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BOTTOM LINE

The Dow Jones Industrial Average traced out the initial waves of a bear market from the 26,617 high on January 26. The intensity of selling pressure to the February 9 low was strong, and the next wave down, which started this week, should be even stronger. A new market reality is in place but virtually no one thinks the current decline is anything other than a dip buying opportunity. This sentiment will change, but it will be a slow process. The 3-month LIBOR rate has soared to its highest level in nearly ten years. The swift rise in this benchmark, used as the basis for many loan rates, is compatible with the long-term bear market underway in bonds. It will eventually result in soaring yields across the breadth of bonds. Gold and silver are declining near term. The U.S. Dollar Index started its largest advance of the past 13 months. The Euro will decline over the same period.

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The Elliott Wave Financial Forecast March 2, 2018


THE STOCK MARKET

Heres how last months issue described the potential for a stock market trend reversal and investors preparedness for it:

Students of Elliott Wave Principle by Frost and Prechter will recall this observation anticipating what could happen at the end of Supercycle wave (V): If there is a throw-over, the ensuing reaction could be breathtakingly fast. Neither the experts nor the investing public is making any allowance for this potential.

That statement was made as of the close on February 1; the Dow Jones Industrial Average plunged 11% over the next six trading days. Because of a common condition known as the fear of missing out on the stock markets relentless rise, last months issue maintained that the stock markets fifth-wave advance had similar emotional underpinnings to commodity-market fifth waves. Commodity-market fifth waves are most often driven by fear, which is more focused and thus more abrupt, as opposed to stock-market fifth waves, which are driven by hope, an emotion that dissipates slowly. This is the reason that commodity tops tend to occur with a spike followed by a sharp reversal, while stock market tops tend to spread out over time. The abrupt stock market top at 26,617 on January 26 and the steep decline to 23,360 on February 9 fits our observation as well as The Elliott Wave Theorists prediction for a pinpoint top. The reversal confirmed that the stock markets throw-over has ended, as shown on the chart above. The decline should be the initial wave of a long-term bear market.

Elliott Wave Analysis

As shown on the chart at right, the Dow Jones Industrial Average traced out five waves down from January 26 to February 9, which should be the first five waves of a larger five-wave structure that will develop as wave a of the bear market. Bear markets always progress faster than bull markets, and the recent decline was a small sample of the speed of the bearish potential: the Dow dropped 3256 points (12.2%) in just nine and a half days. The February

9 intraday low, labeled wave (1), spiked below the top line of the Primary wave 5 channel. Wave (2) carried the index to 25,800 on Tuesday, February 27, completing a double zigzag pattern (see text, p.42). Shortly after the close that day, The Elliott Wave Theorist published an Interim Bulletin discussing the stock markets similar setup just ahead of the October 1987 crash. Whether or not the stock market falls as































steeply in such a short period now, wave (3) should be the strongest downward wave since at least October 2008, in the middle of the Great Credit Crisis. The near term bearish case would weaken if the Dow, S&P and NYSE Composite all rise above this weeks highs at 25,800, 2789 and 13,018, respectively. In such a case, the odds would increase that the January 26 high may not be the end of Primary wave 5.




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The Elliott Wave Financial Forecast March 2, 2018































The stock market reached another important all-time extreme in late January, as the chart at right shows. The total value of U.S. stocks as a percentage of U.S. Gross Domestic Product rose to 154%, demonstrating that, to a record extent, the U.S. is more a nation

of investors than producers. The ratios prior high occurred in March 2000, marking the exact peak in the dot.com bubble and the start of the NASDAQs crash. Whats noteworthy about the rise to the current record is that it traced out five waves from 2009; the fifth wave is equal in size to the first wave, common in impulse waves; and at the high, the ratio perfectly met the top line of a parallel channel formed by the advance. Its a strong sign that the ratio of total U.S. stock market capitalization to U.S. GDP is at or very near the end of its rise. As the current exuberance for equities gives way to gloom, the total value of the stock market should decline below its 2009 low.

Momentum Considerations

The breadth of selling during the stock markets initial decline from January 26 was extreme. Three of the nine days of decline featured nearly nine stocks closing lower for every one closing higher on the NYSE, and 90%+ downside volume relative to total volume. This display of selling pressure is compatible with the start of a larger stock market decline. Bloomberg classified the stock markets swoon as The Worst Momentum Swing for U.S. Stocks in History, based on the moves in the S&P 500s 14-day Relative Strength Index. For the period ending































February 9, the two-week change in the RSI was minus 58 points, from a high of 86 on January 26 to a low of 28 on February 9. Based on data that extend back to the late 1920s, the next-closest reversal was a decline of 48 points over the same time span during the crash in 1987. Swift negative momentum shifts can either signal a brief correction in a bull market or the kick-off to a bear market. Based on the markets wave structure, our conclusion is that its the latter.

