WHY is Elliott Wave supposed to work?

"makes perfect sense when EW is is looked at from its mathematical foundation of Golden Ratios and Fibonacci numbers." Interesting how many people try to make the case that EW is somehow tied to a mathematical basis due to fib ratios. There are no fixed rules in EW related to fib boundaries, that would alter its subjectivity.

The types of rules that any EW bible try to set are loose, subjective, and non mathematical, . For instance, you may read the third impulse must be greater than the 1st and 5th, but there is no rule as to the quantitative relationship of the impulses in terms of objective math.

It would be great if EW said that the impulses must fall into fib ratios for vertical duration. However, they don't-- because again, that would make the rules objective and easy to spot failures of the theory.

From reading most of the EW literature, it's my opinion that EW is primarily based upon impulses (5 waves up and 3 counter), with no precision rules governing the time nor amplitude duration of such impulses. This loose structure allows a great deal of flexibility in subjectively interpreting the patterns.

I could create a theory that there are 6 up impulses and 4 counter impulses that govern the markets, and I bet anyone could also find patterns to fit that template.

Someone asked if EW is like gravity. There is no way it can be compared to gravity. The force of gravity can be repeatedly subject to experiments that confirm it's objectivity. That's what makes science great. EW can not, however, demonstrate repeatability,
only vague interpretation. In this manner, it's more comparable to astrology.
 
From a technical viewpoint:

Friday’s action unfolded in an outside reversal bar suggesting if the market close lower today a two to three day decline will unfold. The target for the downward pattern will is the 1427.65/1419.20 range. The extreme allowed is the 1416.40 level.

A penetration of this level will signal a minor top. The pattern that I have been tracking for the past several weeks suggested that I believed we were in the final phase of this sequence. The market reached within two points of the target but it appears that it failed to unfold in a structure that would confirm the completion of the sequence.

The chart ( see attached file below ) suggests that the market is still in a corrective phase. The pattern now looks to be a double three pattern or an (a,b,c,x,a,b,c) pattern within a 4 wave. This suggest that there will one more minor decline to followed by a rally to new highs in the pattern before an intermediate top will be signaled. The next few days will be critical in determining if Friday action was a beginning of a more sustained downward move or just some more of the same pattern that has been unfolding over the past several months.
 

Attachments

Quote from Landis82:

From a technical viewpoint:

Friday’s action unfolded in an outside reversal bar suggesting if the market close lower today a two to three day decline will unfold. The target for the downward pattern will is the 1427.65/1419.20 range. The extreme allowed is the 1416.40 level.

A penetration of this level will signal a minor top. The pattern that I have been tracking for the past several weeks suggested that I believed we were in the final phase of this sequence. The market reached within two points of the target but it appears that it failed to unfold in a structure that would confirm the completion of the sequence.

The chart ( see attached file below ) suggests that the market is still in a corrective phase. The pattern now looks to be a double three pattern or an (a,b,c,x,a,b,c) pattern within a 4 wave. This suggest that there will one more minor decline to followed by a rally to new highs in the pattern before an intermediate top will be signaled. The next few days will be critical in determining if Friday action was a beginning of a more sustained downward move or just some more of the same pattern that has been unfolding over the past several months.
More...

Good observation.
Are you seeing a 5th wave diagonal triangle forming in the S&P as does Tony ? http://caldaroew.spaces.live.com/
 
I will give credit to R.N.Elliott for 5 waves up and 3 waves back.
I did study 5-10 different styles of Elliott wave for some years; Prechter, Robert Miner, Glenn Neely, Bryce Gilmore, Mr. Swanell(computer based), A. Get-program? ...

The problem is that wave 5 of 5 is trading against the trend. Wave 2 is not as good odds as it's said to be.

I moved on to Gartley, 3 drive, Butterfly, AB=CD...; Larry Pesavento...

Then I moved on to trading with the trend; Larry Connors, Mark Fisher...

Then... I made my own system of all that above.

:)
 
Quote from onlytronalso:

Good observation.
Are you seeing a 5th wave diagonal triangle forming in the S&P as does Tony ? http://caldaroew.spaces.live.com/
More...

I guess you didn't really read my market commentary.
I indicated that we were still in a Wave 4 correction.

