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Fibonacci Ratio

As They Occurred Live In The Markets..!

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 overall progression , past, present and future. 

The purpose of this publication and its associated services is to outline the progress of markets in terms of the Elliott Wave Principle and to educate interested parties in the successful application of the Elliott Wave Principle. This is probably the most comprehensive trading education on how to project high probability time & price targets based  on Elliott Wave pattern structure.

 

Rhythmic Pattern of Waves

Extensive research in connection with what may be termed human activities indicates that practically all developments which result from our social-economic processes follow a law that causes them to repeat themselves in similar and constantly recurning serials of waves or impulses of definite number and pattern. It is likewise indicated that in their intensity , these waves or impulses bear a consistent relation to one another and to the passage of time.

The expression “human acitivties” includes such items as stock prices, bond prices, patents, the price of gold, goverments expenditures, production, life insurance (purchases) , electric power produced, gasoline consumption, fire losses, price of seats on the stock exchange, epidemics, and real estate (prices). ¹ )

It is particulary evident in those free markets where public participation in price movements is extensive. Those who have attempted to deal with the market’s movement have failed to recognize the extent to which the market is a psychological phenomen. They have not grasped the fact that there is regularity underlying fluctuations of the market, or, stated otherwise, that price movements in stocks are subject to rhythmus, or an ordered sequence. The wild, senseless and apparently uncontrollable changes in prices from year to year, from month to month, or from day to day, link themselves into law-abiding rhythmic pattern of waves. The same rules apply to the price of stocks, bonds, grains, cotton, coffee, and all the other activities previously mentioned.

The student should recognize, that there are cycles within cycles Major waves subdivide into intermediate waves (which) subdivide into minor waves. One cycle becomes but the starting point of another, or larger, movement that itself is a part of, and subject to the same law as, the lesser movement. This fundamental law cannot be subverted or set aside by statues or restrictions. Current news and political developments are of only incidental importance, soon forgotten, their presumed influence on market trends is not as weighty as is commonly believed. Underlying this progession, in whatever field, is a fixed and controlling principle, or the master rule under which nature works.² )

¹ ) R.N.Elliott’s Masterworks (1980/1998) by Frost & Prechter, which includes all of Elliott’s original books, articles and major essays, as well as a biography.

² ) Elliott Wave Principle – Key To Stock Market Behavior (1978/1998) by Frost & Prechter, a concise summary of Elliott’s work.  

 

 

Stunning Precision:

In "The Elliott Wave Principle - A Critical Appraisal", Hamilton Bolton stated,

should the 1949 market to date adhere to this formula, then the advance from 1949 to 1956 (356 points in the DJIA) should be completed when 583 points (161.8% of 361 points) have been added to the 1957 low of 416, or a total of 999 DJIA. Alternatively, 361 over 416 would call for 777 in the DJIA.

The year 1966 proved those statements to be the most accurate prediction in stock market history, when the 3.00 p.m. hourly reading on February 9th registered a high at 995.82 (the intraday high was 1001.11). Six years prior to the event, then, Bolton was right to within 3.18 DJIA points, less than one third of one cent error. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DJIA October 2007


14,164.50 on October 9,2007 (high: 14,198.10 on October 11,2007

On January 1,2007, Karl and Maria of ELLtoday made the following forecast:

Note: We were able to forecast the probably path of the market
and a reasonable target, based on EWI and Fibonacci

Fibonacci At Work

DJIA, Jan 1,2007

 

 

Count#2:

The up wave from the low of June/July 2006 has all the earmarks of a third wave, though C-waves are third waves, too. The current situation reasembles the up wave in 2003 into the 2004 high, as prices traveled upward only separated by small corrections. If the wave in progress travels 1.618 times the length of the first wave (+1484 points) a reasonable target can be placed at 13,084.

If we look back 10 years, 1997 had an up first quarter, 20 years back the same happened. (1987 stock market crash). 70 years back, in March 1937 the Dow topped in Cycle wave I and lost 62% by 1942

 

The following Special Report- DJIA, was posted to subscribers on October 7,2007:

 

The Big Picture

Special Report - DJIA
© ELLIOTT today, October 7, 2007 

 

Topping !!

Alternate count showing the advance from October 2002 to October 2007 as a three-wave structure ultimately labeled [a]-[b]-[c] of Primary degree completing Cycle wave B. 

