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TheElliottWavePrinciple

 

 

 

 

 

 

 

 

 

 

 

 

 

 

What is the Elliott Wave Principle?

The Elliott Wave Principle is a detailed description of how groups of people behave. It reveals that mass psychology swings from pessimism to optimism and back in a natural sequence, 
creating specific and measurable patterns. One of the easiest places to see the Elliott Wave Principle at work is in the financial markets, where changing investor psychology is recorded 
in the form of price movements. If you can identify repeating patterns in prices, and figure out where we are in those repeating patterns today, you can predict where 
we are going.

The Elliott Wave Principle is named for its discoverer, Ralph Nelson Elliott.Elliott Wave Principle measures investor psychology, which is the real engine behind the stock markets. 
When people are optimistic about the future of a given issue, they bid the price up.Two observations will help you grasp this: First, for hundreds of years, investors have noticed that
events external to the stock markets seem to have no consistent effect on the their progress. The same news that today seems to drive the markets up are as likely to drive them down 
tomorrow. The only reasonable conclusion is that the markets simply do not react consistently to outside events. Second, when you study historical charts, you see that the markets 
continuously unfold in waves.

Using the Elliott Wave Principle is an exercise in probability. An Elliottician is someone who is able to identify the markets structure and anticipate the most likely next move based on our 
position within those structures. By knowing the wave patterns, you’ll know what the markets are likely to do next and (sometimes most importantly) what they will not do next. 
By using the Elliott Wave Principle, you identify the highest probable moves with the least risk.What is the Elliott Wave Principle?

The Elliott Wave Principle is a detailed description of how groups of people behave. It reveals that mass psychology swings from pessimism to optimism and back in a natural sequence, 
creating specific and measurable patterns.One of the easiest places to see the Elliott Wave Principle at work is in the financial markets, where changing investor psychology is recorded 
in the form of price movements. If you can identify repeating patterns in prices, and figure out where we are in those repeating patterns today, you can predict where 
we are going.

The Elliott Wave Principle is named for its discoverer, Ralph Nelson Elliott. Elliott Wave Principle measures investor psychology, which is the real engine behind the stock markets. 
When people are optimistic about the future of a given issue, they bid the price up. Two observations will help you grasp this: First, for hundreds of years, investors have noticed that events 
external to the stock markets seem to have no consistent effect on the their progress. The same news that today seems to drive the markets up are as likely to drive them down tomorrow. 
The only reasonable conclusion is that the markets simply do not react consistently to outside events. Second, when you study historical charts, you see that the markets continuously unfold 
in waves.Using the Elliott Wave Principle is an exercise in probability. An Elliottician is someone who is able to identify the markets structure and anticipate the most likely next move based on 
our position within those structures. By knowing the wave patterns, you’ll know what the markets are likely to do next and (sometimes most importantly) what they will not do next. 
By using the Elliott Wave Principle, you identify the highest probable moves with the least risk.

Source: The Elliott Wave Principle, 1990 Frost & Prechter Jr.

Source: Elliottwave International


 

 

 

The Elliott Wave Principle

The Wave Principle is unparalleled in providing an overall perspective on the position of the market most of the time. Most important to individuals, portfolio managers and investment corporations
is that the Wave Principle often indicates in advance the relative magnitude of the next period of market progress or regress. Living in harmony with those trends can make the difference between 
success and failure in financial affairs. 

 

 

 

 

 

Source: Elliottwave International


Despite the fact that many analysts do not treat it as such, the Wave Principle is by all means an objective study, or as Collins put it, "a disciplined form of technical analysis." Bolton used to say that
one of the hardest things he had to learn was to believe what he saw. If the analyst does not believe what he sees, he is likely to read into his analysis what he thinks should be there for some other
reason. At this point, his count becomes subjective. Subjective analysis is dangerous and destroys the value of any market approach. What the Wave Principle provides is an objective means of 
assessing the relative probabilities of possible future paths for the market. At any time, two or more valid wave interpretations are usually acceptable by the rules of the Wave Principle. The rules are 
highly specific and keep the number of valid alternatives to a minimum. Among the valid alternatives, the analyst will generally regard as preferred the interpretation that satisfies the largest number
of guidelines, and so on. As a result, competent analysts applying the rules and guidelines of the Wave Principle objectively should usually agree on the order of probabilities for various possible 
outcomes at any particular time. That order can usually be stated with certainty. Let no one assume, however, that certainty about the order of 
probabilities is the same as certainty about one specific outcome. Under only the rarest of circumstances does the analyst ever know exactly what the market is going to do. 

One must understand and accept that even an approach that can identify high odds for a fairly specific outcome will be wrong some of the time. Of course, such a result is a far better performance 
than any other approach to market forecasting provides. Using Elliott, it is often possible to make money even when you are in error. For instance, after a minor low that you erroneously consider 
of major importance, you may recognize at a higher level that the market is vulnerable again to new lows. A clear-cut three-wave rally following the minor low rather than the necessary five gives
 the signal, since a three-wave rally is the sign of an upward correction. Thus, what happens after the turning point often helps confirm or refute the assumed status of the low or high, well in 
advance of danger.

Even if the market allows no such graceful exit, the Wave Principle still offers exceptional value. Most other approaches to market analysis, whether fundamental, technical or cyclical, have no 
good way of forcing a change of opinion if you are wrong. The Wave Principle, in contrast, provides a built-in objective method for changing your mind. Since Elliott Wave analysis is based upon 
price patterns, a pattern identified as having been completed is either over or it isn't. If the market changes direction, the analyst has caught the turn. If the market moves beyond what the 
apparently completed pattern allows, the conclusion is wrong, and any funds at risk can be reclaimed immediately. Investors using the Wave Principle can prepare themselves psychologically 
for such outcomes through the continual updating of the second best interpretation, sometimes called the "alternate count." 