Investor Psychology

Last month, as the Dow, S&P 500 and NASDAQ pushed to their January 26 highs, The Elliott Wave Financial Forecast cited a flood of articles that used the very same termsmelt-up and a fear of missing outalong with arguments that the markets bullish prospects remained strong. On the other hand, we made the case that the use of this terminology and its incessant repetition fit perfectly with a high-degree throw-over. The latter of the two expressions was used so persistently that it became known by its acronym, FOMO, in many headlines. As the collage on the next page of post-stock-market-high headlines reveals, the same message remains intact, though new words are being used to reflect the markets altered circumstances. The relentless, collective cries now include Dont Panic and Buy the Dip. In February, a Google News search shows that the words stock with buy the dip appeared in more than 350 different articles. Over the same span, the total for stock with dont panic surpassed 190 articles. On February 8,



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as stocks were near the end of the first five-wave decline, Bloomberg reported, Buy the Dip Goes Mainstream. In other words, there was a strong optimistic response to falling stock prices. Bloombergs research, which dates to 2007, found that the worst day for U.S. equities since 2011 preceded record high usage of the dip-buying phrase. In other articles, the media use slightly different words to express the same sentiment. An article on February 6 in the nations largest-circulated daily newspaper offered the following advice: This is no time to panic; Dont panic; Consider buying the dip; Realize the sell-off may be a blip; Investors already invested should take a deep breath and sit on their hands; and, Those who are looking for an entry point can gradually buy into the market if it falls further. In a February 25 poll, CNBC asked viewers, Whats the best thing about the recent market volatility? A Fibonacci

62% said, Lot of dips to buy stocks. We agree 100%: There are lots of dips buying stocks. The pervasiveness of this response to the decline reveals that investors remain highly optimistic, maybe even perfectly primed for a bear market of extremely high degree.

Last month, EWFF discussed the big uptick of retail investors in the stock market in the form of a boom in new accounts at various online brokerage firms as well as the introduction of 24-hour retail trading. This is classic, final-high behavior. For a graphic example, look back at our chart of the Shanghai Composite Index in the July 2015 issue of EWFF (see p.6). It shows that a sharply rising stock index was accompanied by a surge in new Chinese stock market accounts, to a stunning four times the total number





























of accounts that attended the Shanghai Composites all-time high in October 2007. EWFF said it was a strong bearish signal for the Chinese stock market, which had just begun a decline of 49% from June

2015 to January 2016. The headlines in our collage and the rote bullish terminology suggest that the media is remarkably aligned with this crowd. Last month, we also noted the entry of the millennials, who were formerly known for having a decided disinterest in stocks. In late 2017 and early 2018, however, the stock market caught many millennial investors attention. When the markets advance turned into a decline last month, advisors simply encouraged them more heartedly. If youve never invested in the stock market, now is a good time to start, said a MarketWatch column on February 9, which added, especially millennials. Another choice article urged, Millennials Should Embrace the Bear. The now utterly twisted bull market logic goes like this: Granted, there were some perilous moments over the last three decades, such as the 1987 crash, the dot-com collapse in 2000 and the 2008 financial crisis. But those three episodes were relatively short-lived. Boomers who managed to hang on were richly rewarded. Most seasoned investors we know who personally experienced the market crashes of 1987, 2000-2002 and 2007-2009, do not so flippantly refer to them as short-lived. To do as well as their parents, they need to get into a slumping market. This totally ignores the reality, which is that their parents didnt do that well because, even though they lived through a massive bull market, they continually got in near highs, got out near lows, and remained fearful and out


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The Elliott Wave Financial Forecast March 2, 2018


of the market through the best parts of advances. The article begins by insisting, Remember, millennials: Red is good. Its official: down is up! The runners are at the starting line for a marathon version of the cited bear markets. As usual in markets, they are inadvertently facing the opposite direction of the race.

