Breakthrough Strategies for Predicting Any Market: Charting Elliott Wave, Lucas, Fibonacci, Gann, and Time for Profit, 2nd Edition

CHAPTER 14

Market Psychology/Sentiment

Now that we’ve discussed you, let’s talk about the market. Back in the Internet bear era, like a lot of people, I believed markets could’ve gone a lot lower in a move that would continue to drop until the Dow hit 1000. So we are going to talk about bull and bear markets. We are going to talk about fear, greed, and the emotions that fuel these markets. I learned a lot from that 2002 bottom. It was an expensive lesson but it may have been the best thing that ever happened to me.

Here’s another tidbit, the only reason I’m really here today is my appreciation of market psychology. Back in the early part of 2003, it was probably January or February I was a caller to a financial news program in Phoenix, Arizona. I’ve told this story a lot and the reason I do is there’s an important lesson attached to it. As it turns out, one of the hosts of that show was very bullish all the way down. At 10 percent down he said it was just a pullback. At 20 percent he said it was an interesting correction and stocks were starting to go on sale. If prices would just get a little lower, they could be the steal of the century. At 30 percent, stocks were a steal. Well, by the time they were close to 50 percent I was on the horn.

There are certain moments in a person’s life that change our destiny. I’m a perfect example of it. So when I got on the air, I told the hosts I knew when the market was going to bottom. Since nobody knows when the bottom will really hit, I got ...