How DEEP Will Cuts in Government Services Go?

How DEEP Will Cuts in Government Services Go?
Plus: The check is STILL in the mail. 
January 9, 2012

By Elliott Wave International

"Localities have chopped 535,000 positions since September 2008..."
USA Today (10/18)

Cuts in government services became conspicuous after the 2007-2009 financial crisis.

The first edition of Robert Prechter's Conquer the Crash saw this coming, even though the book published nearly a decade ago:

"Don't expect government services to remain at their current levels...The tax receipts that pay for roads, police and jails, fire departments, trash pickup, emergency (911) monitoring, water systems and so on will fall to such low levels that services will be restricted." (p. 257)

Households throughout Massachusetts know exactly what Prechter is talking about.

In a boston.com article (12/7), the president of the Massachusetts Taxpayers Association said this about the state's municipalities: "Revenues have been virtually flat, while their costs have grown, which has meant cuts in schools, public safety, and other basic services for most cities and towns.’’

The same article reports that "Worcester has cut about 450 municipal jobs, including approximately 60 police officers, 60 firefighters, and 100 public works employees..."

Detroit's WWJ-TV reports (12/6) "Budget deficits and declining personnel are the major forces behind the Detroit Police Department’s decision to end free funeral escorts."

November 9 saw the biggest municipal bankruptcy in U.S. history, when officials in Jefferson County, Alabama voted to file for Chapter 9. Reuters said the county's debt exceeded $5 billion; Jefferson County is home to Birmingham, the state's biggest city and economic hub.

Financial troubles are also leading to federal cut backs. The U.S. Postal Service has decided to close about half of its 487 mail processing centers:

"The post office had bad news on Monday for all those who like to pop a check into the mail to pay a bill due the next day: don’t count on it.
"The United States Postal Service said it planned to largely eliminate next-day delivery for first-class mail as part of its push to cut costs and reduce its budget deficit. Currently, more than 40 percent of first-class mail is delivered in one day."

New York Times (12/5)

The pace of the deteriorating economic trend appears to be accelerating. Our analysis suggests that it's part of a larger deflationary trend that has a long way to go.

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See what we're seeing so you can prepare and protect yourself Discover Robert Prechter's views on the unfolding deflationary trend by reading the 90-page report, The Guide to Understanding Deflation. This guide will help you survive a major deflationary trend, and even equip you to prosper. Plan and prepare for your financial future. Download Your Free 90-Page Deflation Survival Guide eBook.

Why Choose the Wave Principle?

Why Choose the Wave Principle?
Robert Prechter reveals why he embraced the Wave Principle. 
January 4, 2012

By Elliott Wave International

Robert Prechter is the widely recognized authority on the Elliott Wave Principle.

Read how he learned about the Wave Principle and why he embraced it in the edited excerpt from his book Prechter's Perspective below (Q&A format):

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Question: What was it about Elliott that captured your attention?
Robert Prechter: I had seen some mentions of the Wave Principle in a few market newsletters and a couple of obscure books, and I decided that either this was someone's elaborate fantasy or it was an amazing discovery. I wanted to reject it from what evidence I could find or include it as part of my growing arsenal of technical analytical methods.
Q: How long did it take you to develop your "eye" for discerning these waves?

RP: About 30 minutes -- when I plotted my first hourly chart covering a few months. Apparently, there is such a thing as an eye for patterns. One person told me he had trouble finding the fives and threes. The key is to keep a chart. Most people have no trouble seeing the Principle at work.
Q: You accepted it just like that?
RP: When you begin to see the five-wave impulses and the three-wave corrections unfold over and over, it does not take long for you to say either "I see, but I refuse to believe it," or "This is obviously what's happening; let's see how far it continues." It took about a year and a half of applying it until I knew that Elliott was absolutely right. I'm pretty hard-headed, and it takes substantial reason for me to accept a new idea. By that time, I decided I had seen what amounted to proof. I then said to myself, "This is unbelievable. How come no one is commenting on this? The market is pulling back to points he said it should pull back to in the patterns. It is rising up to levels he said it should, in ways he said it should."
Q: What was it that convinced you?
RP: The Wave Principle proves itself when you merely keep a chart. Once I did that, I recognized what was going on rather quickly. The wave patterns are repetitive and at times, over protracted periods, they are easily discernible.

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The basic Elliott wave pattern consists of impulsive waves (denoted by numbers) and corrective waves (denoted by letters). An impulsive wave is composed of five subwaves and moves in the same direction as the trend of the next larger size. A corrective wave consists of three subwaves and moves against the trend of the next larger size.

