By Elliott Wave International
Price volatility in stocks and other instruments has been stunning the past few weeks. The VIX chart from the August 28 Elliott Wave Short Term Update puts the massive moves in perspective:
Short Term Update editor Steve Hochberg writes:
"This chart of the 5-day percentage change in the CBOE Volatility Index (VIX) shows [you] the explosiveness of Monday's [Aug. 24] range, as the percentage change shot to a record extreme for the index's 25-year history...
"In a section titled 'Here Comes the Volatility,' the July issue of [our] Elliott Wave Financial Forecast (see p. 7) said that an 'era of low volatility will be replaced by head-spinning stock market moves that will shake global stock markets to their foundation."
This stunning spike in volatility came on the heels of the forecast Bob Prechter, Elliott Wave International's president, made in his new Elliott Wave Theorist on August 19, one day before the bottom fell out:
"As shown in this issue, time and price factors call for an immediate end to this dream state. It will be pandemonium in the stock market.
"Time and price events have cleared the way for a stunning decline in US stock prices."
You can see what happened next:
99.9% of investors are panicking right now; Elliott Wave International's subscribers are not. Why? Because they were prepared. EWI prepared them for the 2007-2009 crisis, and they're doing it again. In fact, in the calm of Aug. 18, EWI's own Bob Prechter wrote a sharp critique of the U.S. stock market in his new Elliott Wave Theorist, in which he said to expect market "pandemonium." (His commentary was published the following day.)
"as shown in this issue, time and price factors call for an immediate end to this dream state. When the alarm goes off and the dreamers awake, it will be pandemonium in the stock market. As the next few charts show, time and price have run out of room. Together, these time and price events seem finally to have cleared the way for a stunning decline in US stock prices."
Get your free report, "Pandemonium in the Stock Market," now to learn what's behind the market chaos and what's next. It's adapted directly from two subscriber-level services, Bob Prechter's Elliott Wave Theorist and the EWI Financial Forecast.