Comments on: Large Scale Monthly Elliott Wave Chart of SP500

By: Woody Woodworth

Woody Woodworth — Fri, 11 Dec 2009 21:24:24 +0000

I think your analysis makes the most sense because it aligns with the simplest explanation of the wave count since the great depression ended. If you look at a long term Dow/S&P chart and look only at the major moves, we have a clear 'up' until 1960 (wave 1), a striking 20-year 'flat' correction until 1980 or so, and another clear 'up' (wave 3) until 2000 or so. This current correction, according to the Rule of Alternation, should be a 'sharp', and so structural rules for sharps would apply. My one wonder is: this sharp should be on the same order of magnitude as the 1960-1960 flat – so how to calculate/predict that?
Clearly, the financial world, though licking is wounds, is unrepentant, which sets the stage for a wildly speculative 5th wave up (conforming to socioeconomic theory of market mood & behavior) that will dwarf the 'irrational exuberance' of the 90's. For the sake of my own 401k and millions of others', I certainly hope so. After that happens, then the deluge.
Sorry, I think Prechter has miscounted himself and the deluge happens not now, but one more wild and crazy up wave later….
see you at the top of the roller coaster… KW

By: Woody Woodworth

Woody Woodworth — Fri, 11 Dec 2009 15:24:24 +0000

By: zhanhong

zhanhong — Sun, 28 Jun 2009 21:51:30 +0000

I totally agree with your analysis, that's exactly what I got by counting waves.
However I think the 2000 top is the wave 5 of very grand move, that was counted by elliott himself in his essey “The future pattern of the market, oct 26, 1942″ He said from 1776 to 1850 is wave 1, from 1850 to 1857 is wave 2, from 1857 to 1929 is wave 3, from 1929 to 1942 is wave 4, from 1942 is wave 5. He predict wave 5 should end around 2012 according to the length of wave 3.
Because this downturn is the largest after 1929, I believe this should be the correction of the bullish move from 1776 to 2000.
And I have some trouble to count ABC for the potential 4th wave from march 2009 to June 2009. That's the only thing let me doubt of it's wave 1 of a new bullish market or wave 4 of the C wave.

By: Corey Rosenbloom

Corey Rosenbloom — Thu, 25 Jun 2009 00:03:48 +0000

Hmm. I’ve never heard of that count before – I’ll have to give it a second look. Instead of the ABC of 4 I think we’re in, we could be in the three-wave “A” of the expected “ABC” of 4. Fascinating.

Looking at a log chart, you’re right we have a stellar advance over 100 years (particularly in the last 30 years) with nary a major correction.

I know that’s where Mr. Prechter gets his ‘ultra bearish’ count from, and I can understand his point of view, but I focus far more on the short term so I really can’t join the debate about large-scale cycle waves, other than to point out to readers that they exist and there’s a couple of viewpoints out there with differing opinions.

If we break 550 on the S&P 500, I’ll reconsider my “optimistic” forecast/scenario but until then, I have to dig in to say that I see us currently either in the late stages of Primary 4 up or the early stages of Primary 5 down – both in the context of a Cycle C wave down.

By: kbmartin

kbmartin — Tue, 23 Jun 2009 18:07:27 +0000

I've been seriously considering Dyugle's count too. As you know, EWI thinks we're in primary 2 of cycle C. You and I agree that this seems impossibly bearish, but EWI does raise good socionomic points about the level of optimism in this recent rally -- DSI reaching 86%, almost as high as 88% in 2007; intelligent investors weekly survey got high too, all the talk of green shoots. It seems like a lot of optimism for a 4 of C.

Dyugle's count solves this -- if 2007 to March '09 is primary A, and March to now Primary B, then it's almost a 38% retracement on a log scale, and a B explains the surge of optimism (and steepness) better than a 4.

I'm not convinced that the "larger structure" (I guess you mean the 10-year) is that of an ABC correction. If you just look at those 10 years it looks good, but if you look at 100 years, the tech crash is awfully small for cycle A of a supposed supercycle correction from 1932-2000.

In this proposed count I have the tech crash as primary 4 of cycle V, all of a broad supercycle motive wave that started at the end of 1929. (II is the 1938 crash, IV is the Vietnam era and 70s.) This supercycle wave has III and V extended.

Of course, if this count is correct, then we're just entering (or will soon enter, if we rebound) primary C of cycle A. This would mean we have a B and a C left, but, you know, that could be a flat or whatever, so it doesn't have to be nearly as bearish as us just entering / soon entering primary 3.

Sorry for the long and late post. Like you always say, of course, all that matters is the next swing. I'll guess we entered primary C of cycle A this month, but I would be willing to believe primary 5 of cycle A or C too. In any case we should expect an impulse down, right? Just the typical Fibonacci targets look a little different.

Kevin

By: Schweizer

Schweizer — Mon, 22 Jun 2009 17:42:06 +0000

EWI has their view, but there are several other views that are just as valid. The one Cory is assuming actually makes more sense given the channels.

By: Kai leong

Kai leong — Mon, 22 Jun 2009 09:15:15 +0000

Hi,

EWI has labelled the top in 2000 as Cycle Wave V (instead of III in your diagram above) and the March 2009 lows as end of Primary Wave 1. This would also argue for the current rally as Primary Wave 2 before a large Primary Wave 3 brings the index markedly lower.

I have their chart if anyone is interested.

By: Schweizer

Schweizer — Sun, 21 Jun 2009 23:47:26 +0000

Wave 4 of P1 and now starting the 5th makes a lot more sense than the P2 count which requires a break of the highly respected downtrend channel, which is not likely:

http://social.stocktock.com/photo/spx-downtrend...

See how the channel was respected in 2000-2003:
http://social.stocktock.com/photo/channels-rule...

I show a lower basing range because the GAAP PE is 63 now and needs to be under 10 for a bear market base. That is not likely to happen at 600.

Also, the $INDU 200-month moving average will cap any advance, making the P2 case for a push to 10000 highly doubtful:
http://i42.tinypic.com/6fw1ea.png

The scary part is that the SPX down channel is dropping 1pt/day, which if held will wipe out the SPX in just over 2 years. My chart shows the basing must happen in 2010 in the 300-400 range, and that this will start only once the opposite end of the channel is tested just like in 2002. That's a fast and monsterous drop, but seems to have good historical justification given the PE and the channel patterns of the past.

By: tom

tom — Sun, 21 Jun 2009 22:59:12 +0000

Corey, following another blog in which they say that the march lows were the completion of a 5 wave down. According to them we are now in a corrective zigzag to 1000. But your prognostication does imply much more bearish sentiment and your name to claim website.

By: Bob

Bob — Sat, 20 Jun 2009 10:54:17 +0000

True… very accurate perspective and statements I agree with.

There are two things I really dig about this stuff, trading the market moves and understanding the psychology behind the markets. Both are fascinating pursuits. Price is a window into the soul of the consumer! It reflects consumer sentiment, optimism, pessimism, greed, etc. and people are curious about this topic. Why do the markets move the way they do? The varying schools of thought and applied mathematics try to make sense out of what appears chaotic. Gann, Pitchfork, Dow and Elliot Wave all seem to touch on things that offer order to a chaotic world.

Cool stuff!