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djia

DJIA Priced in Gold: What It Means for the Long-Term Trend

Timeless Trading Lesson

Of the many forward-looking market indicators we at EWI employ, one of the most interesting tools (and least discussed in the financial media) is the DJIA priced in gold — “the real money,” as EWI’s president Robert Prechter calls it. What implications might the present position of Dow/gold have for the long-term trend of the nominal Dow? In this video, Elliott Wave International’s Steven Hochberg shows you several revealing charts that answer this question.

(Discover why deflation is the biggest threat to your money — download your FREE 90-page eBook now.)

Discover how Elliott wave analysis gives you a consistently logical explanation and debunk one of the major myths of what caused the Asian Financial Crisis in the free video, “The Real-Time Power of Elliott Wave Analysis: Debunking the Myths of the Asian Financial Crisis.” Access Your FREE Video Now.


Download your FREE deflation eBook now.

Newly updated for 2010, Prechter’s 90-page eBook reveals why deflation is the biggest threat to your money right now. You will learn how to prepare for
deflation, survive it, and maybe even prosper during it, so you’ll be ready for the next buying opportunity of a lifetime when deflation is over. Download
your FREE deflation eBook now
.

Robert Prechter: Investing in Extreme Markets – Video (Part 3)

Video (Part 3): Prechter – Investing in Extreme Markets

(Note: This interview was originally recorded on September 20, 2010)

In the video below, Robert Prechter talks to Yahoo! Finance Tech Ticker host Aaron Task and Henry Blodget about a technical pattern he sees forming in the Dow.


Get Up to Speed on Robert Prechter’s Latest Perspective — Download this Special FREE Report Now.

About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world’s largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.

Robert Prechter: Ominous Pattern in the DJIA – Video (Part 2)

Video (Part 2): Prechter: Ominous Pattern in the DJIA

(Note: This interview was originally recorded on September 20, 2010)

In the video below, Robert Prechter talks to Yahoo! Finance Tech Ticker host Aaron Task and Henry Blodget about a technical pattern he sees forming in the Dow.


Get Up to Speed on Robert Prechter’s Latest Perspective — Download this Special FREE Report Now.

Robert Prechter On Market Rally: Part 1


Video (Part 1): Prechter On Market Rally

(Note: This interview was originally recorded on September 20, 2010)

In the video below, Robert Prechter talks to Yahoo! Finance Tech Ticker host Aaron Task and Henry Blodget about extreme readings in various indicators that confirm his bear-market forecast.


Get Up to Speed on Robert Prechter’s Latest Perspective — Download this Special FREE Report Now.

Your Cheatin’ Chart Will Tell On You

How the Dow Has Really Performed When Measured in Real Money (Gold)

By Elliott Wave International

“Your cheating chart will tell on you.”

Hank Williams may not have known about Elliott waves, but he did know when a story doesn’t add up.

Such is the case with the nominal rise of the Dow Jones Industrials from 2000 to 2007. In the language of country music, this stock index has a “Cheatin’ Chart” — it doesn’t tell the real story.

Download Robert Prechter’s FREE 40-Page Gold and Silver eBook. This valuable ebook explores the role of gold in today’s markets like no other resource has attempted. You will get more than Prechter’s long-term outlook on gold and silver; you’ll also learn how gold still plays an important role in determining the real value behind nominal share prices. Learn more, and download your Gold and Silver eBook here.

You don’t have to tell Bob Prechter this: He knows. A simple price chart of the Dow is, well, a bit too simple. First Bob explains that pricing via fiat currency is not the same as pricing the Dow in terms of real money (namely gold). Then he shows the difference.

For six long years, we’ve had declining real values in stocks. Since the 2002 bottom, we’ve had rising values in nominal terms. This is the same set-up that we saw in the early ’70s except for one thing: it’s bigger. . .Ultimately, real prices are leading dollar prices, and we’re going to see a tremendous drop in the dollar price of the Dow as well, because I’m making a case that this is a much bigger top.
Elliott Wave Theorist, December 2006

nominal dow follows the lead of real dow

If gold were our money, the major stock market indexes would have declined relentlessly from 2000 to the present, with a muted bounce in 2003. There would be no arguing the point of whether a bull or bear market was in force.
Elliott Wave Theorist, March 2006

This “oh-so-true” chart of the DJIA priced in gold showed the path that the “cheatin'” nominal Dow would eventually follow. Our forecast was that it’s just a matter of time. This analysis has played out as expected several times since the 1999 high in the Dow Jones Industrials.

