Why I like Elliott Wave Internationals Analysis

Not the wave counts, but their outstanding monthly analysis, for years subscribers to their material have been aware of the content of this post, obviously not the current up to date data, but every month we’ve been warned of the true state of the worlds markets based on FACTS.

EWI can, do and have got a little carried away on their predicted wave counts, which is understandable, but if you distance yourself from those and see the facts, figures and analysis for what it truly is – an Indication of the true context of the markets then you can be aware of what may or may not be lurking around the corner.

For me?  Gold – topped in 2011 = not surprised – whilst “experts” where advising mass buying of the shiny stuff

Commodities struggling = not surprised

Understanding what the market did following QE issuance = not surprised

QE does not work during a deflationary depression – something I agree on with EWI – what has happened and why have markets stood up?  The time cycle (In my opinion), If I’m right on the Time Cycle the lows been and gone on 6th March 2009, the market should hold up regardless of economic theories, EW counts and so on.  I’m on record as saying that the 1929 event has already happened – it happened in 2000 with the Nasdaq – just get the charts and compare – been and gone in opinion.

Now knowing all this does not make it easier to trade with exactness!  But if you have more knowledge of the indicators that really matter you can rest, sleep and trade a lot easier than those that might be concerned about things but can’t quite place their finger on a logical explanation which helps to level the mind.

Enjoy the read:

Commodities Falling Despite QE: What Does That Mean?

Robert Prechter: “Charts tell the truth. Let’s look at some charts.”

By Elliott Wave International

During QE3, the latest round of the Fed’s quantitative easing, the stock market rose. We all know that.

But did you also know that commodities fell?

That’s right: QE3 had zero effect on commodities — or maybe
even a negative effect. In fact, an unbiased observer of the
trend might conclude that the Fed drove commodity prices down.

That, of course, would be heresy to investors who believe
that the Fed’s actions have been inflating all financial
markets.

What should you make of the fact that commodities have failed to respond to the massive, historic, unprecedented central-bank stimulus? We see it as a red flag.

What’s more, you may be surprised to know that not one of the Fed’s stimulus programs — QE1, QE2 and QE3 — pushed up commodity prices.

As Robert Prechter, the president of Elliott Wave International,
wrote in his November 2013 Elliott Wave Theorist,
“Charts tell the truth. Let’s look at some charts.” These
four charts and analysis that he published in May, July, and
November 2013 tell the story:

(Robert Prechter, July 2013 Elliott Wave Theorist)

The CRB index of commodities has been losing ground for
more than two years, as shown in Figure 3. Notice the four
short arrows on the chart. Based on their positions, you
might think they would mark the timing of accurate sell
signals
generated by a secret indicator. But there’s
no secret indicator. These happen to be the times at which
the Fed launched its inflationary QE programs!

Investors almost universally take news at face value rather than paradoxically as they should. So they believed the Fed’s QE actions would be bullish for commodities. But — ironically yet naturally — every launch of a new QE program provided an opportunity to sell commodities near a high.

The first time the Fed bought a slew of new assets (QE0) was in 2008, and commodities went straight down during the entire buying spree.

QE1 (see below) was just a swapping of assets, not new buying, so it wasn’t inflationary; ironically, commodities rose during this time.

Commodities rose a little bit after the inflationary QE2 started but ultimately went lower. Since QE3 and QE4 — the two most aggressive programs of inflating the Fed has ever initiated — commodity prices have been trending lower as well.

Are commodities just late and poised to soar? I don’t think so. Figure 4 shows a chart of the CRB index published in The Elliott Wave Theorist back in May 2011.

It shows a three-step, countertrend rally … inside of a parallel trend channel … at a [Fibonacci] 62% retracement … thus giving three reasons to expect a peak at that time. [Indeed] the CRB index has trended moderately but persistently lower since then.

Prechter gave another update in his November 2013 Elliott Wave Theorist:

Commodities are in a bear market. Figure 1 proves that the Fed’s feverish quantitative easing (QE) — i.e. record fiat-money inflating — is not driving overall prices of goods higher.

The bear market in commodities began two months before the Fed’s massive asset-buying program began. Despite the Fed’s inflating at a 33% rate annually for five straight years, commodities are still slipping lower.

Prechter’s final point from the November 2013 Elliott Wave Theorist summarizes it best:

None of the believers in omnipotent monetary authorities and their pledges to inflate saw any of those changes coming. Meanwhile, we couldn’t see how it could turn out any other way.

The largest inverted debt pyramid in the history of the world is the reason that QE won’t work. The future is already fully mortgaged.


15 Hand-Picked Charts to Help You See What’s Coming in the Markets
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Have you ever seen price charts that tell a story clearly? Prechter chose 15 charts to explain to his subscribers where the financial markets are headed in 2014. They cover markets like the S&P 500, NASDAQ, the Dow, commodities, gold, and mutual funds. With this information, they are now prepared to be on the right side of the financial markets. You can be, too, because, in a rare opportunity, we can offer you a look at the whole issue — FREE.

Prechter says that “charts tell the truth.” Here is your chance to see what truths these charts are telling. If a picture is worth a thousand words, then this latest publication is like reading more than 15,000 words of his market analysis.

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