February 10, 2012 - Ending Diagonal: Start Of Opportunity In A Major Commodity Market - By Elliott Wave International
Back in the day, one of the first things I "learned" about investing was that low or declining interest rates are good for stock prices.
I've since had to "unlearn" this.
A certain market commentator recently reminded me of the "lower rates equal higher stocks" myth. He opined that stocks aren't being kept afloat by hopes for a European debt solution, but then claimed that the real reason to be bullish is very low interest rates.
Yet is the near-zero rate on T-bills the reason stocks have held up since early October?
"[The chart below] shows a history of the four biggest stock market declines of the past hundred years. They display routs of 54% to 89%. In all these cases, interest rates fell, and in two of those cases they went all the way to zero! In those cases, investors should have traded all their bonds for stocks. But they didn't; instead, they sold stocks and bought bonds."
Elliott Wave Theorist, February 2010
Have a look at the chart:
JK: Yes. This is a classic ending diagonal unfolding in the final wave of the larger trend. As you can see, prices are progressing in a wave (NYSE:C) to complete the diagonal structure. And, if my wave count is correct, this market's prices are about to board the "Exciting Turn" Railway.
NI: Thank you so much for taking the time to explain the ins and outs of your favorite structure, the diagonal. And also, for alerting readers to the possible DRAMA in store for this major commodity market thanks to this Elliott wave pattern.
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