I have read comments that this market is " climbing a wall of worry ". This is taken as indicative that this up move is a new BULL move. However, this statement is a contradiction the fact. How can you have a market "climbing a wall of worry" with optimism at the highest level since 1987 peak? This is not a "wall of worry" but more in line with exuberance of major tops and bubble mania.
The market comments are full of cliches that often are used out of context or times do not make any sense. Part of that is because our knowledge base has grown and that our view of the world has changed. Many of the market cliches we have inherited from the past and have been repeated so many times that they take form of market truths. Elliott formulated his concept over 50 years. Some things of Elliott's conceptualization may need revision. This not to detract from the man for his observational acumen was rare amongst men.
Let us consider three of his basic structural tenets.
Markets follow order
This is a basic tenet of Elliott Wave Theory as expressed by Elliott himself. Quoting from the introduction in Nature's Law Elliott says, "No truth meets more general acceptance and that the universe is rule by law. Without law it is self-evident there would be chaos, and where chaos is nothing is" and "But the market has its law, just as it is true of other things throughout the universe. Where there is no law, there would be no centre about which prices could be the resolve and, therefore, no market."
The statement is partly true and partly not. There is no question as Elliott puts it that there is law (or order). That there is law does not mean that the market always obeys the laws. Conceptually according to Elliott, the market is completely ordered and thus predictable. IT OBVIOUSLY IS NOT. It is much more correct to say,
"Markets are self ordering mechanism that constantly adjusts to an uncertain world".
Crowd behavior moves markets
The crowds may move the markets but they are not the instigators of the trend they merely reactors to what has happened. The twelve men in the monthly meeting of the central bankers (FOMC) have more effect than rest of the crowd combined.
