How Emerging Markets ETF Followed a Classic Elliott Wave Pattern

 

Here's what happened after the completion of a "bullish triangle"

By Elliott Wave International

A Charles Schwab survey shows that 15% of today's retail investors started investing in 2020.

And, regarding 2021, an August 2 CNBC headline said:

New investors are jumping into the market

So, when you combine the influx from this year and last, that adds up to a lot of new investors.

This is mentioned because some people who are new to investing may see the phrase "emerging markets" and get the impression that this is synonymous with only small countries.

Yet, "emerging markets" covers 75% of the world's population, and are comprised of nations like China, India, Russia, Brazil, South Korea, Thailand, Taiwan, Malaysia and more.

All told, emerging markets account for about a third of global GDP.

The point being -- new and veteran investors alike should at least have emerging markets on their radar screen for consideration. Yes, there's risk, yet there's also opportunity.

Consider a classic Elliott wave pattern in the Vanguard FTSE Emerging Markets ETF.

The April 2020 Global Market Perspective, a monthly Elliott Wave International publication which covers 50+ worldwide financial markets, said:

Largest emerging markets ETF completes bullish triangle.

Of course, the completion of that bullish triangle implied that the next price move would be up.

That's exactly what happened. Here's a current chart from Mark Galasiewski, an Elliott Wave International global analyst who focuses on the Asian-Pacific:

 

 

 

On October 1, our Global Market Perspective showed this Ethereum chart (green arrow added; detailed wave labeling reserved for subscribers):

When this chart went live on October 1, ETH traded at $2917. The wave pattern called for a big rally.

 

Today, as I’m typing this, ETH is at $4763. That’s a 63% rally!

 

That’s the power of Elliott wave analysis.

 

We just posted our new, monthly global market guidance for 50+ of the world’s top markets. Just pick the publication that suits you best…

 

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Bitcoin's All-Time High Foretold Before U.S. ETF Launch

 

"A developing upward wave is in progress"

By Elliott Wave International

On Oct. 20, Bitcoin climbed to a new all-time high above $66,000 -- quite a rebound from its price level just below $30,000 as recently as July.

At that time, the sentiment was quite bearish. Here are just a couple of sample headlines:

• Bitcoin: [Investment Firm Chairman] Says Price Can Crash to $10,000 (Bloomberg, July 9)
• Why You Should Worry About the Next Crypto Crash ... (Money, July 20)

All the while, Elliott Wave International's head crypto analyst Tony Carrion was saying, in effect, "hold your horses. Bitcoin's run is far from over."

In the "Cryptocurrency" section of the July Global Market Perspective (a monthly Elliott Wave International publication which covers 50+ worldwide financial markets), when the grandaddy of digital currencies was still in freefall, Tony told subscribers:

Bitcoin [is] at or near the end of its [Elliott wave] correction.

Short, sweet and to the point.

Well before July was over, Bitcoin found a bottom and has been in "bounce back" mode ever since.

The message of the Elliott wave model was the basis for Tony's prescient Bitcoin call.

In the September Global Market Perspective, Tony again got right to the point in his Bitcoin analysis:

A developing [upward wave] is in progress.

And, as all Bitcoin observers know, that upward Elliott wave has persisted well into October.

Yet, on Oct. 20, the headline of a major financial website stated (CNBC):

Bitcoin jumps to new high above $66,000 after landmark U.S. ETF launch

But as just described, Bitcoin's new all-time high was in the cards, according to the Elliott wave model, months ago.

As of this writing on Oct. 25, Bitcoin is trading a little below that all-time high.

What's next?

Get insights by reviewing the charts with Bitcoin's Elliott wave count, which are found in the "Cryptocurrency" section of the Global Market Perspective.

The Elliott wave model is ideally suited for emotional markets like cryptocurrencies and it can help you to anticipate Bitcoin's next big trend shift.

If you'd like to learn about the Elliott wave model, or need to brush up on your knowledge, you are encouraged to read Frost & Prechter's Wall Street classic, Elliott Wave Principle: Key to Market Behavior. Here's an excerpt from the book:

Most important, the Wave Principle often indicates in advance the relative magnitude of the next period of market progress or regress. Living in harmony with those trends can make the difference between success and failure in financial affairs.

If you'd like more insights into the Wave Principle, realize that Club EWI members are granted free access to the entire online version of the book.

 

What Junk Bonds Convey About Investors' Mindset

 

"Governments feel rich and are spending like drunken sailors"

By Elliott Wave International

Extremely elevated financial optimism is being expressed in multiple ways.

In some ways, the behavior of investors is unprecedented -- which is saying a lot given the financial extremes of past bull markets.

Consider the junk bond market here in 2021. The September Elliott Wave Theorist showed this chart and said:

As we continue to demonstrate, stocks, property, cryptocurrencies and digital art are not the only overvalued markets. Bonds are no less crazily priced. The chart reveals that fully 85% of all junk bonds yield less than the annualized percentage change in the Consumer Price Index. How is that for blind optimism?

Yes, stocks remain near record-high territory after a more than 12-year uptrend, bitcoin is near record-high territory and the rate of price increases in the housing market has been unprecedented (again, saying a lot given the extremes of the prior housing boom).

Even so, an Oct. 18 Fortune article says:

In the next 15 months -- through the end of 2022 -- Goldman Sachs is forecasting U.S. home prices will soar another 16%.

And, who would have ever imagined a few short years ago that digital images would sell for millions?

Yet, here's the latest headline (Oct. 19):

How a 12-year-old coder says he made $600,000 by selling Weird Whales NFTs

Of course, "NFT" stands for non-fungible token -- a unique digital asset. The current craze in that space is around digital artwork.

The October Elliott Wave Theorist mentions several more expressions of a positive social mood. Here are just a portion of them:

Governments feel rich and are spending like drunken sailors; central bankers are confident and unworried, and they have been characterized as heroes; the world economy is producing more tax revenue than ever, despite government efforts to kill productivity; and there are no wars anywhere on the entire planet.

The October Theorist concludes with a hint of what to expect over the next three years.

The Elliott Wave Theorist is part of the Financial Forecast Service -- Elliott Wave International’s flagship investor package -- which offers Elliott wave analysis of major U.S. financial markets.

Now through November 3, you can see that analysis FREE in EWI’s most popular event of the year, “U.S. Markets FreePass

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3. Short Term Update guides you through the patterns in the markets each Monday, Wednesday and Friday at the close.
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"I don't want to hear about it."

 

During a mania, "no prudent professional is perceived to add value"

By Elliott Wave International

"I don't want to hear about it."

That's the general response from many new retail investors here in 2021 when a veteran stock market observer expresses any hint of caution about the stock market.

This lack of respect for sober reflections about the market has been exhibited before.

Indeed, as far back as 1997, in a Special Report titled "Bulls, Bears and Manias," The Elliott Wave Theorist, a monthly publication which provides analysis of financial markets and cultural trends, said:

"A very human aspect of manias is that no prudent professional is perceived to add value. Indeed, the professional with a knowledge of history and value is eventually judged as an impediment to success."