{"id":173116,"date":"2020-07-02T18:16:34","date_gmt":"2020-07-02T22:16:34","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=173116"},"modified":"2020-07-02T18:16:34","modified_gmt":"2020-07-02T22:16:34","slug":"stocks-oil-see-how-elliott-waves-help-you-avoid-getting-married-to-the-trend","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2020\/07\/stocks-oil-see-how-elliott-waves-help-you-avoid-getting-married-to-the-trend\/","title":{"rendered":"Stocks, Oil: See How Elliott Waves Help You Avoid “Getting Married to the Trend”"},"content":{"rendered":"
July 2, 2020<\/div>
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By Elliott Wave International
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– Most investors make the mistake of linearly extrapolating a financial trend into the future, especially at junctures when that trend is near a turn.<\/p>\n

In everyday terms, it’s called “getting married to the trend.”<\/p>\n

Here’s what Elliott Wave International President Robert Prechter said in his book, Prechter’s Perspective<\/em>:<\/p>\n

Most published forecasts are at best descriptions of what has already happened. I never give any forecast a second thought unless it addresses the question of the point at which a change in trend may occur. …<\/p>\n

Read forecasts carefully. If they are unsophisticated, linear extrapolations of a recent trend, it’s probably the best policy to toss them aside and go search for something potentially useful.<\/p>\n

Employing the Elliott wave model helps a market participant to avoid the error of assuming<\/strong> that today’s trend will carry into tomorrow. Why, even a 3rd<\/sup>-grader can learn a tell-tale sign of when a trend is about to change. More on that in a bit.<\/p>

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First, let’s look at a prime historical example of how trend extrapolation manifests.<\/p>\n

A little background: the price of crude oil hit a low of $49.90 in January 2007 and then climbed dramatically in the following year and a half, reaching a high of $147.50 in July 2008.<\/p>\n

Many energy market observers expected even higher prices.<\/p>\n

Here are just a few of the headlines as crude oil was skyrocketing:<\/p>\n