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Financial Markets Review - Sell in May and Go Away

Stock-Markets / Financial Markets Apr 23, 2007 - 09:51 PM

The scene is being set for the next anticipated stock market tumble to begin sometime over the coming two weeks, as we draw nearer to traditionally the weakest period for the stock markets, May to July.

The Stock markets have all rallied, the Dow hitting a new all time high, the FTSE hitting a new multi-year high and China's Shanghai index off again on another parabolic run. The dollar took another tumble on weakening economic activity and interest rates across the world are on the rise on the back of soaring inflation. The update to the summary of financial market forecasts (22nd April), illustrates the intermarket relationships that that are building up to the next sell off primed to occur as we go into May 07.

The trigger is likely to be China again, Risk of China Shanghai Index Crash as Parabolic Rise Continues towards 12 Year Resistance Trendline (23rd April), and China's Shanghai Index Is Falling "On Schedule" to Effect All Financial Markets (19th April), as ever calling the top of a parabolic move is pretty much impossible, just that the market is in pre-crash phase. Once China starts the ball rolling an unraveling of the carry trade is likely to again exaggerate the effect.

UK Inflation is on the rise (18th April), hitting a 16 hear high of 4.8% (RPI), with the next rate rise in May now a done deal, and on track for the 5.75% target later this year, the statistics for May and June (22nd April), will give better indications on whether the trend in rates will continue to the next target going onto 6.5% during 2008.

The US Economy continues to slow, with economic indicators indicating an recession is imminent (21st April)

Gold Bugs need to be aware of a strong possibility of failure of Gold to breakout above $733 (20th April) and thereby sets the scene to revisit $600. The commitment of traders (23rd April) report is especially bearish indications. Failure here would resemble the double top pattern (22nd April)

Though its not all gloom and doom ! As any sell off in the emerging markets and commodities should be viewed as a good long-term buying opportunity (21st April).

More useful education material on the site, Joseph Russo continues his series on trading using elliott wave theory (23rd April). More on how to execute the trade from Dr Dorn, and some simple but powerful investment rules (23rd April).

And finally, If you have not already taken advantage of Free Access to Elliottwave.com's premium Financial Markets Forecasting Service then time is running out, for free access expires on 25th April at 1pm EST.

The Financial Forecast Service includes Short Term Update (Mon., Wed., Fri.)
The Elliott Wave Financial Forecast (monthly)
The Elliott Wave Theorist (monthly).
Free 90 minute video: The Basics of The Wave Principle

Even if your already a member of elliottwave.com, you can still get free access to the financial markets forecasts via the Market Oracle landing page. http://www.elliottwave.com/wave/marketoracle

Until next time, Good Trading & Investing !

Nadeem Walayat
Editor, The Market Oracle.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their personal financial advisors before engaging in any trading activities. We do not in any way warrant or guarantee the success of any action you take in reliance on our forecasts.

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