Markets Are Changing, And People Are Going Crazy

I think this election has made people go nuts.  Not only have people gone over the deep end when it has come to politics, but I think people have gone over the deep end regarding the financial markets.

Before the election, everyone was in the “know” that a Trump presidency was going to cause a major stock market crash, and also cause a major rally in gold.  But, that is certainly not what occurred.  Remember, when everyone “knows” something will happen in the market, the market usually moves in the opposite direction.  Remember how everyone “knew” gold would rally over $2,000 in 2011, or break below $1,000 in 2015, or rally to the moon after the Fed’s holding interest rates steady at the last meeting?  And, yes, there are many more examples just in the last 5 years alone.

Yet, so many continually search for “reasons” as to why the market moves.  And, some of them have become just beyond ridiculous.  Some have even taken it to the point of complete absurdity.

One analyst I heard this past week actually presented the most absurd, and almost paranoid, “reason” for the current market moves.  He actually claimed that the current equity market rally is a manufactured rally for the sole purpose of allowing big money to “escape the market,” only for Obama to then cause a big crash in the stock market before Trump’s inauguration in order to “hand him as big a mess as possible.”

All, I can say is WOW. I think it may be time for this “analysts” followers to stage an intervention.  His analysis method has not been working for quite some time, so he is grasping at straws, which has now taken him to the realm of the sublime.

It seems this market has confounded so many.  I am seeing many calling for deflation, yet interest rates are on the rise.  I am seeing many looking for market crashes, which turn into market melt-ups.  I am seeing many calling for gold to rise to the moon, which then turns into a strong drop.  Everyone is scratching their heads, and completely unprepared for the paradigm change in the markets which I began writing about last year. 

You see, markets are shifting and the relationships that many have been relying upon are no longer working.  Many analysis methods are also seeming to not “work” because many have not recognized how the markets are shifting. But, the one constant that has been accurately keeping us on the correct side of the market has been tracking market sentiment. 

Back at the end of 2015 and based upon the market sentiment patterns we analyze, I began preparing the members in my Trading Room at Elliottwavetrader.net for the paradigm shift which I saw setting up in the financial markets.  And, on June 20, 2016, I even presented a warning to readers at Gold-Eagle.com about the potential paradigm shift that I see developing in the markets (See:   http://www.news.gold-eagle.com/article/gold-paradigm-shift-are-you-prepared/272  )

Then, on June 27th, I published analysis in my Trading Room at Elliottwavetrader.net which warned our members that the bond market was about to crack, and this is the title and first paragraph of that analysis:

Beware Of Bonds Blowing-Up

One of the longest bull markets we have seen through the years has been in the bond market.  Although many have attempted to call the top to this long term bull market, many have failed.  As an example, Bill Gross has been calling for a top to this long term bond bull market for years.  While he has clearly been early, we believe he will soon be proven correct.

It did not take long from our published warning of an impending top.  On July 8th, about two weeks after our call, the bond market topped and has dropped 15% so far.

Markets are shifting and unless you begin to recognize the paradigm shifts that are occurring, you may be left out in the cold.  But, I think it is quite clear that the one thing that you must avoid is the “group-think” mentality, as that has been consistently wrong at every juncture for at least the last year.

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