The latest rise , contrary to how it has been embraced, has in fact strenghtened the case that the high, say top, is near ! In fact last week's leap appears to be an institutional panic at the top of a bear market rally. Normally, corrective patterns retrace approximately 38.2%, 50% or 61.8% of prior preceding impulse waves. In July, technical evidence supported the case that the top is in, but the market traced out what looked like a three-wave decline, which is corrective in character, suggesting that another leg to the upside will follow. And it does. To be cautious does not mean I am bearish all over, but the aftermath of 2000 or 2001 proofed me right ! How many people lost their fortune, some for their lifetime. How many  mutual funds closed down leaving the public with huge losses? 

As of Friday, all major indexes made new highs exceding the high of July 2007. So what? The NASDAQ Composite Index for example trades well behind its alltime-high of March 2000 and even did not reach the 50% percent retracement. 

There are 11 corrective wave patterns, and any one of them may be developing from the high. Nevertheless, forecasting its shape is not that difficult. It merely requires staying within the boundaries of what we know by the Wave Prinicple not what we hope or what we read into it. What we know is that this bear market will either be or begin with an A-B-C pattern, and to date, a satisfactory pattern of this type can only be an alternate. The actual situation today, of course, is much more bearish than in 1930 or 1938 from a long term perspective because the 1980s bull market completed five waves up from 1932 and
probably from the late 1700s. 

There is a compelling cluster of Fibonacci relationships which converge in the Dow right now. The double zigzag count shown in chart 1 as the alternate count, is still valid and clearly shows that the market reached the rising 1x1 Fibo fanline for the second time.  The Elliott parallel trend channel also shows the market has reached its limit. You may have observed, that the rise from 2002 to 2007 mirrors the rise from 1982 to 1987, which lasted 1813 days or 60 months. On October 10, 2007 the DJIA will match 1800 (calender-) days since October 10,2002. The exact day to the 1987s example would be October 23, 2007. 

a = 41.20 % 
c = 10,186 to 14,198.10 = 4012.10 = 39.38% = +/-1.81%)

more precisely:

a = 7197 - 10,664 = 48.17%
c = 10,186 - 14,164.50 = 3978.50 = 39.05% (!!!)

48.17/39.05 = 1.2335 (1.236 =0.618+0.618)

 

 

ELLIOTT today, April 28, 2006:

"The Dow registered a high for the year 2006 on January 11, 2006. The high of March 21, 2006 would be in perfect Fibonacci relationship on May 4, 2006: 70 days x 0.618 = 43." The Elliott Wave structure displays an expanding wedge (expanding diagonal triangle with wave v an ending diagonal triangle. The Dow also reached the ML-1 (red dotted-line)."

 

ELLIOTT today, May 6, 2006:

"With respect to the wave count, the preferred count is a five-wave advance from the low of 2002, whether the Dow will reach a new all-time high remains to be seen. Interestingly enough, the length of wave (1)  and wave (5) are about the same, as wave (1) gained +1857 points and wave (5), measured from the low of 9,708 traveled 1,878 points. Taken the first advance from 7,197 to 10,754 (+3,557 points) and multiply the advance with 0.618 the result is 2,198 and when added  to the 9,708 [the orthodox low of wave (4)] gives 11,906 matching the high of January 14, 2000 by 2  points! Elliott channel lines, Median Line and the 1x1 GL all point to that high."

 

 

ELLIOTT today, May 26, 2006:

DJIA - Wave Length Equality

 

open window   DJIA,May 26,2007

On February 10,2007 ELLtoday presented a report showing the Dow's wave length relationships at different degrees. ELLtoday wrote, "Long term Fibonacci wave length relationships presented already in May 2006 have pointed to a possible target around 12,200 to 12,400 and now we have an exact mathematical basis which strongly argues that the DJIA has reached its top in wave B or V by the alternate count.

Primary wave [1] - [3]: 570.02 - 2,746.65 = 381.86%
Primary wave [5]: 1766.74 - 12,700.20 = 617.85%

The ratio is 1.618 (exactly). 

Now as the DJIA reached a new alltime-high at 13,624 many market watchers may ask: "Where is the beef?"

