Wednesday, February 17, 2016

Elliott Wave and where to start the count:

Elliott Wave is basically an extension of one tenant of Dow Theory and the three phases of a bull market. According to Charles H. Dow (1851–1902), the first advance is the accumulation phase – often thought to be a bear market rally. The second phase is the recognition phase where there is broad leadership and participation, and finally the third and final speculation phase which is usually accompanied by thinning leadership.

An Elliott Wave bull phase would have 5 waves (impulse or numbered phase) and a bear phase would have 3 waves (corrective or lettered phase) – for a total wave count of eight. When the pattern is completed it is repeated but not necessarily in time or price magnitude

The problem most analysts have with Elliott Wave is where to start the wave count. As the old cliché goes, you can't know where you are going until you know where you have been.

If you get lost in a wave count wait for the night your car breaks down on a deserted road and your cell phone is dead. Simply get out a chart and begin an Elliott Wave count – a stranger will suddenly appear to correct you – ask the stranger for help.

In my Berkshire wave count I began at the March 2009 financial crisis low – I trust you agree



Shawn Severin said...

Hi Bill. Are you concerned about weakness in US financials? said...


Good point - yes Goldman (GS) is a worry along with strong gold prices

Keep an eye on $139

Bill Carrigan