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There is no such thing as a perfect analysis tool. Or any that are near perfect. If there were, there would be no ‘markets’, as such, where there are abundant buyers and sellers. In strict economic terms, ‘perfect competition’ exists when all buyers and sellers have the same knowledge. But we know that in reality, this is not so. At one extreme, some players may have better ‘inside’ knowledge of companies for various reasons. At the other extreme, there are buyers and sellers who wantonly throw their bids at the market and practically set out to lose money.
I will not abandon Elliott, even though some may say that it let me down in the past few weeks. I have been investing for a long time and for me, Elliott has been the most reliable tool of all.
Naysayers should be careful about gloating about the last few weeks. This is where we are in the overall context:
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Co-incidentally, an email from a reader seeks further clarification:
“It would be nice to show how the wave count has been picked from primary wave higher degree level to the secondary wave lower degree level and show that the Elliott wave count of 5,3,5,3,5 following the rules as applicable without any violation. Only then we can risk our capital to invest based on EWT analysis, which is very subjective. Thanks Jay“
Thanks Jay for your message. You are right that there is an element of subjectivity about EWA, as there is in any analysis. Please do not think me pedantic but if you feel you are ‘risking’ money in the markets, then you need to go back to basics and only invest where you feel risk is manageable. Furthermore, you should satisfy yourself with your own analysis. What I write here is my perspective only. I think I can say I have a very good track record but I don’t get it right all the time.
I am not entirely clear about your question and the phrase ‘without ‘violation’ in particular. With regard to this last point, we need to ask: ‘violation of whose rules?” I am not trying to be difficult but there are many views on how to interpret Elliott. I have my own version, which is largely based on ProfitSource software. Nevertheless, I hope the following provides some clarification.
Let’s step back in time to late November:
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At that time, Elliott was suggesting a new wave five ahead but my view was that the Oscillator was too weak and I could not see the market recovering strongly. But it did. That was my call, not Elliott’s. I am not in the market, so I don’t have a strong reason to call the market one way or another. I just call it as I see it.
You will note at November last year there were three wave fives: 4960, 4720 and 4600. Let’s look at how the current market is shaping up against those projections:
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The first and second wave fives have been passed. The next target is around 4900 and it could well get there. You will also note also that there are four wave fours!
AND there are four deeper wave fours when we look at a weekly chart:
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These could bring us back to the levels we saw at the beginning of this mini run up.
There will likely be plenty of twists and turns along the way! Make your call!
Enjoy the ride
Tom Scollon |