Sentiment Speaks: A Decade of Success

This article will be published on Seeking Alpha in the coming week:

I am quite astonished when I now look back and realize it has been a full decade since I began penning technical analysis articles on Seeking Alpha.  

Needless to say, when I began writing about Elliott Wave analysis on the fundamentally-based Seeking Alpha platform, not only did I get strong push-back from the editorial staff, the general readership seriously looked down upon it.  And, I think that is a mild description based upon the feedback I received.  

Yet, I did not let that deter me in my goals.  While I had come from a background of fundamental analysis, the years of further research I conducted into market analysis and dynamics led me to a much more honest, accurate, and detailed understanding of how financial markets work.

For those who may not know my background, allow me to explain the qualifications with which I initially approached the markets. I graduated college with a dual major in both economics and accounting. I went on to pass all four parts of the CPA exam in one sitting, something that only 2% of those taking the exam are able to achieve. I then went on to complete law school in two and a half years, and graduated cum laude and in the top 5% of my class. I then went on to NYU for a Master of Law in taxation. I became a partner and national director at a major national firm at a very young age, where I worked to organize very large transactions. So, when I tell you that I understand the fundamentals of economics, business, and balance sheets, you can believe me.

Yet, when I approached investing in the market with all this background of understanding businesses, economics and balance sheets, I was no better than the average investor, and sometimes even worse. It was not until I learned more about the psychology of the market that I began to understand how to maintain on the correct side of the market the great majority of the time. In effect, I had to ignore everything I learned about economics, businesses and balance sheets, and predominantly focus upon investor psychology in order to make more sense of the general market action.

Once I began to understand market psychology, it allowed me to pull back the veil which is presented by the televised and written media, and understand the truth as to what drives markets.  My goal then became to teach that truth to all those willing to listen and learn.  And, in striving to attain this goal, I was guided by the wise words penned by Rabbi Samson Rephael Hirsch back in the early 1800’s: 

“Let him who is convinced that his views are true and right express them. . . at every opportunity . . . without considering how much support or how much opposition he will encounter.  Only falsehood is in need of many supporters in order to win the day; falsehood must have the authority of numbers to make up for what it lacks in justification.  Truth, by contrast, will always prevail, even if it takes time.   Noble, courageous and pure, expressed with all the fiery zeal of conviction and with all the clarity of sure awareness, stated again and again at every opportunity, truth will ultimately gain respect and admiration even of those who do not accept it.”

After a decade of outlining the truth of what drives financial markets, over 61,000 readers on Seeking Alpha have been “converted” through the perspectives we have been teaching on market behavior.  And, even though it took time, we demonstrated that truth has indeed prevailed.  

While we were initially viewed as a laughing stock amongst the readership a decade ago, our Elliottwavetrader group now has 3 services within the top 15 (out of a total 183) in the Seeking Alpha Marketplace, along with over 61,000 followers on just the Seeking Alpha platform alone, with over 7500 subscribers to our services, and almost 1000 money manager clients, many of whom have told us we have changed their lives. 

History Of Some Of Our Market Calls

Gold

When I published my first article providing an Elliott Wave analysis on Seeking Alpha, I was calling for a top in the gold market while price was in the midst of a parabolic run:

“Again, since we are most probably in the final stages of this parabolic fifth wave “blow-off-top,” I would seriously consider anything approaching the $1,915 level to be a potential target for a top at this time.” – August 22, 2011

And, over the following weeks, these are some of the typical comments I received from readers in my gold articles: 

“There is no way you can understand what is going on in gold by doing technical analysis.”

“You are following an outdated script with very little relevance as to what is happening now.”

“Because of fundamentals, gold does not work very well for technical analysis, for charting.”

“Technical analysis is nothing but a wind sock. It is not now nor will it ever be a crystal ball.”

“Your TA is useless. You don't understand the fundamentals because you only look to the past. Gold bulls are forward thinking. The times they are a changing ...” 

To say that the Seeking Alpha audience did not respect technical analysis, especially Elliott Wave analysis, is truly putting it quite mildly. Yet, my gold call caught the top in a parabolic gold market within $6 of the actual high struck. 

As I continued to write articles about metals over the next few years, I rose to become the top read analyst in the gold market, and remained there for many years to come (until Seeking Alpha discontinued its ranking of authors).  So, even though I was initially met with a tremendous amount of skepticism, and even strong condemnation, I think the truth of what we were teaching, along with the quality and accuracy of our analysis finally won many readers over.  And, as I have grown to more than 61,000 followers since that time, I feel that opening readers’ minds to an alternative perspective of market dynamics is one of our major successes.  

