SPECIAL OFFER FOR MWC LISTENERSElliott Wave International is offering McAlvany Weekly Commentary listeners one month of access to the Financial Forecast, Theorist, and Short-Term Update for just $11.Claim the offer here: https://www.elliottwave.com/david SHOW NOTES This week on the McAlvany Weekly Commentary, we continue our two-week exploration of technical analysis. Today, David welcomes Steven Hochberg and Peter Kendall, two highly regarded senior analysts from Elliott Wave International, to examine the markets through the lens of Elliott Wave theory and long-term investor psychology. In this conversation, Steven and Peter discuss: • Why today’s valuation levels sit in what they describe as “stratospheric” territory• How liquidity isn’t simply money — it’s mood, and why that distinction matters as we approach 2026• Signs of speculative excess: AI stocks, the Mag Seven, Bitcoin, options behavior, leveraged ETFs, and more• Why Elliott Wave patterns suggest equities may be near a significant long-term turning point• The real story behind gold’s outperformance since 1999 and the message of the Dow/Gold ratio• A potential fourth-wave correction in gold before a future fifth-wave advance• What the dollar’s wave structure implies for global liquidity• How investors might think about safety, cash, and precious metals if liquidity tightens next year "So I think we're right at the edge of where we think market has an opportunity to turn down. And these are just based on long-term mathematical relationships between what we call waves—waves of advance and waves of decline in the market. And these mathematical relationships are expressing themselves at various points as [unclear] progress. Bob Prechter and his Elliott Wave Theorist have done some unbelievable work and very detailed work on some of the mathematical expressions that the market's showing. And we're right at the edge of one of those numbers now." —Steven: * * * Kevin: Welcome to the McAlvany Weekly Commentary. I'm Kevin Orrick along with David McAlvany and our guests today, Steven Hochberg and Peter Kendall. This week on the McAlvany Weekly Commentary, we continue our two-week focus on technical analysis. As you know, David, last week we had Michael Oliver on from Momentum Structural Analysis. And we got great, great comments from that program. And today, we go into the long-term wave structure of the markets with two of the most respected names in Elliott Wave Analysis. * * * David: Well, gentlemen, thank you for joining us today. It's been a while. We have Steve Hochberg and Peter Kendall joining us as guests. As we noted last week, this is the second week in a row we'll look at the markets through the lens of technical analysis. There are some long-term observations from Elliott Wave that are very important to keep in mind and I think will make for a very interesting dinner table conversation through this holiday period to the end of the year. Elliott Wave encompasses not only technical structures and wave counts, but provides an interpretive framework as well, socionomics. Before we jump in, I want to let our listeners know that Elliott Wave is giving McAlvany Weekly Commentary viewers and listeners a special one-month access offer to their Financial Forecast, the Theorist, and the Short Term Update for $11. You can find the link in our show notes or at Elliottwave.com/david. The interview will be audio focused. But if you're curious, there will be a number of charts that are posted that you can refer to on our YouTube channel. Well, getting started with a long-term look at valuations, in early November you published a chart of the S&P companies in that index, their book values and dividends spanning from 1927 through October of 2025. And it shows how current levels are excessive and well outside historical norms, with the 2019 to 2025 period really reaching into the stratosphere. In fact, I actually missed the October 2025 dot at first glance because it's nearly off the page. Could you expand on that theme of overvaluation to get us started? Steven: Yeah. That chart that you're referring to, we call it our Pluto chart because the valuation levels are just in a different stratosphere right now. The S&P 500 dividend yield is 1.16% right now. And the S&P 400 price to book value is 7.85. And if you think about that dividend yield, the yield that you're getting on the stock market, the three-month US Treasury Bill is now yielding 3.8%. So you're getting more than triple your return just by buying a short-term Treasury Bill, which has zero risk. And so what we're pointing out here is that there's just a tremendous amount of risk in the market right now, simply based on valuation. Now, we don't use valuations as a short-term timing tool because there've been many years where you've had outsized valuations relative to historic norms, but it does give you a landscape, a basic backdrop of the