TESLA punp & dump

 

Has Crypto-Mania Finally Run Its Course?

Here's a high-profile parallel between tech- and crypto-mania

By Elliott Wave International

When a company that's part of a major financial trend buys the naming rights to a professional sports stadium or arena, watch out!

History suggests that such a prominent move might be a sign that the fortunes of that company are about to dramatically change.

For instance, back in 1999-2000, technology shares were all the rage and one of the "highest of the dot-com high flyers," as the Wall Street Journal put it, was CMGI. It was the best performing U.S. stock from 1995 to 1999.

Well, in 2000, the firm bought the naming rights to the stadium of a major league football team.

The December 2021 Elliott Wave Financial Forecast, a monthly publication which provides coverage of major U.S. financial markets, showed this chart and elaborated:

The chart shows the stock market performance of CMGI, which is now known as Steel Connect. In August 2000, the company bought the naming rights to the home stadium of the New England Patriots for 15 years. Just two years later, in the wake of the dot.com bust, they were forced to relinquish their agreement.

 

 

Junk Bonds Are Sending a Signal to Stock Investors

 

Something happened just before the historic 2007 stock market top -- and it's happening again

By Elliott Wave International

It's generally known that stocks are risky. It all hinges on how "hungry" investors are.

So, if investors' appetite for risk starts to diminish, it stands to reason that this is not a positive development for stocks.

But is there a way to gauge investors' risk tolerance so as to get an early warning sign before stocks start to tank?

Yes, keep your eye on the junk bond market.

You see, junk bonds also carry a great deal of risk because they're issued by companies with the weakest balance sheets. Investors' claim on assets in case of bankruptcy is usually next to the bottom rung, just one notch above equity holders. Hence, the trend in junk bonds often aligns with the trend in equities.

Here's the important point: When the trends of stocks and junk bonds diverge, with stocks holding up as the value of junk debt declines, it's usually a sign of impending trouble for stocks.

A past Elliott Wave Financial Forecast, a monthly publication which provides coverage of major U.S. financial markets, showed a historical example of such a divergence and said:

A countertrend rally high in prices for high-yield bonds occurred in February 2007, three months before the intraday extreme in the financials, five months before a top in the Dow Jones Composite Average and eight months before a top in the Dow Industrials. All stock indexes then crashed into the first quarter of 2009.

 

 

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