Since that time, I branched out to writing about other markets, including the US Dollar, the bond market, and the stock market.  Some of our larger degree calls in those markets were initially met with similar skepticism from the Seeking Alpha readership, despite my having risen to one of the most read analysts on the site.

US Dollar

Back in 2011, as the Fed was hell bent on its Quantitative Easing process, most market participants were certain that the US dollar was going to crash.  Yet, we were calling for a multi-year rally in the DXY from the 73 region to a target of 103.50.  As we now know, the DXY rallied to a high of 103.82, which was struck in early 2017, and we have been in a multi-year pullback since that time.  

Bonds

This brings me to a bond call which seems to have shocked most.  Back in November of 2018, the Fed was still strongly in its rate raising cycle.  Yet, I boldly noted that I was going long the TLT at that time.  And, despite all the comments that “you can’t fight the Fed,” well, it seems we often fight the Fed and are still standing quite tall and proud. As those that followed us in this market call know, this caught the major low struck in the bond market back in 2018.  Many who follow us have noted that this was one of the most accurate and extreme contrarian market calls they have seen.

S&P500

A major example in the S&P500 was presented back in 2015 when we were calling for the market to top in the 2100SPX region, then looking for a pullback into the 1750-1800SPX region, which would then set up a “market melt-up” to 2600+.  As we now know, the market topped out in 2015 at a high of 2134, and then dropped to a low of 1810 before we began a “melt-up” to over 2800SPX.  The main reason most did not believe my call at the time was because of the predominant expectation for a market crash due to the fact that the Fed was backing away from the market as it was reducing its involvement in QE.  So, again, we “fought the Fed,” and won.

Thereafter, as we came into the 2016 election, I reiterated our expectation for a continued melt-up “no matter who won the election.”   And, at the time, most were quite certain that the market would crash if Trump won the election. Again, we know how this turned out.

Another major example of our market accuracy was seen last year.  As the market approached our long-term support target in the 2200SPX region, I strongly reiterated my expectation for a major rally off that region to take us to 4000+, with an ideal target of 6000SPX.  Needless to say, most thought that was one of my craziest market calls to date. In fact, another contributor emphatically told me that straight out:

“Coming from someone who still thinks the bull market of January is alive enough to carry us to 4,000, that's highly unmeaningful... Here is the 2200 exactly that you said the S&P would bottom at before taking the trip back up to 4,000... What do you want to bet the ECONOMY is going to pull it down a lot further and that 4,000 is a lot further away than your charts ever said... THIS bull market did not ever come close to taking us to 4,000, and it is not taking us anywhere ever again because it is DEAD. OFFICIALLY and in EVERY way. Every index is DEEPLY into a bear market now. The bull is dead, and so it can NEVER take us to 4000. What you predicted can NEVER come true now... my own resolution is that this market has a lot further to fall because it is now following the economy, which it long divorced itself from; whereas Avi doesn't believe the economy ever means anything to stocks and has told me so several times last year... So, you have that common sense view, or you can believe Avi's chart magic will get you through all of that and is right about a big bounce off of 2200 all the way back up to 4,000.”

Needless to say, it has been quite a ride over the last decade.  Yet, it is one in which I am extremely proud of our accomplishments.  And, when thousands of our subscribers and money manager clients explain to us how we have changed their lives, we are even more certain that truth has prevailed:

“You don't hear it often enough, but you've made a significant difference (financially) in my family's life, and other's too I'm sure. Thank you all for the help, guidance and camaraderie you've given me these past 5+ years!! ”  (Fred)

"I have been a member less than one year and what I have learned has been a game changer"  (dasak5297)

“I was close to giving up mid/end of march, couldn't read where the market was going. Then I joined MPW...it's changed my entire psychology on the market” (spapas00)

“I cannot stress enough how much this site not only changed my entire approach to investing, but my life as well. Game-changer is an understatement.” (megatronus)

In fact, at one of my recent member gatherings, one of our members pulled me aside with tears in his eyes to thank me for what we have done for him and his family.  It is moments like this that make what we do so incredibly gratifying.   And, it is what will keep me doing this for as long as the good Lord allows me to do so.  

So, I want to thank you all for your support over the last decade, and I am hoping we can help many more people in the decade to come.

Avi Gilburt is founder of ElliottWaveTrader.net.