The July 1999 top in the real Dow was the first in a long succession of rolling blow-offs that (The Elliott Wave Financial Forecast) successfully identified From the DJIA’s orthodox top in 2000 to the NASDAQ’s all-time high several weeks later to the top in residential real estate prices in 2005 to the nominal peaks in major stock indexes in 2007 to the wild commodity spikes in 2008, EWFF managed to anticipate many of the markets major trend changes. . .We owe these forecasting successes to the Wave Principle and its reflection of market psychology and its foreshadowing of larger social forces.
Elliott Wave Financial Forecast, July 2009

The monthly Elliott Wave Financial Forecast keeps a tireless eye on stocks, real estate, commodities and much more. We also keep track of the precious metals and the dollar — and even keep our finger on the pulse of developing social trends.

The quotes above confirm the power of Elliott wave analysis in identifying market turns in various asset classes.

Download Robert Prechter’s FREE 40-Page Gold and Silver eBook. This valuable ebook explores the role of gold in today’s markets like no other resource has attempted. You will get more than Prechter’s long-term outlook on gold and silver; you’ll also learn how gold still plays an important role in determining the real value behind nominal share prices. Learn more, and download your Gold and Silver eBook here.

Elliott Wave International (EWI) is the world’s largest market forecasting firm. EWI’s 20-plus analysts provide around-the-clock forecasts of every major market in the world via the internet and proprietary web systems like Reuters and Bloomberg. EWI’s educational services include conferences, workshops, webinars, video tapes, special reports, books and one of the internet’s richest free content programs, Club EWI.

Dow’s Winning Streak Screeches to a Halt

by Javier C. Hernandez

The Dow Jones industrial average was stopped in its tracks on Friday as it tried for a ninth consecutive session of gains, a feat last achieved in 1996.

A sharp drop in the price of oil weighed on shares of energy companies, and by day’s end, stocks were firmly in negative territory.

The market was hurt as the price of oil retreated nearly 2 percent, briefly dipping below $80 a barrel. That bolstered the appeal of the dollar, which strengthened against the euro and the British pound amid concerns about unwieldy deficits in Europe.

Despite the losses, the Dow ended the week 1.1 percent higher. On Friday, it fell 37.19 points, or 0.35 percent, to 10,741.98. The Standard & Poor’s 500-stock index fell 5.93 points, or 0.51 percent, to 1,159.90. It was 0.85 percent higher for the week.

The Nasdaq fell 16.87 points, or 0.71 percent, to 2,374.41, posting a 0.28 percent gain for the week. It was held back by the smartphone maker Palm, which fell more than 29 percent after offering a disappointing revenue forecast.

A decision by the central bank of India to raise interest rates for the first time in nearly two years brought jitters to the world’s equity markets. Analysts worry that the announcement could encourage other high-growth countries to follow suit as concerns about inflation grow. But investors bristled at the prospect of higher rates, which make lending more expensive and can hurt profit.

Currency markets were in flux on Friday amid lingering uncertainty about Greece, which is grappling with a wide budget deficit as deadlines for debt payments loom. No clear resolution has emerged for the nation, with Germany recently backing off its support of a European-led rescue package. Europe’s wealthier countries are now looking to the International Monetary Fund for help.

Germany’s words exposed new fissures in the effort to ward off a crisis for the Continent and its monetary union.

“It does not look like Europe has a united face to deal with the Greece situation,” said Marc Chandler, the global head of currency strategy at Brown Brothers Harriman.

The pound also weakened, falling more than 1 percent against the dollar, as an official at the Bank of England raised the possibility that the British economy could fall into another downturn. Andrew Sentance, a member of the monetary policy committee, told CNBC, “There is some risk of a double-dip recession but it is not the central forecast.”

Investors also remain concerned that looming elections could result in a fractured Parliament that would be unable to tackle Britain’s deficit problems.

The dollar benefited from those concerns, strengthening against most world currencies. Mr. Chandler said a consensus was emerging that the Federal Reserve would soon move to raise the rate it charged banks on short-term loans, known as the discount rate.

Interest rates were steady. The Treasury’s 10-year note fell 4/32, to 99 14/32, and the yield rose to 3.69 percent, from 3.68 percent late Thursday.

The stock market’s movements were clouded on Friday because of “quadruple witching,” the expiration of futures and options for stocks and stock indexes.

Despite Friday’s losses, investors said they thought some optimism had returned to the market. Economic data has been largely positive lately, and traders are expecting first-quarter earnings to show strong revenue growth. Many also say they think a government report on the labor market to be released next month will show that the economy created jobs in March.