Place the start of the greatest bull market in history on August 1982 at DJIA 777 the recent high IS in perfect Fibonacci wave length relationship, again:

1982-1990: 777 -   3,024 (intraday high on July 17,1990) = 289.18%
1990-2007: 2389 - 13,624 = 470.28% 
and the ratio is 289/470 = 0.61489 or 470/289 = 1.626 which is phi. 

But there is more. As the chart reveals, the Intermediate degree upward cycle from the
low of October 2005 reveals virtually perfect Fibonacci relationship among its components. Examining all the percentage gains of wave (1) and wave (5) using extreme readings (intraday highs and lows) I immediately observed that both waves produced wave length equality, since wave (1) gained 14.9% and wave (5) gained 14.1%. R.N.Elliott observed  that wave four may penetrate the lower channel line by a certain amount as the market did in March 2007, but also stated that on the other hand the market may produce a "throw over" , i.e., penetrating the upper channel line of a parallel trendchannel to the upside. That's exactly what happened. A decline below Thursday's low probably will break the  upper channel line and highly likely the overall bull market. If this is correct, the previous 4th wave support lies at the 12,000s a possible drop of 12%. And this will be only the beginning.

TimeZone: The number 377 is a Fibonacci number and will be in place on Sunday, May 27,2007 measured from the high of May 10,2006. The next trading day will be Tuesday, May 29,2007. Caution is advised. 21 years ago (another Fibonacci number), when I started learning Elliott Wave the DJIA undertook its first "surprising" decline "out of the blue" the day after the national holiday.

 

Most compelling, however, the longterm calculation:

Cycle Wave V: 1982-2007 (1982-2007)

I - III = 777 - 3024 = 2247 = 289.18% (1982-1990)
V = 2457 - 14,164.50 = 476.49%        (1991-2007)

And the ratio is: 289.18/476.49 = 0.6068 = phi Ø (0.618)

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Fibonacci - Sequence and Ratio
(C) ELLIOTT today,  March 07,2005

The Fibonacci sequence is 1,1,2,3,5,8,13,21,34,55, and so on. It begins with number 1,and each new term from there is the sum of the previous two. The limit ratio between the terms is 0.618034…, an irrational number variously called the ”golden mean” and “divine proportion,” but in this century more succinctly phi (f) after the architect Phidias, who designed the Parthenon. Both the Fibonacci sequence and the Fibonacci ratio appear ubiquitously in natural forms ranging from geometry of the DNA molecule to the physiology of plants and animals, as we will see in this chapter and in chapter 11.

The mass psychological fluctuations revealed by the stock market are not only correlated with mankind's actual progress and regress through history, but in fact produce them. What the Wave Principle ultimately says, then is that mankind's progress, which results from his social nature, does not occur in a straight line, does not occur randomly, and does not occur cyclically. Rather, progress takes place in a Fibonacci-related arborating, spiraling or wave-fractal style that nature uses for all its robust forms. As the activity of social man has form, it is apparently no exception to the general law of order In the universe. 

Professor Ian Steward of Warwick University makes a case in his book, "Life's Other Secret", that  the cardinal code of life Is mathematical, not bio-mechanical. 

He begs his readers, "We must turn at least some of our attention to life's other secret - the universal  mathematical principles of growth and form 
that DNA exploits." 

(Steward, I.,1998. Life's Other Secret.)
The Wave Principle of Human Social Behavior, by Robert R.Prechter,1999)  

 

The Fibonacci Sequence and Ratio in Plant Life

A grand connection between Fibonacci and life has been proposed from time to time. In the seventeenth century, mathematician Jakob Bernoulli, the father of probability analysis was the first modern European to observe the importance of the Fibonacci ratio in nature. Early in the twentieth century, several publications reported on Fibonacci expressions in plant and animal physiology, including The Curves of Life by Theodore Cook (1914), On Growth and Form by Scottish zoologist D'Arcy Thompson (1917), The Elements of Dynamic Symmetry by Jay Hambridge (from articles published by the Yale University Press in 1919), and papers by Oxford professor A.H.Church on "Phyllotaxis in Relation to Mechanical Law."

There are many expressions of Fibonacci mathematics in plants, from leaf arrangements to branching
tendencies to the numbers of petals in flowers. For instance, lilies have 3 petals, buttercups 5, delphiniums 8, marigolds 13, asters 21, and most daisies 34, 55 or 89. While flowers occasionally reveal non-Fibonacci numbers, says Professor Ian Steward, "you don't find any other numbers anything like as often," and when 
you do, they often reflect the family of numbers called the Lukas sequence: 1,3,4,7,11,18,29 etc., which is 
the Fibonacci phenomenon of additive growth starting with two different numbers, 1 and 3, instead of 1 and 2. 