The Marching Band Refuses to Yield

The array of quotes on the top right of page 4 shows that Wall Street appears just as misaligned for the bear market as Main Street. It wasnt just newly christened day traders at discount brokerages getting schooled in market physics, reported Bloomberg on February

9. Some of the most steadfast believers in a rebound have been the biggest money clients of Wall Street banks. The Socionomic Theory of Finance (2016) explained that Wall Street professionals are just as susceptible to the pull of a long trend in mood as it passes its peak:

Financial advisors are almost always herding even when they advise against it. One of the commonest actions of herders is to deny a new trend in its early stages. At such times, seemingly sensible, cautionary advice not to join the panic but to buy the dip, reveals a misunderstanding of the intricate phenomenon of herding while simultaneously offering an example of it.

Where do we find the pros now? In total agreement that the bull market is still marching on. On February 22, Bloomberg noted that not one of the Wall Street strategists it monitors budged from his or her bullish year-end forecast: Amid the sound and fury of the U.S. stock markets first 10% correction in two years, nary a peep was heard from forecasters. Instead, calls to buy the dip grew louder. And one strategist even increased his estimate for 2018. A congratulatory editorial tone on the part of Bloomberg underscores the extremely bearish long-term implications of this analytical imperturbability. Its a good showing, says the writer. It bears repeating: Not one Wall Street strategist cut his or her estimate as the market went awry. The bullish bias is so deeply ingrained that it needs repeating. In an aside, the reporter noted that she is relating the performance of a group, whose collective wisdom has drawn occasional ridicule. No discussion is offered about the uniformity of bullish opinion despite one of the most ferocious momentum reversals in stock market history. Financial herding is just too overwhelming for any such possibility to be considered.



The bullish response to the markets decline is exactly what the Wave Principle suggests should occur at a trend reversal. Near the end of a second-wave rally in a bear market, Elliott Wave Principle by Frost and Prechter states that investors are thoroughly convinced that the bull market is back to stay. In the current case, most investors are convinced that the bull market never went away. There is no talk of a bear market, just an argument over whether the bottom has taken the shape of a V or will take the shape of a W by testing the February 9 low. Warning of this worst-case scenario is a headline reading, Market Sell-Offs Tend to Happen in Three Waves, Strategist Warns. This strikes us as an ideal setup for a third-wave decline to much lower lows.





















Fat and Happy Retirees; Well, Happy, Anyway Heres another chart that shows a major shift to positive long-term expectations. The graph plots the results of a survey of consumers by the University of Michigan. Over the last 20 years, the Michigan poll asked the following question every month: Compared to five years ago, do you think the chances that you will have a comfortable retirement have gone up, gone down or remained about the same? Considering that the line between a better and worse retirement is a reading of 100, consumers have been mostly glum about their retirement prospects since the record optimistic extreme of 123 in November 2000. Given the slim-to-non-existent savings of many eventual retirees, this attitude is understandable. But after stocks had been rising for five years and were approaching their 2007 highs, consumers finally returned to an optimistic better outlook, which had dominated their thinking during the late-1990s, at the front edge of the Great Peaking Process. The surveys results pushed to




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The Elliott Wave Financial Forecast March 2, 2018


a high of 105 in February 2007, coincident with the top in the KBW Bank Index. In October 2007, the S&P 500 made a high that led to a 58% decline to March 2009. The chart shows retirees negative responses

as stocks crashed in 2008 and early 2009. In fact, the trend toward higher responses really didnt start until February 2012, when real estate prices bottomed. In March of 2017, retirees finally capitulated once again to the uptrend in share prices by registering a response of 104, their first better response above 100 since August 2007. Last month, the survey even pushed to a 17-year extreme of 109. This show of resiliency is a bearish signal because the most recent survey was conducted as stocks experienced their sharp decline.

This result is ironic as already precarious retirement prospects got hit hard in the first few days of last month. The California Public Employees Retirement System, the largest public pension fund in the U.S., lost $18.5 billion in the 11 trading days that ended on February 9. This was 5% of its total assets. CALPERS had a chance to pull back on stocks in December and decided against it. The reason is that it needs the money that it thinks stocks promise. Like most other pension funds, CALPERS is willing

to bet on stocks because of aggressive investment targets designed to fulfill mounting obligations. The average pension fund stock allocation is now 53%, only slightly lower than the high of 54.6% registered in December 2007, two months into the start of the last major bear market. With cash allocations having crashed to a record low of 3% (see December 2017 EWT, Figure 71) and apportionments to various alternate investments now routine, the exposure to a bear market is higher than ever. Harvards endowment fund recently incurred losses of more than $1 billion in bets on tomatoes, sugar and eucalyptus. These bets were made in 2012 as commodities were registering wave 2 highs in a new bear market and just before their biggest plunge of the decade. It also lost on market volatility investments, which are the same VIX bets that novices were making. The Wall Street Journal calls these gambles The Risk Pension Funds Cant Escape. But there is an escape: lower expectations and conservative investing. At this point, it is clear that most pension funds and their beneficiaries will get to these solutions the hard way.

