"By its very nature, the shift from up to down in an all-the-same-markets scenario is a big turn. ... As we noted in October, "the turn is taking more of a saw tooth form" in which some markets turn ahead of the pack."
- Elliott Wave Financial Forecast, June 2007

At EWI, we call 'em like we see 'em, and mounting evidence reminds us every day that the longer and higher the markets go up, the more sure we can be that they will eventually reverse at an equally manic degree. The greater a mania grows, the more devastating it's aftermath. So why is irrational behavior continuing to fuel this market?

You see, the very definition of a mania is "excessive or unreasonable enthusiasm." A mania depends on the inability of its participants to recognize their irrational state. So as gauges for investor optimism hover around 90%, the markets increasingly ignore all rational indicators that point to danger ahead ? and in the case of the U.S. markets, there are many.

In this issue of The Elliott Wave Financial Forecast, you'll learn that Chinese investors wear red clothes because they are "representative of a hot market" and eat beef to help sustain the "bull" run. There are telltale signs of financial mania, and superstitious amateur investors are unmistakable classics.