in February 2012, when the U.K. producer price inflation came in higher than expected, it prompted this word of advice from economists:
"PPI: Another wake-up call for apoplithorismosphobes, the clinical term for those who fear deflation. We recommend that sufferers 'seek therapy.'" (March 12, Wall Street Journal)
Yet, our July 2012 European Financial Forecast remained committed to its counter claim:
"Our models say that inflation rates will keep failing until they're again measuring the rate of deflation as they last did briefly in 2009."
So, it's now 2014 and deflation in Europe is no longer a specter or a figment of an unbalanced imagination. Here's a comment from the September2014 European Financial Forecast:
"The central bank's latest deflation-fighting contrivance is a €400 billion package of targeted LTRO loans, which are designed to compel banks to lend to ordinary business owners... The ECB has slashed its main refinancing rate to 0.15% and now charges for banks' overnight deposits. The result? Shown below, Europe's largest economy, Germany, just contracted 0.2%; French economic output has ground to a halt; and Italy just entered its third recession since 2008."
Now that deflation in Europe is a reality, the question is -- will it get better? Is this just a temporary economic condition that will be soon replaced with another one -- the condition that economists are much more familiar with, inflation?
We don't think deflation will surrender quite so easily. Want to learn more about deflation before it could potentially affect your investments?
Today, we invite you to read a free report from Elliott Wave International titled, What You Need to Know About Protecting Yourself from Deflation. This 10-page report will help you understand how you can better prepare yourself for its devastating effects.
This article was syndicated by Elliott Wave International and was originally published under the headline What's Scarier Than DE-flation?. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
Researchers have found people who remarry after a spouse’s death report less depression and a greater sense of well-being and life satisfaction than those who don’t remarry, says Camille Wortman, professor of psychology at Stony Brook University, in New York, whose research focuses on grief.
“Men lose more when a spouse dies,” says Dr. Wortman. Wives often watch over their husbands’ health and tend to take care of more of the housework. Because men often have fewer friends than women, wives are typically their husbands’ main social and emotional outlet.
There is no set timeline for moving on. Some people need a lot of time to grieve. Others are ready to date pretty soon. Only you will know what is right for you.
Ask yourself: Am I ready to trust somebody again? And am I ready to care about another partner?
Your children may not be thrilled that you want to meet someone. But if you’re happy and balanced, you’ll be a better role model and a happier person overall. Talk to your children, no matter their age. Tell them why you are dating. Explain no one will ever replace their other parent. Reassure them that you will be safe and cautious.
You don’t have to let go of your positive feelings about your spouse and marriage. You aren’t looking to replace that person. Your spouse was unique. If you take that as a given, you can move forward.
Cope with the loss itself: Talk with others. Join a support group. Join a special activity group to meet others and do things that matter to you.
Stay hopeful and optimistic. Remember, you can and will find love again. You are never too old. Don’t let yourself feel pressured to make decisions you aren’t comfortable with.
We change our values and needs as time goes on, and especially after the loss of a spouse. Identify your needs and desires, and what values are important to you. Identify what you want in a new mate.
Think about what you liked and disliked in your first partner to help define what you want. If you know what you are looking for, you’ll be more likely to find that person.
The following article was adapted with permission from the November 2014 issue of The Elliott Wave Financial Forecast, a publication from Elliott Wave International, the world's largest market forecasting firm. Follow this link for the complete article.
Here's a key principle concerning the role of government in bull and bear markets, as outlined in The Elliott Wave Theorist in 1991:
Government is the ultimate crowd, every decision being made by committee. It is always acting on the last trend. (For example, the Federal government passed securities laws to prevent the 1929-1932 crash...in 1934.)
The Federal government repealed that law, known as Glass-Steagall, in November 1999. [A major peak in stocks] occurred within a matter of weeks, in January 2000. Government's effort to bring back the old bull market started in 2001 with a bailout of Argentina. Citing a critical difference from prior bull market rescue efforts, the September 2001 issue of The Elliott Wave Financial Forecast asserted that the stock market would fall straight through the effort to shore up that country. It did, as the Dow declined 30% through October 2002.
A similar short-term market plunge through a government-sponsored bailout initiative occurred on October 2. That's when Mario Draghi, president of the European Central Bank, announced a quantitative easing program under which the central bank will buy $1.3 trillion in loans and mortgages, "including some junk-rated assets from Greece and Cyprus."
Draghi pulled the trigger even though the Euro Stoxx 50 Index has rallied for almost three years and, at the time of the announcement, was within 5% of its June high.
In 2012, Draghi's bold "whatever it takes" ad-lib was "seen as a masterstroke that halted the downward economic spiral that had gripped the continent." This time he fired live rounds in the form of a long-awaited "U.S. Federal Reserve-style QE" program. But the blue chip European stock index gave him no respect; it fell. The Euro Stoxx 50 is still down 3% from its October 2 close.