Stephane Douaday and Yves Couder of the Laboratoire de Physique Statistique and the Laboratoire de Physique in France explain that phyllotaxis, the Fibonacci-based structure of plants, is a self-organized 
growth process. As we shall see, many (if not all) self-organized growth processes involve Fibonacci mathematics.

Fibonacci numbers appear in the tiniest first cells of a growing plant, called primordia, which grow outward from an apex along a spiral called a "generative spiral" that ultimately produces the plant. Two researchers, the Bravais brothers, found the mathematical rule that governs the spacing of the primordial along the generative spiral. It turns out that the angles between the center of the apex and successive primordia is always the same, approximately 137.5 degrees. This angle is 0.382 of the full circle of 360 degrees and is called the golden angle. G. Van Iterson in 1907 showed that this angle produces two families of interlocking Fibonacci spirals, one clockwise and the other counterclockwise. In 1979, H.Vogel explained why: The golden angle is the only divergence angle at which seeds may pack without gaps, making it the most efficient method of packing and the only way to achieve full density in the seed head.

Efficiency is not the only advantage that Fibonacci has for life forms. It is also the best sequence for robustness, which is to say, for providing the greatest latitude for variability and growth in an integer-based system. The reason is that the Fibonacci ratio has a unique property that sets it apart from all other irrational numbers. When using increasingly large whole numbers in fractions to approach limits, the differences between the result and limit shrink more slowly for phi than for any other irrational number. I infer from this fact that phi allows for more and longer growth in real-world entities, which must be counted for whole numbers, than any other limit.

To summarize the above paragraph, nature uses Fibonacci for efficiency and robustness in plants, which are self-organizing growth forms. As this book progresses, we shall investigate the possibility that social man is participating in a self-organizing growth form whose progress is governed by Fibonacci mathematics because 
it allows the greatest efficiency and robustness.





Fibonacci in Diffusion-Limited Aggregation (Branching Systems)

In the early 1990s, five scientists from the Centre de Recherche Paul Pascal and the Ecole Normale Supeieure in France investigated the diffusion-limited aggregation model, which is a set that diffuses via smaller and smaller branches. Arneodo et.al. state at the outset that it is "an open question whether or not some structural order is hidden in the apparently disordered DLA morphology." [Arneodo, A., et.al. (1993)."Fibonacci sequences in diffusion-limited aggregation." Growth patterns in physical sciences and biology. All quotes in this section are from this source.]

To investigate the question, they use a wavelet transform microscope to examine "the intricate fractal geometry of large-mass off-lattice DLA clusters." In the first linking of the two concepts of fractals and Fibonacci since Elliott, they demonstrate that their research "reveals the existence of Fibonacci sequences in the internal 'extinct' region of these clusters." 

These mathematics pertain to "apparently randomly branched fractals that bear a striking resemblance to the tenuous tree-like structures observed in viscous fingering, electrodeposition, bacterial growth and neuronal growth," which are striking similar to trees, root systems, algae, blood vessels and the bronchial architecture", i.e. the typical products of nature. The study shows that these apparently random fractals are in fact more orderly than previously realized. Specifically, the authors find that the branching characteristics of off-lattice DLA clusters "proceed according to the Fibonacci recursion law," i.e. they branch in intervalls to produce a 1-2-3-5-8-13 etc. progression in the number of branches. The authors of this study, then, have found the Fibonacci sequence in DLA clusters in the same place that R.N.Elliott found the Fibonacci sequence in the Wave Principle: in the increasing numbers of subdivisions as the phenomenon progresses. 

The authors find even more evidence of Fibonacci. They have discovered that the most commonly occurring "screening angle" between bifurcating branches of theses DLA clusters is 36 degrees, which holds regardless of scale. This is the ruling angle of geometric phenomena that display Fibonacci properties, from the five-pointed star to Penrose tiles. The authors elaborate.

