By Elliott Wave International
Have you ever been at the ocean body surfing, just waiting for that perfect wave? When you begin to truly feel it, your adrenaline starts pumping.
I came to work for Elliott Wave International in the late 1980s — before the Internet, before ETFs, before smartphones. Part of my job was to review the many publications that came to our offices, in search of articles that spoke to the "mood" of the markets.
It was a task that constantly searched for an answer to the question, Is there a large cluster of articles in print right now to indicate that people are extremely "bullish" or "bearish"? At that time my searches related mostly to the commodities markets, but I also kept close tabs on stock market news.
At first it was tedious. When I found groups of articles that reflected a certain mood, I would clip and save them to a file for our analysts to review. Yet after several months, I actually began to develop a feel for the mood patterns in the articles. I started to use this to see if I could anticipate where the price trend would go over the next several days or weeks.
The idea was simple: When the mood in the news articles got extremely bullish – and our Elliott wave counts suggested that a rally was completed — it would often represent a downside opportunity; when that mood became deeply gloomy, it was usually time to get bullish.
I was amazed — my adrenaline was pumping. I actually started to get a feel for the waves — a feeling for the direction of the market! I was hooked, so I took it to the next level.
I had read Prechter and Frost’s Elliott Wave Principle – Key to Market Behavior before I interviewed for my position. It was interesting, but it didn’t really speak to me. But after I had personally experienced and understood what it means to feel the mood of the markets, I read it again. The second time took on a whole new meaning.
If you read Elliott Wave Principle a long time ago, or wish to read it for the first time, Elliott Wave International has just released an online edition of this investment classic, free to members of Elliott Wave International’s Club EWI. Membership is free. This is your chance to learn how the waves of social mood can change the way you invest forever.
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This article was syndicated by Elliott Wave International and was originally published under the headline When You FEEL the Elliott Waves, Your Eyes Become Wide Open. 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.