“Investors are starting to get their confidence back, starting to get their feet back underneath them,” said M. Jake Dollarhide, chief executive of Longbow Asset Management.

But recent gains for the market have been small, and trading has been light on some of the most enthusiastic days, raising doubts about the durability of an upward turn.

“It’s a very tenuous, nervous time for Americans,” Mr. Dollarhide added.

New York Times

Same Day. Same Event. Same Market. Different Story!

“There is no group more subjective than conventional analysts.” — Robert Prechter.

By Vadim Pokhlebkin
Elliott wavers sometimes hear the criticism that patterns in market charts can be “open to interpretation.” For example, what looks like a finished 1-2-3 correction to one analyst, another analyst may interpret as 1-2-3 of a developing impulse, with waves 4 and 5 on the way.

Does this happen? Absolutely. (Although, there are always tools an Elliottician can employ to firm up the wave count.) But here’s the real question: What’s the alternative?

Typical alternatives amount to analysis of the “fundamentals”: Jobs, interest rates, CPI, PPI, what Ben Bernanke said on Tuesday — it all goes into the pot. Result? Well, if you think it’s clear and unambiguous, guess again. Here’s a fresh example.

Find out what really moves markets — download the free 118-page Independent Investor eBook. The Independent Investor eBook shows you exactly what moves markets and what doesn’t. You might be surprised to discover it’s not the Fed or “surprise” news events. Learn more, and download your free ebook here.

On the evening of February 18, in a surprise move, the Federal Reserve raised its discount rate — the interest rate at which it lends money to banks. The next morning the S&P futures were pointing lower; everyone was bracing for a weak day — because, as conventional thinking goes, higher interest rates are bad for business, the economy, and ultimately for the stock market. Friday morning, stocks indeed opened lower and major news headlines confirmed:

  • Wall St opens weaker after Fed move
  • … Investors Wary After Fed Move
  • Stocks Open Lower After Surprise Fed Move

But around 11am that same morning, the DJIA turned around and moved higher. Now look at what the headlines from major sources were saying after lunch on February 19:

  • US stocks bounce back; Fed move viewed in positive light
  • US Stocks Up A Bit On Fed Discount Rate Increase
  • Stocks Higher After Fed Move

What was a “bearish move” by the Fed in the morning morphed into a “bullish” one by the afternoon! Same event. Same market. Same day. Completely opposite interpretation!

This brings to mind the answer EWI’s President Robert Prechter once gave when asked about the objectivity of Elliott wave analysis. Bob said:

“I always ask, ‘compared to what?’ There is no group more subjective than conventional analysts who look at the same ‘fundamental’ news event — a war, the level of interest rates, the P/E ratio, GDP reports, you name it — and come up with countless opposing conclusions. They generally don’t even bother to study the data. Show me a forecasting method that is totally objective or contains no human interpretation. There is no such thing, even in a black box. To answer your question more specifically, though, properly there should be no subjectivity in interpreting Elliott waves patterns. There is a set of rules and guidelines for that interpretation. Interpretation gives you only the most probable scenario(s), not a sure one. But people mislabel probabilistic forecasting as subjectivity. And subjectivity or bias can ruin that value, just as in any other approach. Sometimes we screw up. But in contrast to the outrageously improbable (if not downright false) wave interpretations or other types of forecasts we often see from others, we are as close to an objective service as you’re going to find. We hire analysts who know the rules of Elliott cold.”

Find out what really moves markets — download the free 118-page Independent Investor eBook. The Independent Investor eBook shows you exactly what moves markets and what doesn’t. You might be surprised to discover it’s not the Fed or “surprise” news events. Learn more, and download your free ebook here.


Vadim Pokhlebkin joined Robert Prechter’s Elliott Wave International in 1998. A Moscow, Russia, native, Vadim has a Bachelor’s in Business from Bryan College, where he got his first introduction to the ideas of free market and investors’ irrational collective behavior. Vadim’s articles focus on the application of the Wave Principle in real-time market trading, as well as on dispersing investment myths through understanding of what really drives people’s collective investment decisions.

Wall Street Hit by Drop in Consumer Confidence

By Leah Schnurr

NEW YORK (Reuters) – U.S. stocks suffered their biggest one-day decline in nearly three weeks on Tuesday after a sharp drop in consumer confidence heightened worries over one of the most vulnerable areas of the economy.

