A Disturbing Global Shift Toward Financial Conservatism

By: Elliott Wave International | Mon, Feb 29, 2016
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Editor's note: The following article was adapted from the just-published State of the Global Markets Report--2016 Edition, one of our most anticipated annual reports for technically minded investors and analysts around the world. We are making the first 10,000 copies of this $99 report available 100% free. Click here to get your free copy now >>

Originally published Nov. 6, 2015.


An excerpt from our new State of the Global Markets Report -- 2016 Edition

Our monthly Elliott Wave Financial Forecast has been tracking a steady global shift to greater financial conservatism over the last several months.

As we noted in October, the long duration of the transition from a "risk on" to a "risk off" attitude suggests that the next decline will "go deeper and last longer than that of 2007-2009," which was the biggest bear market since the Great Depression.

The relationship between the MSCI Emerging Markets Index and the MSCI World Index on the following chart shows a trend away from risk that will gradually widen into a trend out of all equities.

The MSCI Emerging Markets Index comprises riskier stocks, and it made a countertrend rally high in September 2014.

The blue-chip World Index comprises shares in more developed countries, and it made its all-time high in May of this year.

The current rally shows how much the MSCI Emerging Markets Index is lagging. In fact, it retraced only about a third of its most recent decline while the MSCI World Index retraced two-thirds of the sell-off from its May high.

 


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This article was syndicated by Elliott Wave International and was originally published under the headline A Disturbing Global Shift Toward Financial Conservatism. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

 


 

Elliott Wave International

Author: Elliott Wave International

Elliott Wave International

Robert Prechter, Chartered Market Technician, is the founder and CEO of Elliott Wave International, author of Wall Street best-sellers Conquer the Crash and Elliott Wave Principle and editor of The Elliott Wave Theorist monthly market letter since 1979.

Elliott Wave International (EWI) is the world's largest market forecasting firm. EWI's 20-plus analysts provide around-the-clock forecasts of every major market in the world via the internet and proprietary web systems like Reuters and Bloomberg. EWI's educational services include conferences, workshops, webinars, video tapes, special reports, books and one of the internet's richest free content programs, Club EWI.

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