The inimate relationship between regular pentagons and Fibonacci numbers and the golden mean Ø = 2cos (pi/5) = 1.618… has been well known for a long time. The proportions of a pentagon approximate the proportions between adjacent Fibonacci numbers, the higher the numbers are, the more exact the approximation to the golden mean becomes. The angle defined by the sides of the star and the regular pentagons is 36 degrees, while the ratio of their length is a Fibonacci ratio. (Fn+1/Fn).

The authors conclude, "The existence of this symmetry at all scales is likely to be a clue to a structural hierarchical fractal ordering." Indeed, it is. I not a dissimilar way, Elliott found that the price lengths of certain waves are often related by 0.618, at all scales, revealing another, though perhaps less fundamental, Fibonacci aspect of waves.

There is another link between these two phenomena, though it is a bit amorphous conceptually. 36 degrees is 1/5 of a semicircle, is the ruling angle of the 5-pointed star, and is half the angle of the pentagon, whose 72-degree angles are 1/5 of a circle. The average bifurcation angle, then, links the property of "fiveness" to DLA clusters just as Figure 1-1 displays the importance of "fiveness" to the Wave Principle. The formula for phi itself, which is (root 5 - 1)/2 or (root 5 +1)/2 depending upon the inversion, is grounded upon the square root of 5. Apparently, among all Fibonacci numbers, the number 5 has the most fundamental importance to phi. The reason may be its necessity in creating progress in the form of waves as explained in Chapter 1 under the heading "Why 5-3?"
The authors announce that their "wavelet analysis provides the first numerical evidence for the existence of a 'Fibonaccian' quasi-fractal structural ordering in DLA clusters." This is terrific news because DLA structures occur in countless of nature's living forms and processes, one of which the Wave Principle purports to depict. 

The Robust Fractal Reappears

In a brilliant concluding proposal, Arneodo, et.al. determine from just this data that they are working with a type of fractal that scientists had not yet found, an intermediate form between perfect self-identity and vague, indefinite self-similarity:

The intimate relationship between regular pentagons and Fibonacci numbers, the golden mean..has been well known for a long time…The recent discovery of "quasi-crystals" in solid state physics is a spectacular manifestation of this relationship. This new organization of atoms in solids, intermediate between perfect order and disorder , generalizes to the crystalline "forbidden" symmetries, the properties of incommensurate structures. Similarly, there is room for "quasi-fractals" between the well-ordered fractal hierarchy of snowflakes and the disordered structure of chaotic or random aggregates. 

This is the same type of intermediately ordered fractal that R.N.Elliott described for the stock market. Of course, Elliott managed to detail many more aspects of that fractal, showing to a far greater degree how substantially its form is self-identical within a certain definable latitude of expression. As implied earlier, I prefer the term robust fractal to quasi-fractal since it has been established that nature's processes of growth and expansion produce this type of fractal. Its connection to natural phenomena indicates that there is nothing quasi about it. I expect that it will eventually be found to be so common that other types of fractals should be called quasi.

To summarize, what we have here is a study that observes the Wave Principle's characteristics of fractality, fiveness and Fibonacci in a phenomenon (DLA clusters) that shares with the Wave Principle the fundamental aspect of human self-similarity. I will add that this yet another study among many in the past twenty years that shows more order in apparently random processes that previously believed, which is what this book proposes about human social behavior. I would guess that more and greater such surprises are forthcoming in the sciences, both natural and social. [The Wave Principle Of Human Social Behavior and the New Science of Socionomics, 1999, Robert R. Prechter 1999] 

 

SP500 Index, July 2004 - January 2005
© ELLIOTT today, Carl H. Lachmann 

 

 

 

ELLIOTT today used the Fibonacci ratio
with respect to timeZone intervalls. 

As you can see the time intervalls 
produced the ratio 0.618: 
140x0.618=86.52, 86.52x0.618=53.46. 

"Time is the most important dimension in market analysis, yet it is the most ignored factor." (Robert Minor, Editor and publisher of Precious Metal Timing Report and the W.D.Gann Trading Techniques Home Study Course, Oracle, Tucson, AZ). 

