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What Happens When the Fed FINALLY Reduces Its $4.5 Trillion Balance Sheet?

Bloomberg Barclays Global Aggregate Credit index yield spread

So, there we have it. Deflation has started. The Federal Reserve announced last month that they would start to reduce their $4.5 trillion balance sheet in October, thereby starting the process we call Quantitative Tightening (QT). As expected, they are aiming to do it gently and quietly, by not reinvesting bonds as they mature, starting with sums of around $6 billion of Treasuries and $4 billion in Mortgage-Backed Securities (MBS). The scale of non-reinvestment will gradually increase. Once in full swing, the Fed’s balance sheet could reduce by up to $150 billion each quarter. Conventional analysis might conclude that the […]

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On Bulls and Bears, and the Delicate Balance Between Them

Rydex Bull Bear Assets Ratio

  3 Videos + 8 Charts = Opportunities You Need to See. Join this free event hosted by Elliott Wave International and you’ll get a clear picture of what’s next in a variety of U.S. markets. After seeing these videos and charts you will be ready to jump on opportunities and sidestep risks in some major markets. This free report (a $29 value) will present a unique outlook and give you a new perspective on the markets you won’t get anywhere else. Get your FREE report now – for a limited time! This article was syndicated by Elliott Wave International […]

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Here’s Why the Time to Worry About the “Fear Index” is NOW, Not Later

VIX - Fear Index

The stock market’s next big downleg… will bring with it a jaw-dropping surge in volatility that should ultimately set records.   3 Videos + 8 Charts = Opportunities You Need to See. Join this free event hosted by Elliott Wave International and you’ll get a clear picture of what’s next in a variety of U.S. markets. After seeing these videos and charts you will be ready to jump on opportunities and sidestep risks in some major markets. This free report (a $29 value) will present a unique outlook and give you a new perspective on the markets you won’t get […]

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Markets: Understand the Present to Forecast the Future (Part 2)

In part 2 of our in-depth interview with Steve Hochberg, Steve explains what else makes Elliott wave analysis so useful and practical. If you missed part 1 of our in-depth interview with Steve Hochberg, you can watch it here. [Editor’s note: A text version of the interview is below.]   Alexandra Lienhard: So, as editor of the Financial Forecast and the Short-Term Update, what’s the goal with the services you provide? Steve Hochberg: It’s interesting in how we form them. Bob [Prechter] writes the Elliott Wave Theorist, and has been doing so since 1978. Back in the 1990s, his interest […]

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Markets: Understand the Present to Forecast the Future (Part 1)

Alexandra Lienhard: I’m Alexandra Lienhard for ElliottWaveTV, and today I’m joined by Steve Hochberg, Chief Market Analyst at Elliott Wave International. Now Steve, everyone’s got a background, a story to tell, so what’s yours? How did you become interested in the financial markets in the first place? Steve Hochberg: Probably like a lot of other people did. Growing up, you start reading the financial papers and you probably have a family member involved. In my case, it was my grandfather who was involved in the market. So you start, you hear things people talk about; you get interested in companies […]

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(Interview) Europe: Why It’s Going to Get a Lot Worse Before It Gets Better

New interview with Elliott Wave International European markets expert. Brian Whitmer, the editor of our monthly European Financial Forecast, explains what indicators helped him anticipate market volatility. You’ll also learn what he’s expecting for the year ahead in European stocks. You can read Brian’s commentary comparing Germany to the Greek god Atlas as part of our report, Deflation and the Devaluation Derby. Here’s what you will learn: How Europe’s biggest economies are screeching to a halt Currency devaluation’s role in the developing global crisis How the self-reinforcing aspect of deflation is already apparent in commodities trading Why the top 1% […]

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Can the Fed Drop Interest Rates Below 0%?

For the financial markets, the biggest event of the week starts tomorrow: On Wednesday and Thursday (Feb. 10-11) Fed chair Janet Yellen will appear before Congress to deliver her semi-annual Monetary Policy Report. “It’s huge.” That’s how one strategist put it this morning, in a CNBC interview about the importance of Yellen’s testimony. Why are all eyes on Yellen? Maybe because by now, almost everyone has forgotten how powerless the Fed appeared in 2007-2009, when none of its measures could stop the financial crisis. Despite the recent market chaos, six years of rising stock prices reaffirmed the notion that the […]

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USDJPY: “Diving” For Opportunity

Elliot Wave patterns in the U.S. dollar/Japanese yen exchange rate (USDJPY). Learn how protective stops keep you on the right side the trend. On a recent vacation to the Yucatan, my friend decided to get certified in scuba diving. I, on the other hand, prefer breathing my air above water! But I did tag along with her to one of the classes, anyway. She learned how to handle and interpret all the various diver gauges: gas pressure, submersive pressure, depth, and on. The one feature all those indicators had in common was a bold, red line to indicate the level […]

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Can Stock Values Simply “Disappear”? Yes.

On Wednesday (Jan. 13) CNBC reported that, “Almost $ 3.2 trillion has been wiped off the value of stocks around the world since the start of 2016, according to calculations by a top market analyst. U.S. stocks are now off $ 1.77 trillion, while overseas stocks are down $ 1.4 trillion.” Stocks rallied on Thursday — but then tanked even harder on Friday, which probably made that $ 3.2 trillion figure even bigger. But how can that be? Doesn’t money simply move from one asset class to another? Our readers have asked us this question before — especially during the […]

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The Perils of “Buying the Dip” in U.S. Stocks

Legions of bargain hunters have suffered losses by buying stock market dips at the start of bear markets. Making matters worse, they decimate their portfolios by continuing to buy all the way down, only to capitulate at the bottom. This chart and commentary is from Elliott Wave International’s April 2001 Financial Forecast: “If there were ever a testament to the importance of market timing, the NASDAQ over the last year is it. Anyone who bought into the euphoria at the all-time high or the bull trap highs of early September and late January, would have taken successive hits of 40%, […]

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