That Wave 4 correction that I spoke about was taking place as an A-B-C-X-A-B-C ( double zig-zag ). It was getting close to being completed. I actually thought that we would have one more day down before heading off into Wave 5.

With today's action in the SPX, that correction is now complete and we are heading into Wave 5.

If you took a moment to compare Tony's wave count with mine, you would see that his Wave 4 only takes a week and a half to be complete. Quite frankly, I would suggest that it is rather naive to think that a Wave 4 of this degree would be completed in only 8-9 trading days.

In stark contrast, I identified Wave 3 peaking on Nov. 22nd at 1407.89 intraday, and my Wave 4 has been ongoing ever since . . . nearly 58 days up until yesterday.

For example, where Tony has Wave 2 of Wave V ending in early January on the SPX, I have the end of the first 'C' wave of the first A-B-C of the double-zigzag Wave 4 correction. Furthermore, where he has labeled Wave 3 of V, I have the high of the second 'B' wave of the double-zigzag.

So, in answer to your question . . .

No, I do not see a Diagonal 5th wave unfolding.
In my opinion, that's hard for me to envision at this point and time
since we just began Wave 5 today.

http://home.surewest.net/brett/The_Elliott_Wave_Principle.htm
 

Attachments

Let me throw out something . . . food for thought.

Elliott seems to think that there is systematic and consistent number of waves that occur between extreme Resistance and extreme Support.

So here is another opinion: Due to fluctuating volatility and liquidity, the number of waves will ALWAYS vary. The same way there are more waves on a windy day than there is on a calm day on the water. What IS consistent is the fact that there is always a CONFIRMING wave at each extreme top and extreme bottom. Once that confirming wave is in place, price will move in the opposite direction of that confirming wave.

I.E. If the confirming wave is of the extreme top, price will fall systematically challenging the previous extreme bottom. If the confirming wave is of the extreme bottom, price will fall systematically challenging the previous extreme top.

It is totally unnecessary to count the waves, it is enough to KNOW that they exit and move from a CONFIRMED extreme top to a CONFIRMED extreme bottom.
 
As mentioned in yesterday's comment, the sharp rally has signalled the bottom of the "double-three" correctional pattern that has been in place since late November.


The conformation of the low will be a close above the 1447.95 level today. Should this occur, it would suggest that the market will enter 5 to 8 day rally. The target for this 5 to 8 day patter is the 1461.20/1464.35 levels. The intermediate pattern suggests the market should reach a minimum of 1478/1491 in the next 4 to 6 weeks.
 

Attachments

Quote from Wallace:

" there is always a CONFIRMING wave " —
would you provide an example/s or are you speaking in the abstract ?
More...

There is no such thing as a "confirming wave" ........in actuality what you have is a structure that lifts the probability that the previous interpretation is correct.......in other words.....if your already in that trade then you are finding reasons to;

1 reset stops to a different and distinct level (as a break of these stops would re-evaluate the original interpretation)

2 add to the pos

3 eliminate lower probability alternatives (the alternate count)

4 confirm (and distinguish) between a corrective or impulsive action

........the point of nonmenclature is to differentiate "levels" of price action........in this way I can say that volume activity is supportive of my interpretation and this is cumulative and is different from merely saying that I am seeing a build-up or a generic break-out or a generic and unspecific support/resistance break and can interpret false breaks better (B waves are atypical false breaks......defined.......allows "the story" to be placed into context)......again probabilities.......

........back to nonmenclature........think of it like cogs........one small series of cogs placed with a larger series starts to define one type of mechanism.........this merely gives a set of levels to define what is happening as it unfurls in real time........obviously I am not going to nail each one as it comes and that's the beauty is that I cna sit back and merely wait the confirmations.......

In many ways Elliott is an attempt to quantify intent and delineate possibility versus probability........oh, by the way........the subjective thingy........bollux.......EVERYTHING is subjective in trading......the only thing that aint subjective is the price itself.........

........when these cogs are placed together to form a one-larger-degree mechanism, then I can conclude that, I am seeing a confirmation or a tipping of the scales ........that my highest probability alternative count can be eliminated........in that respect you could say that there is a confirmative wave........this simply takes some of the what-if out of the picture........I prefer to always err on the side of caution in this way........



cin cin

MM1
 
You must log in or register to reply here.
Back
Top