Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
Is the US Yield Curve Inversion Broken? - 3rd July 22
New Signs Economic Turmoil Will Prompt Fed to Lose Its Nerve - 3rd July 22
Stagflation With Powell Could Make Gold Price Happy - 3rd July 22
UK Housing Market Analysis, Trend Forecast 2022 to 2025 - Part 2 - 30th June 22
Stock Market Turning the Screws - 30th June 22
How to Ignore Stocks (and why you should) - 30th June 22
Top Tips For Getting The Correct Insurance Option For Your Needs - 30th June 22
Central Banks Plan To Buy More Gold In 2022 - 30th June 22
AI Tech Stock PORTFOLIO NAME OF THE GAME - 29th June 22
Rebounding Crude Oil Gets Far Away from the Bearish Side - 29th June 22
UK House Prices - Lets Get Jiggy With UK INTEREST RATES - 28th June 22
GOLD STOCKS ARE WORSE THAN GOLD - 28th June 22
This “Bizarre” Chart is Wrecking the Stock Market - 28th June 22
Recession Question Answered - 28th June 22
Technical Analysis: Why You Should Expect a Popularity Surge - 28th June 22
Have US Bonds Bottomed? - 27th June 22
Gold Junior Miners: A Bearish Push Is Coming to Move Them Lower - 27th June 22
Stock Market Watching Out - 27th June 22
The NEXT BIG EMPIRE WILL BE..... CANZUK - 25th June 22
Who (or What) Is Really in Charge of Bitcoin's Price Swings? - 25th June 22
Crude Oil Price Forecast - Trend Breaks Downward – Rejecting The $120 Level - 25th June 22
Everyone and their Grandma is Expecting a Big Stocks Bear Market Rally - 23rd June 22
The Fed’s Hawkish Bite Left Its Mark on the S&P 500 Stocks - 23rd June 22
No Dodging the Stock Market Bullet - 23rd June 22
How To Set Up A Business To Better Manage In The Free Market - 23rd June 22
Why Are Precious Metals Considered A Good Investment? Find Out Here - 23rd June 22
UK House Prices and the Inflation Mega-trend - 22nd June 22
Sportsbook Betting Reviews: How to Choose a Sportsbook- 22nd June 22
Looking to buy Cannabis Stocks? - 22nd June 22
UK House Prices Momentum Forecast - 21st June 22
The Fed is Incompetent - Beware the Dancing Market Puppet - 21st June 22
US Economy Headed for a Hard Landing - 21st June 22
How to Invest in EU - New Opportunities Uncovered - 21st June 22
How To Protect Your Assets During Inflation - 21st June 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stocks: Is the Really Scary Part Just Ahead?

Stock-Markets / Stock Market 2022 May 27, 2022 - 06:34 PM GMT

By: EWI

Stock-Markets


Here's one of the actions which investors take when they get "rattled"

Big daily selloffs have occurred since the stock market's downtrend began in January.

For instance, on May 18, the Dow Industrials closed lower by 1,161 points -- a 3.6% drop. The S&P 500 shed 4% on the same day.

Yet, most investors aren't exactly shaking in their boots. Panic is absent.

After the market close on May 18, the U.S. Short Term Update, a thrice weekly Elliott Wave International publication which analyzes near-term trends for major U.S. financial markets, showed this chart and said:


Traditional measures of investor complacency and panic, such as the CBOE Volatility Index (VIX), remain somewhat subdued relative to prior extremes over the past six months. One of the ways we measure the level of investor panic is to compare the one-month VIX futures contract to the three-month VIX futures contract, which is shown by the histogram at the bottom of the chart. When investors are rattled, they bid the short-term contract (one month) above the longer-term contract (three month), feeling as if they need "protection" from a falling market now versus later (see grey ellipses).

During the most vicious phase of a major bear market, the spread between the one- and three-month futures contract should dramatically soar.

In the meantime, there was this headline just two days after that big May 18 selloff (CNBC, May 20):

These are the cheapest stocks in the S&P 500 that could be buying opportunities

Yep, many market participants are still viewing the drop in prices as a time to go bargain hunting rather than running for the hills.

Memories of the longest bull market in history die hard. Remember, it started back in March 2009.

However, panic will set in when the downtrend reaches a "third of a third" Elliott wave. If you're new to Elliott wave analysis, the third of a third is the strongest part of a trend -- both up and down.

Want more U.S. markets insights like this?

Check out Elliott Wave International's new report, "Bitten by FANG? Clocked by Cryptos? -- "Air Pockets" Everywhere."

Down more than 25%, the NASDAQ is "officially" in bear-market territory.

"Big whoop" as they used to say -- some of the hi-tech darlings have already been cut in half and then some. Bet the folks down 50% or more in their so-called investments are glad to hear they're "official."

And now Bitcoin, the King of Cryptos, has hit an "air pocket" of its own and fallen below $30,000. Wonder if that's officially a bear market, too?

This excerpt from EWI's May Financial Forecast explains how it all fits together.

Sign up for Club EWI -- FREE -- and read it now.

This article was syndicated by Elliott Wave International and was originally published under the headline . EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in