One of Gann's most unique and important concepts for projecting market time/price reversals is the relationship of price and time. Gann called it "squaring price in time". Important price highs, lows and ranges often project future time periods when minor and major trend reversals occur in the markets. The concept and technique is really quite simple. The method to project highly probably time zones of future trend reversals from price extremes and ranges is identical to projecting future dates from prior time cycles. From the use of the charts which have the equal time and price relationship, Gann went on to find that certain fixed angles had a very significant relationship to price movement. The basis of the angles which Gann used came again from the 360 degree circle. The circle, or more specifically, one quarter of the circle or 90 degrees,is the basis of the angles. The 45 degree angle divides the square in half and gives a further division of the circle. There are three angles of major importance. The 2x1 , 1x1 or 45° angle, which is the most important, accurately measures time periods as in the square of the range. The slower 1x2 and other angles that are used are 3x1, 4x1. 

These angles then give you a visual idea of the type of momentum the stock or market is developing. First of all, the angles are drawn from major highs and lows, with the angles moving down from the highs, and up from the lows. Angles from the highs represent resistance areas; and from lows, support. Angles form high and low points in price are very important to the resulting move from that low or high, but angles drawn up from zero, from the date of the major lows and highs on the chart are also very important to this work. Gann often would indicate that a stock or commodity was in "a strong position from bottom, and a weak position from top". 
This type of qualifying the strength of market action is really very simple - below a 2x1 from a top is in a weak position from a top, above the 2x1 from bottom, is a strong position from bottom. The slower angles give you progressively less weak positions from top, and less strong positions from bottom. (Source: Gann Made Easy, William McLaren, How to trade using the Methods of W.D.Gann, 1986)

 

 

SP500 Index 7/29/04-08/04/04
© ELLIOTT today
  

Classic Elliott: After completing a contracting triangle (a-b-c-d-e) a "thrust out of the triangle" produced a clear five-wave advance to 1108.60. "When the fifth of the fifth wave tops out, we need not ask why it has done so. Reality again, will be forced upon us. When the producers who 
are leeched upon disappear or are consumed, the leeches who remain will have lost their life support system, and the laws of nature will have to be patiently re-learned." 
(EWP, p. 183, Frost & Prechter, 1990).  

SP500 Index, 10/18/04 - 10/22/04
© ELLIOTT today
 

The pattern from 1094.25 to 1108.96 is a textbook 3-3-5 "irregular flat", also called an expanded flat. (EWP, p.37-38, Frost & Prechter, 1990)  

Nasdaq Composite, March 11,2004
© ELLIOTT today
 

Figure F-3

Fibonacci: Wave (ii) terminated at the .618 retracement level of wave (i). Wave i bottomed at the .618 retracement level of the entire upmove of Minor wave 5 [1900-2153]. Minuette wave ii retraced .786 times of the entire decline of Minuette wave i. [.786 x .786 = .618]

The ML did a good job identifying an important turningpoint. 
Also, wave (e) retraced 61.8% of wave (d).

DAX, March 24,2004

© ELLIOTT today
  

Figure F-4

The first downwave stopped right in the area of a 38.2% Fibonacci retracement of the previous upmove from 3200 to 4175. The second downwave stopped right in the area of a 50% Fibonacci retracement of the previous upmove from 3200 to 4175.

DAX, January 27,2004

© ELLIOTT today
 

Figure F-5

From the low of the end of September 2003 a strong upmove started, wave (a). [3200 - 3600 = +400 points].
After an a-b-c zigzag correction for wave (b) another upleg brought the DAX above 3800, a gain of +400 points. The entire structure is best counted as an (a)-(b)-(c) with waves (a) and (c) of the same length. From the low of wave (c) of [b] in November 2003 another leg up [wave [c] brought the DAX to 4175 points, a gain of +600 points, the same length as wave [a]. 

 

 

DAX, January 17,2004
© ELLIOTT today
  

Figure F-6

On January 17,2004 ELLIOTT today, presented the chart of the DAX as shown in Figure F-6. As you can see, not only is Minor wave 5 from 3200 in its latter stages as Minute wave (v) reaches the upper parallel trend channel line, but actually at 4214 the DAX will meet the Fibonacci 61.8% retracement level of the decline
from March 2002 to March 2003. 

S&P 500 [SPX], February 11,2004

© ELLIOTT today
  

Figure F-7

Market analysis to subscribers: 

ELLIOTT today, S&P 500 January 17,2004:

The next powerful resistance level in the S&P should be the 50% retracement level measured from the alltime-high: 1553-768= -785. 785/2=392,5. 768+392,5= 1160,5.These developments are remarkable high enough, but substantially more is involved in the fascinating mathematical relationships of the wave structure. 