The Bull Market in Volatility is Back

The recent market action marks a dramatic shift from the sea of stock market tranquility that persisted through the end of 2017 and through most of January 2018.



Heres how EWFF apprised the situation in December: The CBOE Volatility Index declined to 8.56 intraday last Friday, the lowest level in its 30-year history (see Figure 86, p.10 of the December EWT for the VIXs history back to 1996). As weve noted, the most placid periods of stock market activity are invariably followed by episodes of extreme volatility, which nearly always attend a bear market. The levering up by fund managers and individual investors indicates that the damage will be widespread when prices fall and volatility spikes with a vengeance.

Heavy damages did not wait long to show up. On the day of the stock markets high on January 26, the VIX closed at 11.08. Over the next seven trading days, the VIX surged 354% to 50.30 on February 6. The upward vault carried the volatility index to more than five standard deviations above its 21-day daily average. Large Speculators in VIX futures were caught in a massive wrong-way bet. After amassing a record net-short position of 174,665 contracts in the fourth quarter of last year, an insane bet that was featured

in both EWT and EWFF, Large Specs were forced to cover their entire bearish wager and subsequently moved to a net-long 85,818 contracts. The near-term moves have been that violent, and it was just the beginning of the bear market.

The volatility has done nothing to shake the bullish faithful. As the top headline in our collage illustrates,




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The Elliott Wave Financial Forecast March 2, 2018


one of the first entreaties to reach investors as stocks rounded the bend into washout mode was not to panic About the Return of the VIX. Nevertheless, going long the VIX had already morphed into a pretty good strategy, as a Reuters headline on February 6 revealed that traders that bet against a variety of popular, short-volatility products on U.S. exchanges were reaping Big Gains. Naturally, the pain was excruciating on the other side of the trade. The chart on the previous page shows the share price of the VelocityShares Daily Inverse VIX Short-Term ETN, or XIV, an instrument that gained when markets are calm and lost money when the VIX rose. We use the past tense because the XIV was suspended from trading on February

15 and completely liquidated on February 22. The breakneck speed of the reversal is instructive. After taking seven years to rise from 5 to 146, the XIV took just 17 days to fall 96% and then another 7 days to disappear altogether. The chart is reminiscent of two that EWFF published in November 2007 (see, p.5), when the last bear market was less than a month old and we showed the plunging prices of several mortgage-related indexes and stocks as a sneak peek into the future crash environment that was starting to unfold.

A key difference this time is the velocity of the XIVs liquidation. In November 2007, the featured forerunners had peaked weeks or even months earlier and they were all still months away from their ultimate fate at the end of the credit crises. The potential for an ongoing succession of implosions continues, with the latest one occurring on Tuesday morning when the ProShares Short VIX Short-Term Futures ETF (SVXY) fell 80% in a matter of seconds. The fund, designed to offer exposure to market tranquility, announced that it intended to dial down its use of leverage. According to Macro Risk Advisors, $100 million in SVXY options premium instantly vanished.

Heres a related headline that calls to mind Conquer the Crashs outlook for financial derivatives:
Long Volatility ETPs Are Also Losing Money Despite Gains

In the heat of an all-out-panic, CTC projected that there may be structural risks in dealing with stock and associated derivatives. Being positioned for a market decline might not be enough, as trading systems tend to break down when volume surges and the systems operators become emotional. If you want to try making a killing being short in the collapse, make sure you are not overexposed. Make sure that if the system locks up for days or weeks, you will not be in a panic yourself. Through the first 10 days of February, market pundits



continually commented that the system worked and that trading was orderly with almost no trading halts, broken trades or other signs of market stress. But the air pockets in the share prices of XIV and SVXY, as well as other back office developments, suggest that the scenario described in CTC will become a reality. A Bloomberg story on February 9 quoting the head of equity trading at a major Wall Street firm hints at the potential: We did see people take off protection in the derivatives space, only to come back later that day to put [it back on], in some cases, two and three times what they took off. It was just a mad dash for protection, mad dash for re-positioninga lot of that was occurring where there just wasnt a lot of liquidity so prices quickly gapped. Beneath the surface, the winds of the next debacles are blowing.