risks that you're taking right now by investing in these markets that are way, way overvalued based on history. Peter: Yeah. And if I could provide some historical context, that chart shows you normal in the form of the box, which is basically towards the bottom of the chart. And that's prior to 1929. That's all the dots there were. Every year was in the box, other than maybe '29—went up through the top of the box. And then what happened in the '30s was you fall down through the bottom of the box. That's the revaluation called the bear market. And this is all one bull market, in our opinion. So what you've had since at least sometime before 2000, we climb out of the box and we continue to do that. So it's been a generation of overvaluation, not just an overvaluation like we had in 1929. And we will get a revaluation at some point, we think right about now. David: Is there something to be said about the unhinging of the dollar, and how, in nominal terms, things have just gone crazy? And then with the advent of leverage and new leveraged tools, where we just see things priced into the stratosphere, as you say, this is the Pluto chart, is there something about the money system that drives that even farther than we saw prior to the 1930s? Steven: I think that's a really good point. Talking about how we all have fiat currencies now, and the leverage that's coursing through just about every financial asset. It's all about leverage right now. And we can see this in just basic— For example, just your New York Stock Exchange margin debt levels, which are over a trillion dollars right now at historic levels. But you could see it throughout other areas. For example, we now have these exchange-traded funds that use three times the leverage. We have zero-day options. I think they're well over 50% of the total option market now. That's just a gamble on short-term leverage use on what's going on. Seeing this leverage just blow up. And think we're starting to see changes very subtly in the use of leverage. And I think next year, in my mind, is going to be kind of the loss of liquidity. I go way back. In 2007, 18 years ago, I can't even believe it's been that long, we started out our January issue with a special report called "The Year of the Financial Flameout." And it turned out to be very prescient. It took us up until October of that year before mortgages started to implode. But a lot of things are reminding me right now of that time period. And what really is piquing my interest right now is I'm looking at the yen carry trade. And we talked about it in that issue, in that January 2007 issue. And I think it's coming back into play right now as yields on 10-year Japanese bonds are the highest they've been since 2007, 2008. They're up about 1%. Doesn't seem like a lot. But basically, there were years people were just borrowing in yen and investing throughout the world. And this is where this leverage is coming from, or emanated from. And I think 2026 is going to be kind of the year of the loss of liquidity. I think liquidity and that yen spigot is going to be turned off a bit. And I think that the amounts of leverage that we've built up are going to start piling down and falling down on itself. So that's something to think about and look at as we turn the corner into 2026. David: Well, liquidity is something that certainly drives these markets. We've got extreme expressions of speculative excess. And obviously, that's supported by the amount of liquidity that's in the market. Can you walk us through what you see in terms of the options call volumes, the Mag 7, and AI in particular as expressions of speculative excess supported by that liquidity you're talking about? Steven: Yeah. It's everywhere. Pete, hop in whenever you want. But we see it in the mania for Mag 7 and the mania for AI stocks and the mania for options and the mania for bitcoin and the mania for any asset that is moving up in price. There's just been a huge move into whatever's going up. But liquidity is, and I just want to make this point, it's an ephemeral event. It's a psychological event. And you have liquidity until you don't. In other words, when people are optimistic, they want to buy stocks, they want to speculate, they listen to happy music, they wear bright colors. And when that mood changes to something more negative, well, all of a sudden, they start dressing more conservatively. They don't buy stocks. Liquidity evaporates. And all this house of cards that we've been built upon with all this leverage, I think, starts imploding in on itself. Peter: Yeah. So you mentioned the Mag 7 and AI. So this is obviously a big part of what's going on in the stock market. In fact, you wouldn't have a rising stock market over the course of the last year without the Mag 7 and their emphasis currently on artificial intelligence stocks. We've recently completed a special section that's a two-parter.