Better Trader

An Urgent New Resource from Market Technician Bob Prechter

On Tuesday afternoon (April 23), Robert Prechter, a famed market technician known for calling the roaring bull market of the '80s, the 1987 crash and the March 2009 stock market low, published an urgent new issue of his Elliott Wave Theorist.

This issue is so powerful -- and so urgent -- that EWI has unlocked the first two pages for you to read with no obligation to buy.

Every issue of the Theorist provides you with a unique look at tomorrow's news today. This issue meets that high standard and more. It's one of the most powerful and revealing issues of the Theorist subscribers will ever read. Now, Prechter is not always right. Unfortunately, no market analyst is. But there's one thing his readers know for certain: When Prechter revs up his urgency, he sees something big on the horizon.

Due to the timely nature of this issue, EWI cannot make the first two pages available indefinitely, so they've set a date of May 8 to end this special promotion -- at which time the first two pages will no longer be available for free.

Please follow this link to get instant access to the first two pages of Prechter's urgent market letter

Two Signs That Deflation is Far From Over

By Elliott Wave International

A key economic index turns south.

The Producer Price Index decline is happening in tandem with a notable reversal in consumer sentiment. The Federal Reserve's machinations -- which includes the Dec. 12 announcement of $45-billion in monthly Treasury bond purchases -- will not stave off a developing deflationary trend. How much farther does the economic cycle have to go before it reaches the bottom? Read more.

Dow-30, FTSE-100 & Dax-30

By Ashraf Laidi

As global equity indices decline 3-4% from their highs, questions emerge on the length and duration of the next pullback. Both the FTSE-100 and the Dax-30 staged a 13% rally into late January from their lows of late November. The Dow-30 rose by the same amount but started its rally two weeks earlier than its German and UK counterparts. It also sustained a 3% decline in the second half of December.

European equities are facing their first event-driven decline since the November declines, which were in sympathy of the US sell-off following president Obama’s victory and the ensuing implications for capital and income taxes. Once UK and continental European bourses rallied on the hammering of a Greek debt swap deal, US equities were left behind to worry about the cliff-on-cliff-off fears ahead of the December 31 deadline on avoiding the fiscal cliff. Meanwhile, European and Asian indices went on to chart +30% gains for the year.

Three months later, as we approach the four-year anniversary the multi-year bottom in global equities, the risk climate is no longer free. Two major event risks loom large into the horizon: the threat of Italy’s elections disrupting the nation’s path to economic reforms; and the possible “sequestration” of $85bn in US government spending cuts if no deal is reached by March 1st.

The consequences for each are grave. In the event that Monti’s centre left-Democrat coalition fails to win and Berlusconi’s rightist coalition takes on power and blocks reforms, Italian bond yields will regain the 5.00% level, reigniting speculation of Italy demanding the Outright Market Transactions from the ECB. Yields on 10-year Italian bonds have already hit a three-month high at 4.9%. The consequences are enormous for yields of the €1.98 trillion bond market to revisit their 6% levels.

In the case of the US, markets are already pricing another last minute solution between Democrats and Republican to avoid $85bn of automatic cuts. The Federal Reserve is keeping an eye, and as Chairman Bernanke indicated today, QE3 shall remain as long as unemployment is not reduced. The combination of continued Fed easing, renewed asset purchases from the Bank of England and the Japanese government’s appointment of the pro-reflation Kuroda, global equities are unlikely to sustain declines of more than 5% from current levels.

The Dow Jones Industrials Index is currently supported by the November trendline, coinciding with the previous resistance (now support) around 13,580. We expect renewed buying at those levels for a fresh revisit of 14,000, followed by 14,550s.

The FTSE-100’s is 50-60 pts above its own November trendline support, may give way to prolonged selling towards 6,080s. The index had consistently lagged behind its European and US counterparts through last year until catching up in late Q4. Just when it caught up with its peers, the FTSE shall require a fresh boost from the BoE to combat speculation of a triple dip recession and the threat of more austerity around the March Budget Statement.

DAX-30 nears the triple confluence of November trendline support, the base of the past four weeks and the intermediate high from September at 7,480s. In order for the DAX to lose footing below 7,300s, we have to see an Italy election impasse drag into late Q2 at the expense of further bailouts from Berlin, Frankfurt and Brussels. Markets will also watch Germany’s PMI indices (manufacturing and services) for a continuation of home-driven domestic demand overcoming concerns of a drag from the periphery. A break below 7,250 risks accelerating losses towards the 55-WMA of 7,050.

 

Ashraf Laidi is Chief Global Strategist at Leading Spread Betting Company - City Index

Global Markets, Economies Mired in Early Stages of Biggest Disaster Ever

By Elliott Wave International

The following is a sample from Elliott Wave International's new 40-page report, The State of the Global Markets -- 2013 Edition: The Most Important Investment Report You'll Read This Year. This article was originally published in Robert Prechter's September 2012 Elliott Wave Theorist. Read more.

The Most Important Investment Event You'll Attend in 2013 (and it's free)

Consider yourself warned.