As the chart below shows, these basic patterns link to form five- and three-wave structures of increasingly larger size.

The Elliott Wave Principle helps to identify turning points in the trends of financial markets.

It does not provide certainty, yet the Wave Principle does provide a way to assess the probabilities of possible future paths of a given financial market.

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Learn more in the free Elliott Wave Basic Tutorial The Elliott Wave Basic Tutorial is a 10-lesson comprehensive online course with the same content you'd receive in a formal training class -- but you can learn at your own pace and review the material as many times as you like! Get 10 FREE Lessons on The Elliott Wave Principle that Will Change the Way You Invest Forever

What Is Backing Your Deposits in the Bank?

Understanding Fibonacci

Understanding Fibonacci
Learn to apply Fibonacci ratios to calculate price targets in stocks 
October 06, 2011

By Elliott Wave International

The Fibonacci ratio can be an invaluable tool for calculating price retracements and projections in your analysis and trading. This excerpt from The Best Technical Indicators for Successful Trading explains the origins of the Fibonacci sequence and how you can apply it to the markets.
You can read the entire Fibonacci section -- plus 7 more lessons on how to use technical indicators to improve your trading for FREE -- see below.

Leonardo Fibonacci da Pisa was a thirteenth-century mathematician who posed a question: How many pairs of rabbits placed in an enclosed area can be produced in a single year from one pair of rabbits, if each gives birth to a new pair each month starting with the second month? The answer: 144.

The genius of this simple little question is not found in the answer, but in the pattern of numbers that leads to the answer: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, and 144. This sequence of numbers represents the propagation of rabbits during the 12-month period and is referred to as the Fibonacci sequence.



The ratio between consecutive numbers in this set approaches the popular .618 and 1.618, the Fibonacci ratio and its inverse. (Relating non-consecutive numbers in the set yields other popular ratios - .146, .236, .382, .618, 1.000, 1.618, 2.618, 4.236, 6.854....)



...In addition to recognizing that the stock market undulates in repetitive patterns, R. N. Elliott also realized the importance of the Fibonacci ratio. In Elliott's final book, Nature's Law, he specifically referred to the Fibonacci sequence as the mathematical basis for the Wave Principle. Thanks to his discoveries, we use the Fibonacci ratio in calculating wave retracements and projections today.

How to Identify Fibonacci Retracements
The primary Fibonacci ratios that I use in identifying wave retracements are .236, .382, .500, .618 and .786. Some of you might say that .500 and .786 are not Fibonacci ratios; well, it's all in the math. If you divide the second month of Leonardo's rabbit example by the third month, the answer is .500, 1 divided by 2; .786 is simply the square root of .618.

There are many different Fibonacci ratios used to determine retracement levels. The most common are .382 and .618. However, .472, .764 and .707 are also popular choices. The decision to use a certain level is a personal choice. What you continue to use will be determined by the markets.

...It's worth noting that Fibonacci retracements can be used on any time frame to identify potential reversal points. An important aspect to remember is that a Fibonacci retracement of a previous wave on a weekly chart is more significant than what you would find on a 60-minute chart.

See charts that show the application of Fibonacci ratios, plus 7 other lessons on technical indicators, by accessing your free report now.

Learn the Best Technical Indicators for Successful Trading In this free report, you will learn the tools of the trade directly from the analysts at Elliott Wave International. Using both video lessons and reports, they teach you how to incorporate technical indicators into your analysis to improve your trading decisions. You will learn: How to employ Fibonacci ratios to calculate possible turning points. How to interpret technical indicators such as Moving Average Convergence/Divergence -- MACD. How to exploit trendlines to uncover trading opportunities when stock charting. Technical patterns that can alert you to major moves, and how to know if it�s a legitimate pattern. And more -- 8 lessons in all! Get your Technical Indicators report now>>

The Single Most Reliable Indicator

The Single Most Reliable Indicator

In this video excerpt, Elliott Wave Financial Forecast Editor
Steve Hochberg explains one of the most important things to keep in mind when
assessing a market, "Extreme opinions, shared widely, constitute the single
most reliable indicator of an impending change of direction for a market." Enjoy
your video excerpt.

To find out more about the Wave Principle, be sure to watch the Club EWI video
series: Learn the Why, What and How of Elliott Wave Analysis. This 3-video series
is a great way to get started with the Wave Principle. You can watch these
videos free with a Club EWI Membership.

Watch the Club EWI video series: Learn the Why, What and How of Elliott
Wave Analysis. This 3-video series is a great way to get started with the Wave Principle. You can get these videos free with a Club EWI Membership.

Watch your free video now>>