Because applying the Wave Principle is an exercise in probability, the ongoing maintenance of alternative wave counts is an essential part of investing with it. In the event that the market violates 
the expected scenario, the alternate count immediately becomes the investor's new preferred count. If you're thrown by your horse, it's useful to land right atop another. Of course, there are often 
times when, despite a rigorous analysis, the question may arise as to how a developing move is to be counted, or perhaps classified as to degree. When there is no clearly preferred interpretation, 
the analyst must wait until the count resolves itself, in other words, to "sweep it under the rug until the air clears," as Bolton suggested. Almost always, subsequent moves will clarify the status of 
previous waves by revealing their position in the pattern of the next higher degree. When subsequent waves clarify the picture, the probability that a turning point is at hand can suddenly and
excitingly rise to nearly 100%.Renowned financier Bernard Baruch, who was as close to markets as anyone, saw a connection between economic trends and the herding impulse of animals.
He also understood the crucial importance of that knowledge to a correct social analysis:

All economic movements, by their very nature, are motivated by crowd psychology. Without due recognition of crowd thinking... our theories of economics leave much to be desired... 
It has always seemed to me that the periodic madnesses which afflict mankind must reflect some deeply rooted trait in human nature - a trait akin to the force that motivates the migration of birds
or the rush of lemmings to the sea.. It is a force wholly impalpable.. yet, knowledge of it is necessary to right judgements on passing events.
.

Source: The Elliott Wave Principle, 1990 Frost & Prechter Jr.

Source: Elliottwave International

 

 

 

 

 

 

Bottom Line

Is This a Big Sign of a Big Stock Market Turn? >>>

 


ALERT !!!

 

Touch Down !

// Nasdaq 100 Index  >>> 

© ELLIOTT today, October 21,2018 

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 Below 10,000s

// DAX Index, Daily Chart >>> 

© ELLIOTT today, October 19,2018 

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 Down The Road, Jack

// DAX Index, Daily Chart >>> 

© ELLIOTT today, October 11,2018 

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TheCrest

 

At The Crest  >>>

 

'Catching'  A Turning Point (2)

// SPX, 120min. Chart  >>>

© ELLIOTT today, October 17,2018 

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'Catching'  A Turning Point 

// SPX, 120min. Chart  >>>

© ELLIOTT today, October 16,2018 

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Breaking A Mid-Line

// SPX, 120min. Chart  >>>

© ELLIOTT today, October 12,2018 

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// Catching A Turning Point

Gold, Update >>>

© ELLIOTT today, October 14,2018 

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Back In Japan

// Nikkei 225 >>> 

'Thrust' Out of a Triangle

© ELLIOTT today, September 30,2018 

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Modern Science Comments on the Wave Principle Hypothesis

1996 was an important year for the Wave Principle. In that year, the Journal of Physics published a scientific
study entitled "Stock Market Crashes, Precursors and Replicas" by Didier Sornette and Anders Johansen, 
then of the Laboratoire de Physique de la Matiere Condensee at the University of Nice, France, and 
collaborator Jean-Phillippe Bouchard. The authors make this statement:

It is intriguing that the log-periodic structures documented here bear some similarity with the "Elliott waves"
of technical analysis [citation Elliott Wave Principle]. Technical analysis in finance can be broadly defined
as the study of financial markets, mainly using graphs of stock prices a function of time, in the goal of
predicting future trends. A lot of efforts has been developed in finance both by academic and trading 
institutions and more recently by physicists (using some of their statistical tools developed to deal with
complex times series) to analyze past data to get information on the future. The "Elliott Wave" technique
is probably the most famous in this field. We speculate that the "Elliott waves".... could be a signature of 
an underlying critical structure of the stock market. 

Sornette, D., Johansen, A., and Bouchaud, J.P. (1996). "Stock market crashes, precursors and replicas."
Journal de Physique I France 6, No.1, pp.167-175) 
The Wave Principle of Human Social Behavior and the New Science of Socionomics, 1999 by Robert R.Prechter jr.

Socionomics >>>

 

The Wave Principle of Human Social Behavior 
and the New Science of Socionomics


R.N.Elliott's announcement of his discovery of the Wave Principle sixty years ago was a major breakthrough 
in sociology. To summarize Elliott's achievements, he discovered that the stock market displays fractal geometry, 
he discovered and described the component patterns and how they link together, he recognized (with the help 
of Charles Collins) the basis of the patterns in Fibonacci mathematics, and he concluded from all this evidence 
that human social progress regulates itself according to natural laws of growth and expansion that are
found throughout the universe. 

As Robert Prechter explains herein, this simple yet profound formulation reveals that, on the whole, the endogenous 
ebb and flow of social mood that propels mankind's progress follows a robust fractal and spiral design that closely 
resembles the development of all kinds of living forms. The practical value of the Wave Principle is that it forms the
basis for a new science, the science of socionomics. 

Socionomics is the study of the formological imperative of human interaction, which in turn is the engine of culture 
and history. Because people have an impulsive nature that rules in collectives, and because that nature is patterned, 
mass emotional change has a fair degree of predictability. As a result, its product, social action, does so as well.

(The Wave Principle of Human Social Behavior, Robert R.Prechter 1999) 

 

Socionomics >>>

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The Elliott Wave Principle is a detailed description of how markets behave. The description reveals that mass investor psychology swings from  
pessimism to optimism and back in a natural sequence, creating specific patterns in price movement.Each pattern has implications regarding  the 
position of the market within its overa