Continuing heavy exposure to financial derivatives may be one reason that share prices of major bank indexes failed to surpass their 2007 peaks. Ironically, the debris from the derivative blow-up during the

2008 financial crisis is, finally, mostly cleared away. When Lehman Brothers collapsed in September 2008, it had $39 trillion in notional outstanding derivative bets with 6,600 different counterparties. Most of those claims have been settled. Citigroup, one of the more aggressive derivatives players, is the last big bank holdout. Of $1.2 trillion in notional outstanding derivatives bets with Lehman, Citi is holding out for $2 billion in payments. Lehman says it owes just $266 million. In the meantime, Citi is once again a leader in financial engineering, becoming the go-to dealer for single-name credit default swaps. CDSs played a key role in

Citis 2008 implosion and subsequent bailout by the U.S. government (i.e., U.S. taxpayers). In February, Citi announced that it intends to initiate trading in exchange-traded funds that track the riskiest European



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The Elliott Wave Financial Forecast March 2, 2018


bank bonds. The lower graph on the chart on the previous page shows that investors appear largely unimpressed. After declining 98% from a late-2006 peak, Citis share price retraced just 12.5% of its 2006-2009 decline. The next wave down of the bear market will draw Citis share price to a new low, or simply see the firm go the way of Lehman Bros.

The top graph on the chart shows a much more robust rise in the stock price of JPMorgan Chase. A more conservative approach to derivatives may have held it back in 2007, as it failed to accompany the rest of the financials to new all-time highs at that time. But JPMorgan has become the dominant global bank during Primary wave 5 in the DJIA. The form of its rise, however, suggests that it will encounter its fair share of financial fallout in the years ahead. In classic fashion, JPMorgan appears to have topped off its rise with the February 21 announcement that it will build Soaring New Headquarters in Midtown Manhattan. The peak significance of this plan is discussed in Socionomic Studies of Society and Culture (2017). The chapter titled A Socionomic History of Skyscrapers explains that the major peaks of 1910, 1929 and 1966 all expressed themselves by inspiring the initiation of soaring Manhattan financial towers. This certainly qualifies as another one, as Bloomberg called the new headquarters a soaring monument to the success of the largest U.S. bank. Its grandeur has yet to be fully defined, but when it is finished, like the Bankers Trust Building, Bank

of Manhattan Trust Building (now Trump Tower) and World Trade Center of past major financial peaks, it will stand as the physical embodiment of a bull market that had run its course.

THE BOND MARKET

Its been calm for so long in both the stock and bond markets that investors cannot imagine any other emotional state. The recent stock market slide has been met with

a chorus of buy, and the bear market in bonds, which has steadily progressed over the past

19 months, has been met with a collective yawn. The yield on the U.S. 10-year Treasury note has already

8



risen 124%, from a record low of 1.32% on July 6, 2016 to a high of 2.96% on February 21, a move that is in line with our major bear-market forecast for bonds of July 2016. The rise in the 3-month LIBOR rate has been even more intense, as shown on the chart. LIBOR, which stands for the London Interbank Offered Rate, is a set of daily average rates at which banks borrow short term from each other. It is also used as a benchmark reference rate for other financial debt instruments, such as mortgages, student loans and credit cards, to name a just a few. The 3-month LIBOR has soared from a low at 0.223% in May 2014 to 2.017% yesterday, a 804% increase. This benchmark interest rate is now the highest since December 2008.

Yet as shown on this next chart, investors in the junkiest of junk bonds, those rated Caa, remain as complacent as they have been for better part of the past year. These bonds are issued by companies in the weakest financial condition, yet the average yield has held between 8.00% and 9.25% since March 2017, approximately 220 basis points from the

all-time low in June 2014. When yields break above this range, it will be a clear signal that the bear market is intensifying as investors dump their junk. The move is likely

to be very swift; Jim Bianco notes that one-quarter of the junk bond market is tied up in exchange-traded funds. A large percentage of junk debt, therefore, trades in unison as the money managers of these ETFs buy and sell issues en masse as part of the index. EWFFs forecast is that when the selling starts, the yield on Caa-rated bonds will surge above its prior peak at 18.57% in February 2016.

GOLD & SILVER

EWFF made the case last month that gold is at or near the end of a corrective rise from December 2016 and that the next multi-month move will be a decline. Prices slipped over the past month, and our forecast remains intact. Short term, Managed Money Accounts in silver have again moved to a large net-short position in silver futures. So, there is variability for silvers near-term wave structure, but EWFFs overall bearish forecast remains intact here, too. We will update all new near-term developments in the Short Term Update.

