Elliott Wave 5.0 "Reboot"

Saturday, March 12, 2016

DJIA Monthly And Weekly Charts Elliott Wave Count Review: 1929-2016

This is a notice that I have made another major change, to the largest degree in the DJIA wave count. 
The fact that this bearish thing or bull market correction is taking so long forces a wave count review. Or it should force a wave count review.  Keeping a SC or GSC degree wave count for 30+ years is not an option if those wave counts miss a major bull market.  Elliott Wave is a contrarian analytical tool, and if we  see that we are counting in sympathy with the herd then we will surely get in a bear trap just like the herd we are analyzing does. I use the bottom of 2009 as a perfect example, and even 2003 was a bottom that also caught the wave counters by surprise. 

Now at our recent top many are betting that they have a "B" wave top in Cycle degree and we are going down for the big one.  Sure, we are going to see another major bear market, much worse than what we are in now, but I seriously question the fact that any market has ever sustained a 7 year bear market rally within the last 300 years.  

I can hear all the naysayers talking about the 5 year bear market rally from 2002-2007. This idea can easily be trashed as well, because with a little work I can fit that rally into an impulse very well. (Intermediate Degree 5th wave)

Besides, I have never seen two expanded flats in a row anywhere also going back 300 years as well. I don't think they cannot technically exist.  Of course, if you have been brainwashed with WXY waves, then anything goes, and you will always be right.  

I think that the heavy use of "WXY" waves at times are  actually diagonal wave structures and then they can give the wave analysts the false impression of a bear market rally when in fact it could be a diagonal 5th wave.  

As I mentioned this so called bear market rally has gone on far too long to where I am extremely suspicious as to its true character. I have never seen a 7 year bear market rally and I have looked back 300 years many hundreds of times. Anything that gets retraced by 100% or more can be called a bear market rally. 

So for the next few months or so I will run this as if the 2009 rally is back on a diagonal 5th wave in Primary degree. 

The reason that the majority who are counting in SC or GSC degree,  is that their wave counts are all based on a 4th wave base or the 5th wave being the longest wave structure. This is not what the little blue book says what happens. Over the years I found so many places that the wave 3 can be extended, I still shake my head in disbelief.

Elliott wave is not what you see in the real world, but it runs from an idealized script and in order to make sure wave 3 is counted as the longest wave structure, then we must start off with a 1-2, 1-2, 1-2, and even another 1-2 punch.  In this case I changed the 1929 top back to a wave 1 in SC degree, followed by the first 1-2 punch in Cycle degree. 

What they all called a 4th wave bear market in the early 60's and 70's was actually waving 1-2 in Primary degree,  which had an expanded flat in it. Followed by a 1-2 Intermediate degree running flat and then the next 1-2 leg in Minor degree. 

Again, if we try and maintain this so called bear market of the 70's as another 4th wave in Cycle degree, then we would be building yet another 5th wave extension. I don't think markets in stocks can do this. 

I'm not the type of wave counter that will sit back and just keep changing future wave counts without going back 100 years each time, as we can only find better fitting wave counts in the past. We can make all the changes we want, but until we have the Cycle degree sequence down pat all other degrees are irrelevant! 

As of March 2016, I will run the diagonal 5th wave again and we have to see how long it will last. 

As I mentioned many times, I think depressions only come from very high degree wave 2 bottom crashes and not from any 4th wave bottom. We would also need a complete breakdown of the welfare state and a true revulsion of debt. 

Any potential future 4th wave bottom in Cycle degree can fall far short of the 2009 bottom, so we have to be prepared for that when we think we are getting close.