The global market outlook is far less rosy than world leaders would have you believe.

Global stocks are near multi-decade, technical price junctures.
Regional economies recently said to be "recovering" are now slipping back into recession.
Despite a multi-year rally in stocks, the AP reported on Dec. 27 that mainstream investors are selling shares at breakneck pace. "It's the first time ordinary folks have sold during a sustained bull market since relevant records were first kept during World War II."

In their speeches, proclamations and world economic summits, politicians and central bankers reassure investors that the credit crisis of 2007-2009 will turn out to be nothing more than a footnote in market history -- despite the compelling evidence that it never truly ended.

Meanwhile, US Congress is once again facing a dangerous deadline for solving its gargantuan budget woes, Europe remains in turmoil, and Asian-Pacific regions and emerging markets are charting surprising courses of their own.

ASK YOURSELF:

As the year 2013 goes forward, do I have the means to prepare for tomorrow's news today?

Elliott Wave International's top analysts have already gone on the record -- with the cameras rolling, literally -- to discuss markets from oil to stocks to bonds, in the US, Asia-Pacific, and Europe.

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    Understanding the Extraordinary Value of the Wave Principle (Robert Prechter, Feb. 9)
    Buy & Hold or Sell and Fold? Where Are the US Markets Headed in 2013? (Hochberg, Feb. 13)
    Europe: Is it as Bad as it Looks? Or is it Worse? (Whitmer, Feb. 14)
    And more, including a 40-minute keynote from Robert Prechter on Feb. 17 and a Q&A video presentation Feb. 20.

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IMPORTANT: Please don't make any investment decisions without reading EWI's report first.

The Most Important Investment Report You'll Read for 2013

Exclusive invitation: Our friends at Elliott Wave International have just released their new 40-page independent investor report, The State of the Global Markets -- 2013 Edition: The Most Important Investment Report You'll Read This Year. On an exclusive, limited-time basis, they've allowed us to share it with you for FREE. Learn more and download your 40-page report now.

Consider yourself warned.

The global market outlook is far less rosy than the emperors-minus-their-clothes would have you believe.

    Global stocks are near multi-decade, technical price junctures.
    Regional economies recently said to be "recovering" are now slipping back into recession.
    Despite a multi-year rally in stocks, the AP reported on Dec. 27 that mainstream investors are selling shares at breakneck pace. "It's the first time ordinary folks have sold during a sustained bull market since relevant records were first kept during World War II."

Politicians and central bankers worldwide reassure investors that the credit crisis of 2007-2009 will turn out to be nothing more than a footnote in market history -- despite the compelling proof that it never truly ended.

Meanwhile, U.S. Congress made a final-hour fiscal cliff deal to delay addressing its gargantuan budget woes, Europe remains in turmoil, and Asia-Pacific regions and emerging markets are charting surprising courses of their own.

Just as the timeless fable warns, sometimes it takes a single voice in a crowd to tell everyone the emperor wears no clothes. EWI's new report, The State of the Global Markets -- 2013 Edition, is that voice.

Packed with timely charts and analysis, this 40-page tour de force tears down the popular investment myths of today and replaces them with hardcore reality.

    It tells you what's really going on in the global marketplace.
    It reveals market pitfalls no one else sees coming.
    It uncovers once-in-a-lifetime investment opportunities.

To get ahead of the markets in 2013, you must think independently. This 40-page report gives you the tools and the direction you need to gain a competitive edge.

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Follow this link to download your free 40-page report, The State of the Global Markets -- 2013 Edition, now.

IMPORTANT: Please don't buy or sell a single share of stock -- anywhere in the world -- without reading this report first.

A Long Cold Winter Ahead for the Dax

By Kathryn James

The markets seem critically placed at this moment in time. Technically some big numbers have been taken out - S&P 1400, Nasdaq 3000 and with relative ease and the Dow has sliced through 13,000 adding a drop of over 1000 points since the highs in September. The usually volatile month of October, although a little late in starting, did not fail to deliver a dose of gloom to the bulls.

The daily chart shows how this week has been technically bearish for the Dax. At the start of the week the uptrend from the June lows was broken, then the breakdown from a usually bullish rectangle pattern followed, highlighting the underlying weakness of the market with the failure of bullish follow through. The final alarm bell has been sounded today with a break of 7000 support and as I write this the Dax is fighting to maintain a level starting with ‘7’. Incidentally 7000 was broken to the upside during the build-up and hype of the QE3 announcement, perhaps the bull’s last stand in a market of hope and highly priced expectations.

 

Many are blaming Sandy for the Dows fast track to 12,500 and there’s the election, fiscal cliff, Israel and so on but Europe still faces its own bubbling economic problems as well. The Euro crisis is still at large and for the first time in three years the Eurozone has fallen back into recession. A following comparison chart shows how far the Dow has stretched from the Dax in the last few weeks.  I’m leaning towards the Dax catching up rather than the Dow springing back and with the risk of further downside before a rally in the Dow, a pair trade may not prove fruitful. So it’s not without reason that the Dax could likely play catch up to the US and set its sights on 6400 in the near future.