The Elliott Wave Financial Forecast March 2, 2018


U.S. DOLLAR

Last month, EWFF discussed the impending end of a five-wave decline in the U.S. dollar from the 103.820 high on January 3, 2017 and reported a bearish sentiment extreme. The index slipped to 88.253 on February 16, satisfying the minimum expectations for the fifth wave of the decline. As we said, the next wave of advance should be the largest since the early 2017 high and carry the U.S. dollar to near 95.000, at the least. We also discussed the record sentiment extreme in the euro, which trends opposite the U.S. dollar.

Its such a stunningly bearish signal for the euro, and bullish signal for the U.S. dollar, that we want you to see a chart depicting it. The graph at right shows that over the past several weeks, the spread between Large Speculators and Commercials in euro futures contracts widened to an all-time record. When the spread between the two positions is relatively narrow, the euro is usually near the start of an advance, as shown. When the spread is wide, the euro is usually near a high. Large Specs are making a record bet that the euro, which has advanced 21% from January 2017 and traced out five waves, will continue to rise. This is a bad bet, in our opinion. The complete or nearly complete five waves up over a Fibonacci 13 months from January 2017 to February 2018 indicates that the next euro move will be a significant decline. The initial target surrounds 1.1550, with greater bearish potential.

Markets Back in Sync to Sink?

Since January 25-26, stocks, gold, silver and the euro have declined, while the U.S. dollar has moved higher. As this chart of the Thomson Reuters/CoreCommodity CRB Index shows, commodity prices appear to have completed a countertrend advance at that time too, which is labeled wave 4. These near-term moves over the past several weeks may mark the return of the All-The-Same-Market effect. A re-emergence of this phenomenon has significant ramifications. EWT put it this way in September 2008, at the peak in downside momentum during the last bear market: Smells like deflation spirit. Whats important this time is that U.S. Treasury bond prices are declining (yields rising), which is similar to what occurred in the deflation of the early 1930s, when bond yields also rose (see chart July 2017 EWFF, p.8).

ECONOMY & DEFLATION

At this point, however, deflation is almost completely out of the headlines. The Elliott Wave Theorist explained this aspect of the final high two days before the Dow Industrials January 26 top, Dont look for



































bearish news to trigger a reversal of the trend. Bull markets tend to end not on bad news but on great news. The news cycle is certainly cooperating, as many of the analysts cited in the Investor Psychology section used the same words, synchronized global growth, to explain why investors need to hold on to their stocks or, better yet, buy more. For the month of February, Google news locates 94 articles that reference synchronized global growth. It is the reason one chief investment officer insisted that its a close relative of buy more stocks: You have to. The sun is shining. This sentiment is exactly what we




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The Elliott Wave Financial Forecast March 2, 2018


were referencing should happen on the other side of the price peak. At the very end of a long uptrend, the future is so bright, people have to buy stocks. At the bottom, the same people will be pointing to bearish fundamentals to explain why you should sell.

There are many parallels to the top year of 2000, but two key ones stand out. The Conference Boards Consumer Confidence Index hit 130.8 last month, its highest level since November 2000. Meanwhile, one of the most widely followed measures of economic performance, the U.S. unemployment rate, fell to 4.1% in January, its lowest level since December 2000. On Wednesday, an article in The New York Times related that economists are now arguing over How Low Can Unemployment Really Go? According to Reuters, The number of American workers voluntarily quitting their jobs jumped in December to its highest level in nearly 17 years, a strong show of confidence in the labor market. In December, more than 3.2 million workers willingly left their jobs, the highest total since January 2001. Of course, that was also the first month of a recession and the start of a sharp rise in the unemployment rate. Even though the stock markets peak in 2000 has already occurred in January-March, the job losses came as a surprise to many. In mid-2000, EWFF noted that workers were demanding the ultimate perk, a long breather from work. We warned that many workers were already on the verge of more free time than they ever thought possible. As late

as November 2000, media reports held that almost everyone is feeling the flush times. The current rush of similar feelings suggests that the outcome will be alike this time around. Heres the latest assessment from Bloomberg on February 24: Everything Is Booming.



























Bloombergs Boom evidence includes surveys of one business sector that is more optimistic than ever. The National Federation of Independent Business Index shows that small business owners saying Now Is a Good Time Expand rose to its highest level in the 45-year history of the survey. Main Street is roaring, says the NFIBs president. Its also providing the perfect cover for the onset of an economic contraction that will be similarly unprecedented.


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