Home > European Markets
European Stocks: Watch The "Market's Rhythm"
While chart patterns may seem chaotic, they have a distinct -- and predictable -- structure.
"A Chartered Financial Analyst was my houseguest several years ago, and I brought him to work with me at Elliott Wave International one day. He was an investment banker in New York and must never have had any association with technical traders before me, because he laughed when I introduced him to the Wave Principle. I explained how I forecast market moves based upon the sequence of five-wave and three-wave developments – and he thought I was joking. I offered to teach him how the surging optimism and pessimism of market participants creates rhythms and patterns that enable its students to time the market, but he declined.
"I couldn’t blame him. I thought the whole area of technical analysis was silly, too – when I first encountered it. I traded for several years before I noticed enough of the market’s rhythm to want to learn more. But now, I have seen patterns play out as expected so many times that I take their development very seriously – and you should, too. Let me highlight for you recent developments in the patterns of European stock indexes that suggest their future course."
That's an excerpt from the opening paragraph of the just-published, June issue of Elliott Wave International's European Financial Forecast (EFF). When its editor, Tom Denham, talks about "market’s rhythm," he means Elliott wave patterns that you can see in the charts of any liquid market. Here's what an idealized diagram of a basic Elliott wave sequence looks like (in a bull market; in a bear market, flip it upside down):
And here's an actual chart of the German DAX stock index, the European equivalent of the DJIA. Tom Denham shows you this chart fully labeled with Elliott wave symbols on page 4 of the June EFF (online now).
What's the significance of these "12345s" and "ABCs"? Here's how Tom explains them in the Overview section on page 2:
"Some [European stock] markets appear to be falling from the peak of an impulsive, five-wave advance, while others appear to be falling after completing a corrective, three-wave rebound. Falling from an impulsive peak implies the decline that will retrace only a portion of the advance. Falling from a corrective peak implies the decline continuing to a new low."
Which European stock markets are just correcting and which ones are likely to hit new lows? Find out right now, inside the June EFF, risk-free. Below is the complete list of markets you'll find.
- Germany's DAX stock index
- Britain's FTSE-100
- France's CAC40. PLUS, Special Focus: See how the approval ratings of the French President, Nicholas Sarkozy, track the ups and downs of the CAC40 index. Using the Wave Principle to predict a politician’s fortunes can have excellent results.
- The Netherlands' AEX
- Switzerland's SMI
- Spain's IBEX 35
- Italy's S&P/MIB
- Dow Jones Euro Stoxx 50
- Russia's RTS
- Eastern Europe's CECE Overall Traded Index: Hungary, Poland, Czech and Slovakia.