Consumer confidence in February slumped to a 10-month low as the short-term outlook on jobs worsened. Results from retailers added little hope, as bellwethers like Target Corp (NYSE:TGT – News) forecast a tepid performance in the first quarter.

“There’s a bit of an adjustment process in terms of the growth outlook as to what is going to be the major driver,” said Nick Kalivas, vice president of financial research & senior equity index analyst at MF Global in Chicago.

If “the economic outlook gets adjusted down, certainly the materials and semis would be the places to see selling,” he said.

Stocks associated with a strong cyclical upturn in the economy were hit. Top performers during last year’s rally, including technology, materials and energy stocks led the downside. Oil futures fell $1.45 to $78.86 a barrel, pulling the S&P energy index (SNP:^GSPE – News) down by 1.5 percent. Dow component Caterpillar Inc (NYSE:CAT – News) shed 2.4 percent to $56.66.

Chipmaker Intel Corp (NasdaqGS:INTC – News) dropped 2.4 percent to $20.38 and the PHLX semiconductor index (^SOXX – News) lost 2.8 percent.

The weak data added to the cautious tone before congressional testimony from Federal Reserve Chairman Ben Bernanke on interest rate policy beginning on Wednesday.

Meanwhile, a separate report showed home prices unexpectedly slipped in December, adding to concerns over the sustainability of the economic recovery.

The Dow Jones industrial average (DJI:^DJI – News) slipped 100.97 points, or 0.97 percent, to 10,282.41. The Standard & Poor’s 500 Index (^SPX – News) gave up 13.41 points, or 1.21 percent, at 1,094.60. The Nasdaq Composite Index (Nasdaq:^IXIC – News) was off 28.59 points, or 1.28 percent, to 2,213.44.

Overseas data set a negative tone early on with German business confidence falling unexpectedly for the first time in almost a year. The day’s losses reversed stocks’ recent trend and the S&P 500 racked up its worst decline since early February.

The broad index had risen in four of the past five trading days and posted weekly gains in the last two weeks.

Investors shied away from risk ahead of Bernanke’s testimony when he is likely to be asked about the Fed’s surprise move to raise the discount rate last week.

Home Depot Inc (NYSE:HD – News) was a bright spot, reporting results that beat estimates and raising its profit forecast. The Dow component gained 1.4 percent to $30.75.

Jason Weisberg, trader at Seaport Securities in New York, said the strong earnings season has been overshadowed by uncertainty about the political direction.

“The really nice thing is the guidance you’re hearing from corporations, it looks very good,” said Weisberg.

But discount retailer Target fell 1.2 percent to $50.06 after it gave a tepid view of its first-quarter outlook even as it posted a fourth-quarter profit slightly above expectations.

New Video: Dow in 2010 = Dow of 1929

Is It Déjà Vu All Over Again for the Dow?

In today’s short video we examine the crash of 1929 and the similarities to today’s Dow. This video is not meant to scare anyone, but to educate investors and traders of the possibilities that may exist in today’s market.

We could be, repeat, could be very close to a tipping point similar to that of 1930 when the Dow had ended a 50% correction to the upside. I invite you to watch my latest video and see what makes sense to you.

As always our videos are free to watch and there are no registration requirements.

Watch the video here: Dow in 2010 = Dow of 1929. Video Analysis

U.S. Stocks: Will The Bears Relinquish Control?

By Nico Isaac

In case you were hiding out Tiger Woods’ style far away from the mainstream media during the past month, let me be the first to say: January saw an abrupt end to the U.S. stock market’s record-setting winning streak. Last count, the Dow Jones Industrial Average plummeted 4% in its worst monthly loss in a year.

And, according to one Feb. 1, 2010, MarketWatch story, “The time to consider an exit strategy” has officially arrived. Here, the article captures the public’s astonishment turned acceptance of the Dow’s boom-to-gloom shift:

“The Dow has shocked the bulls out of their complacency. After all, analysts were looking for the bull market to last until at least the second half of the year. Investors were not prepared for such a sharp decline and now at least some of the chatter has gone from ‘how high will the market go?’ to ‘how low will it fall?’ [emphasis added]
Let me get this straight. The powers that be say it’s time to “consider an exit strategy” — AFTER the Dow has already plunged 700-plus points to land at its lowest level in two months. That’s about as helpful as building a life raft AFTER your ship has begun to sink.

Let me get this straight. The powers that be say it’s time to “consider an exit strategy” — AFTER the Dow has already plunged 700-plus points to land at its lowest level in two months. That’s about as helpful as building a life raft AFTER your ship has begun to sink.

[Read more…]