The performance is similar to what happened in November 2007, when a consortium of banks organized by the U.S. Treasury created a fund (called M-Lec) to rescue the hemorrhaging market for subprime loans. At the time, The Elliott Wave Financial Forecast explained that the difference between bailouts in a healthy bull market and those in a major bear market is that in a bull market the bailouts invariably come near major lows, when the market is ready to turn up anyway. In bear markets, however, pessimism is more persistent, and the stock market ultimately falls through even the most aggressive bailout efforts.
The Elliott Wave Financial Forecast also stated that the "fascinating thing about the bailout attempt is that it was needed before the stock market even headed down. As we said in April : Chrysler and Continental Illinois were 'too big to fail,' the unfolding crisis will be 'too big to bail.'"
Senior RV Travel America Dream Come True Comes with Mosquitos and Mechanics
Like many a retired couple, Jo Ann Bender and her husband Skipper thought it would be a grand adventure and a dream come true. So they upgraded the interior of a $7,000, 1973 Ford motor home and spent $3,000 in repairs hoping that would be sufficient to fix the engine and they hit the road.
In her new book Snowbirds, Jo An Bender shares what happened to them on their 2,000 mile trip from Spokane to Texas.
Instead of enjoying the wonders of nature and the exploring the scenery in the parks, it turned into a nightmare of breakdowns by the side of the road, and hours searching for, finding, and then getting help from mechanics everywhere along the route.
They learn new skills as navigators and mechanics as they plow joyfully ahead with their cantankerous little motorhome looking for free parking. The challenges are aplenty as they head to hot springs, Indian ruins, Western Forts, the Marfa Lights, and a Mariachi Mass at a San Antonio Mission.
And along the way, Jo Ann records her experiences and the many discoveries she and Skipper make during the course of their journey. Here’s a sample:
“As we drove down the lonely highway, a tape played, and I heard the words, “Fill your dreams with sweet tomorrows,” and I started to glow all over. I wondered what time it had gotten to be and notice that I was not wearing my watch.
Discovery No. 1: I didn’t care. Deadlines were part of another world. What were the parameters of that “other world”? Minute-to-minute timing to match time with goals. Pressure to meet deadlines. Always planning more activities than could genuinely be experienced.
Discovery No. 2: I felt a sense of rightness of journeying on a predestinated path. Th e inner spirit seemed to be shining, a feeling that the soul was being bathed in the waters it sought. Tears glistened.”
The couple’s two month semi-business trip required $2,000 a month for fuel, food, camping and $1,500 for repairs. This was less than they would have had to pay at home during the two highest months of utility bills. Insurance of the car left at home was lessened by being “on vacation.”
Snowbirdsis a delightful guide to anyone who dreams of taking on such an adventure, although maybe not in a vintage motorhome. It’s packed full of insights and how to do things that need to be done safely on and off the road, what provisions to take and how to pack so everything has a definite spot and can be found again.
One of major problems with life in an RV. Things have a way of disappearing that become a waste of energy, frustration and loss of good feelings.
Discovery No. 7: When you’re on the road, it’s difficult to do more than get from one destination to another, especially when weather conditions make driving hazardous. Road Gods must be similar to River Gods: they like to claim something for themselves. In Portland, it was a turtleneck left in a dryer.
A RV brings out the best and the worst in personal relationships. Small spaces are ideal for some couples. For others, even with outdoor living possible under awnings, there is nowhere to get away from each other. As Skipper points out at one point in frustration, “There’s no place to have a good fight in such a small space.”
Discovery No. 8: Indispensable Items for a Snowbird trip
1. The trip log with tickler notes
2. Frozen, easy-to-cook meals, prepared at home and packaged in freezer bags, laid flat
3. A map for each state
5. New wiper blades
6. Bathrobes and slippers
7. Gifts representing our state (potatoes, apples, handmade items, the cookbook we wrote)
8. Easy-going companion with a sense of humor
9. Tool kit with wrenches, sockets
10. Rolls of quarters for laundry, tolls, phone calls, gambling (minimum of sixty dollars in cash for each day we’ll be on the road for groceries, attractions, and cash-only service stations)
11. Flashlight for each occupant, plus one spare for the person who can’t find theirs
12. Flood lamp
The Best Part of the Trip. The RV world is vast. It is as beautiful and challenging as this wonderful world we call home – the U.S. of A. We went off to explore parts of it and returned feeling the responsibility and privileges of being a citizen.
Discovery No. 16: Buy a motor home but buy one you can afford so you can love—not resent—it.
When we viewed and drove miles of golden lands, we thanked our country for the good roads which allowed us the opportunity at little cost to explore so we could meet diverse people and savor foods and other lifestyles.
Discovery No. 17: Repeat Discovery No. 16. Buy what you can afford without hurting your quality of life, and it will be the best decision you ever made.