 

Get a Free Week of U.S. Stocks, Bonds, Gold, Silver, USD Forecasts

Now - Nov. 19, you can join a free analysis-packed event for investors in the U.S. markets, hosted by Elliott Wave International, the world's largest financial forecasting firm.

Packed with videos, charts, analysis and more, this event centers around EWI's three flagship publications: The Elliott Wave Theorist, The Elliott Wave Financial Forecast, and the Short Term Update. During this rare event, you will get to see the analysis and forecasting from each of these premier U.S. market publications.

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    Robert Prechter's November video edition of The Elliott Wave Theorist: In the 30 years of publishing Theorist, this is only the third time that Bob has recorded a video issue. You will get select clips of his landmark presentation. You don't want to miss this!
    Complete Short Term Updates on Monday, Wednesday and Friday: Chief Market Analyst Steve Hochberg gives you forecasts for the markets' near-term turns through use of extensive Elliott wave charts.
    October 2012 Elliott Wave Financial Forecast: 10 pages of analysis of U.S. stocks, bonds, gold, silver and the U.S. Dollar.
    Steve Hochberg's "Buy and Hold or Sell and Fold" video presentation, plus his Nov. 8 video interview on CNBC's Fast Money program.
    Prechter's best-seller Conquer the Crash: You can read eight chapters now, including: "When Do Depressions Occur?", "The Significance of Historically Optimistic Psychology", and "When Do Stock Markets Turn from Up to Down?"

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Get 2 Free Weeks of U.S. Market Forecasts

When it comes to market forecasts, conventional analysts look at all the wrong indicators: the Federal Reserve, the latest economic data, the political campaign, or the trending financial scandal of the week.

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"Because the financial markets have a life of their own."

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The basis of the Elliott wave model of market forecasting is not complex, but it is counterintuitive. Human beings are creatures of habit. Their collective behavior is patterned, and those patterns are recognizable. Once you learn to recognize those patterns, you will be able to anticipate when the turns and trends are likely to unfold.

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    The conventional experts failed to alert you to the 78% crash in oil prices in 2008,
    They failed to warn you about a topping real estate market in 2005,
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    And they failed to anticipate the subsequent rally starting in March 2009.

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Election Scenario Analysis of the Markets

By Ashraf Laidi

We avoid making simplistic if-then scenario analysis on the US elections for US equities, solely based on the notion that a Democrat president is negative for stocks and a Republican victory is a positive due the presence of three major elements:

1) Potentially positive market implications of Obama keeping pro-QE Bernanke, likely offsetting classical partisan implications for equities.

2) Implications of Romney threatening trade war retaliation with China as a consequence of labelling Beijing as a currency manipulator (which is a USD negative).

3) Interaction between the new White House and Congressional balance of power and its impact on averting the Fiscal Cliff.

The least ambiguous scenario analysis from the US presidential elections is that a Romney victory would be deemed a negative for gold and metals due to the Governor’s plan not to re-appoint Fed Chairman Bernanke when his term expires in January 2014. Considering Fed Chairman Bernanke’s explicit support for ongoing quantitative easing, which could extend into mid 2014 (until unemployment drops below 7.0%), removing Bernanke and his dovish supporters would likely sustain serious damage to gold and possibly boost the US dollar (in the event that Romney does not push China into a trade retaliation to his labelling them as currency manipulators).

If Romney threatens a trade action with China, as did Bush in February 2002 with his trade war on foreign steel, it would be a de-facto negative for the US currency. Recall that February 2002 marked the top of the US dollar despite prevailing so-called ‘strong dollar policy’ by Treasury Secretary O’Neill.

The implications for metals are especially magnified by the threat of the potential fiscal cliff; the combined expiration of the Bush era tax cuts; and across-the-board spending cuts in the event that Congress takes no action to avert it by end of year. Both of the spending cuts and the removal of the Bush tax cuts are expected to remove $607 billion from the US economy, or 4-5% of total GDP. Such a bite from the world’s biggest economy is estimated to drag down growth to 1.0% in the first half, before possibly printing a 2.0% contraction in the first quarter.

The above is magnified by the possibility that Romney could well ask Bernanke to resign instead of waiting until January 2014.

Aside from the Presidential race, the balance of power in Congress could also be crucial. A Congressional status quo (Democrat-led Senate and Republican-led House of Representatives), combined with a Romney victory may reduce the odds of the fiscal cliff but is likely to ease the way for a Bernanke ouster.

The worst case scenario for gold and metals would then be a Romney victory with no change in the House and the loss of further Republican seats in the Senate but without the Republicans gaining more seats in the Chamber.

The combination of a Romney victory and persistent budgetary stalemate in Congress would have a negative knee-jerk reaction throughout the metals complex. Gold has already lost half of the gains accumulated this summer. It could lose a lot more this quarter, and risk testing the $1600 territory.

 

Ashraf Laidi is Chief Global Strategist at Leading Spread Betting Company - City Index