S&P 500 Index,Feb.9,2004: Prices held above the lower trend channel line and staged what looks like a five-wave-upmove. It is highly likely, that the supposed wave c of (iv) produced a “truncated fifth” and the fourth wave correction ended short of wave a. If so, 1160 should be favored as a near term target since it presents the Fibonacci 50% retracement level of 1553-768.

Short term update, S&P 500 Index, March 5,2004: The S&P 500 may be in its last advance of topping action since January 26, 2004. Caution is advised as the last decline occurred under diverged conditions, especially in the Dow. 

 

S&P 500 [SPX], March 19,2004

© ELLIOTT today
 

 

Figure F-8

As ELLIOTT today said on January 17,2004:

“The next powerful resistance level in the S&P should be the 50% retracement level measured from the alltime-high:1553-768= -785. 785/2=392,5. 768+392,5= 1160,5.”  

NASDAQ Composite 

© ELLIOTT today, July 2000

open chart

  NASDAQ

Nasdaq Composite: A classic 61.8 % Fibonacci Retracement:

5039 - 3042 = -1997. 1997 x 0.618 = 1234.14
3042 +1234.14 = 4276.14 (+/-2.14)

 

 

Crash of 1987

I remember that year very well since it was my second year of studying Elliott Wave and at that time I followed the market on a hourly basis, day by day. Fibonacci calculations produced
a stunning symmetry with wave relationships not seen before. 

A 3.236 (1.618 + 1.618) multiplication with the length of wave 1 (509 x 3.236 = 1647.124) pointed exactly to 2733 which was the hourly high on August 25, 1987. 

 

 

  

Early in August of that year, in London the so called "yuppies" hailed the bullmarket not with glasses of champagner but with big bottles. Optimism was running high, almost everybody 
called for higher prices ahead. For a contrarian stance, this was an excellent signal to
go to the opposite. As can be seen on the chart, the first downwave held exactly on the lower trend channel line connecting waves 2 and 4 drawn from the low of October 1986. At that time I also used the 40-month cycle which indicated a crest in July 1986 and I published a warning about the state of the market. Account executives at a broker house laughed out loud (lol) but in October 1987 they were fired! As it turned out, this was my first great call with respect to the Wave Principle and as can be seen on figure 5 the Median Line technique did a great job, too. 

 

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None of these stocks are buy or sell recommendations. There is a high degree of risk in trading.This chart  contains information that we reserve for subscribers.Choosea subscription that's right for you. 

Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been exted, the results may have under-or-over compensated for the impact, if any, or certain market factors such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or loses similar to those shown. Performance results listed below represent simulated results and not the results of an actual account. None of these stocks are buy or sell recommendations. There is a high degree of risk in trading.

All trading involves high risk; past performance is not necessarily indicative of future results.No offer or solication to buy or sell securities, securities derivative or products of any kind, or any type of trading or investment advice,recommendation or strategy,is made, given or in any manner endorsed by ELLIOTT today  or any of its affiliates. Past performance, whether actual or indicated by historical tests of strategies, is no gurantee of futures trading performance or success. Active trading is generally not appropriate for someone of limited resources, limited investment or trading experience, or low-risk tolerance, or who is not willing to risk capital. There is risk of loss in futures trading .

The material is ONLY PROVIDED FOR EDUCATIONAL PURPOSES AND PAPER TRADING. The recommendations are for paper trading to develop your skills for real time trading. If you can make profits in papeer trading, and wish to trade real time with real money and need assistance, then seek help from a qualified financial advisor. THIS IS NOT FINANCIAL ADVICE.

The material does not recommend or otherwise imply that any trading position be taken, which is,and only can be initiating trader's decision and responsibility. I am not a registered financial advisor - and cannot give such advice.

The charts, forecasts, and information are for educational purposes to demonstrate the predictive success of this type of market analysis. As such, it is primarily a teaching tool. Any signals given to buy or sell are for demonstration of the method and are NOT trading instructions or any sort. If you do not agree to these terms then do not accept and cancel this instruction tool. The author does not take any on responsibility for your trading success or failure. Payment of fees acknowledges that you have accepted and understand these terms. This information is not available free. If you have obtained this without payment, you have an illegal copy and are an illegal user. The information on this report is copyright.