Wave Theorist : A Rising Market Won't Stop the Economic Rot
Are you prepared for when the "disconnect" between the market and
Suppose you see a lovely house -- one with great curb appeal. It has
new paint and manicured shrubbery out front....
But also suppose that you look more
closely. You press your thumb on the window sill and the wood frame
crumbles in. Come to find out, the wood is rotten in too many places to
count. The deck joists and supports are fractured. Even the terrain
underneath the deck looks unstable. And the closer you look the worse
the problems are.
It's obvious that very few people
would buy that house. Yet you can be pretty sure that the home's owner
will have "good things" to say about the place.
Likewise, today's stock market has
plenty of cheerleaders -- even as the rot spreads throughout the
economy. Real estate and homebuilding sector alike continue to decline
in the wake of the mortgage meltdown. Municipalities continue to have
growing budget problems. We're not talking about a "small town"
bankruptcy, either. An Oct. 12 Reuters headline
Pa., Files for Bankruptcy Protection." The
story goes on to say that "The
Pennsylvania state capital faces a $300 million debt crises..."
This Oct. 12 headline is from Bloomberg: "California
Kids Face Days Without School as Revenue Gap Imperils Education." It
continues:"Public schools in California...are bracing for a
$1.7 billion cut that may wipe out high-school sports and student
busing, and trim the academic calendar by seven days next year."
The economic problems run much deeper
and wider than these stories can reflect -- yet they are indeed today's stories.
The capital of one of our biggest states is filing for bankruptcy? That should serve
as an alarm. Then again, the market is rallying just weeks after the
downgrade of U.S. Treasury debt.
So when will optimistic financial
investors wake-up to reality?
"At some point in the trend
toward negative social mood, fear, and then panic, will bring to light
the risks that people today are ignoring. Global credit deterioration
is objectively real; but disaster will strike only when it becomes
Elliott Wave Theorist,
Collective psychology could "catch up"
to the objective economic reality sooner than later.
Will you be
prepared when the economic reality hits?
Robert Prechter has just
released a FREE report -- with urgent analysis from his August and
September 2011 Elliott
Wave Theorist letters,
including an excerpt from a special video presentation that he created
for his subscribers in August.
Stocks -- Buying
Opportunity or Another "Free Fall" Ahead? will
help you put these uncertain markets into perspective so that you'll be
better positioned to both protect your investments when needed and
prosper when opportunities arise.
your free Elliott Wave Theorist report now
article was syndicated by Elliott Wave International and was originally
published under the headline A
Rising Market Won't Stop the "Economic Rot" Beneath.
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.