eee Picking up the Elliott wave pieces In the first article of a three-part series, this wave analyst discusses shortoomings he has found in Elliott wave and describes the application of his NEoWave theory to the stock market, By-Glenn Neoky he Elliott Wave Principle, pos: tulated in the carly 19905 by Ralph, Nelson Eliot fand con- tinually improved upon by ‘hit. tiroweh Ue 19405), was a rev olutionary concept far tts time tat described market. behavior in ‘greater detail than ever before. Regrettably, years of incorrect | forecasts made by various El- | Hotticians have jeopardized the rep | utatton of RN. Elliott's famous ‘After renewed interest ty a decade in the lime light, it appears to many peaple the | Wave Principle has stopped work- | ing, Is it a flawed concept or is it | simply being misinterpreted? | Having spent years finding solu- | tions to Eilioct questions, Te devel- ‘oped logical, objective. step-by-step techniques that enhance Eliett’s crigittal principle, NEoWave theory INeely’s Extensions of Wave theory) is my collection af innovations (0 wave analysis derived from more than a decade of research and real- time experience, NEoWave Is @ superset of Eliott ‘wave that intraduces a more exten- sive and precise collection of rules, bringing ingedher various new con” ithe yp ia, Par aca ecco | a2" ead raceme wae Hens ‘ees ae ong pens D0. ies 700 $0 srcuiduresree cor August 1906 70 oa cepts and analytical techniques that improve forecasting necuracy, In this series (Il fist explain chy the reputation of Elliott wave has heen so damaged Ut primarily revolves around one erucial period tn history nearly all Elliotticians Ihave analyzed incorreetiy), and then pno- vitle you with three simple NEoWave concepts you can implement tmme- «ately to improve your analysis, Second. you'll learn innovative concepts that address and solve many of the problems that have plagued Elboit wave sinoe its incep- tion. These new concepts, if applied ‘correctly, shold promt you with ant enhanced level of analytical and trad ing confidence not usislly possible nnsing Etiott wave ani. Third, Il apply NEoWave con cepts to 200-plus years of U.S. stock market data, presenting the first publicly released update of my Jong-term forecast in eight years 136-yearald error “Standard wave count” (below) shows a yearly aver- age plot of the Dow ones Indiastria Average from 1789 to 1996. In. cluded on the charts dhe generally accepted long-term Elliott wave Dow Jones. ee Industrial Average Comyn ve char De ’ ‘cones pls it cork ia, feet para 38 veal bye Pres count. As you can see, that inter- pretation puts the U.S. stock mar- ket in the latter stages af wave 5. According to Elliott wave, when a Ath wave ends, the market should move back into the price range of the “fourth wave of one lower degree.” Measuring from the most recent high, the Dow would need to drop a calamitous 480M points to meet ual requirement! Forvumately the generally accepted long-term wave rount on the U.S. stock rte- Ket contains several fundamental technical errors, making this ace- nario Impossible. IL starls with a misinterpreted pert od af the sack marlest beginning in 1859 that has resulted in an fwalanche of ereuncous market faro- casts through the 1950s. To under- | stand the seriousness of this error, we need to review some af R.N, | Elliott's most important rules, First, Elliott discovered that the behavior of fast-moving markets Cinignisive waves) wass cleary elfer- ent from the reactions to those market phases (corrective waves). Overall, impulsive patterns always produce @ positive or negative price Change and contain five subdivi- ons, we eoereetive pattems Bro, juce more neutral price movement and most often contain three subal- visions. if an impulsive pattern fs moving upward. it will include three salvaneing phases, separated by two intervening dectines, Second, Elliott obmerved that when ‘The prevailing long-term Elliott wave count is flawed because It labels ‘the 1859 to 1525 advance 98 an impulsive pattern.comparing the three advancing phases (still referring to the prior exam- ple) of an impulsive pat fem. one, and any ane, 1s significantly longer {and possibly mare subdivided) than the other two; he called that wave the ester som fsee “impulsive ws, enr= recive." right) ‘Third, he discovered the middie segment of an impulsive patiern (wave 3) ‘aul never be the sliortest of waves 1, Sand 5. A generally accepted associ. tied rule holds that whether oe not ‘yave 3 4s the extension, tt most often ‘exhibits noticeable price aeocleratton toward tls center, ( Remembering the above concepts, Jet's return in the year 1859, which is the end of wave 2 in “Standard wave count,’ Here ts where most Elliott ‘wave analysts go astray. Exam tation of te advance from wave 2 1p svawe 3 (from 1858'S ow to 1928" high) clearly reveals a pattern lack: the characteristirs of am impulsive pattern and a third wave. When ‘Viewed! wa whole. that period pos- seeees only fo major advances, nt three (a requirement af impale for- imatins). The two advances are sep- arated by a long, upward-drifting ‘consolidation phase (typical of a vor- ‘rection. Further, the price acceler ton ‘associated with the cen- ter ofa third wave ts not only absert ‘he mice of this wave 3 4s the slow fst. most congested trading period of ‘he Kast 200 years, Additionally, wore channels ike a correction (a 2igag fn this ease), not an. impulsive pat tom. Finally, f you attempt to label each subdivision of the 1859-1925 advance, ft cannot logically be count- edasan impulsive pattern. The “Iook" of the longer-term structure makes it tempting to ‘count the 1859-1929 advance as a third wave, but yielding to that femplation is whai has placed most Eliot wave analysts squarely or the wrong side of the U.S. stock market for nearly a decade, Te eon sider 1859 to 1929 a third wave, too many fundamental rules must be dgnored or broken. destfying the problem Markets func ‘on like bacteria, which mutate to frustrate the medicines developed o eradicate them, Elliott wave was a 5 Auimpusincasrane wis ae ‘gal paar 3, hncertetie sete rose compacta A frome | ane fan incredible iscavery for its time. But, as technologies, governments, ecoriomies and social systems have changed, the behavior of people has also, These changes have allected the wave patterns RN. Elliott dis- covered. Consequently, strict appl caiton of orthodox Elliott wave eon: cepls to current day markets skews forecasting accuracy. Markets have evolved, but Elliott vrave has not For example. in the 1980s con: tracting price patterns (eg, triangle formations) occurred frequently. In the ‘90s, expanding and newiral tor- ‘mations became the norm. while 00 tracting formations became rare. ‘This change severely affected the design of nearly al] uke patterns Elio discoveree: Triangles began to develop long (extended) C-waves, Creating 2 new pattern [call a "neu tral triangle" the same thing hap- pened to terminal formations (ses Dela). known in the 1980 for their “tising wedge” appearance. But when wave 3 started extending in ‘such palterns in the 1890s, the pat- tem ne Tanger looked like a wesge ‘As ant additional example, mn the 1960s, 2 NEoWave patern called a “terminal consistentiy exhibited a specific relationship between. waves Dand 4: Wave 2 was always the larger, mare time- consuming eorree- tion, In the 1990s ‘One nebulous area of wave analysis Is defin- Ing the beginning of a wave count. NEOWave makes the process more objective. vegrinn anf rcs an nese pe, ager wir aay sabi ini frescoes am rarely Gris tr roprencoarge Specific rules defining the ffaractrinte of impataive b & waves 2 and 4 switched behavior traits: wave 4 became the larger, more time-consuming segment. "That minor behavior change treated © new and eampletely different look {othe terminal patter. ‘AS a Wave analyst OF trader iv the 1890s, if your objective has been to search for pattems that exhibit che “ook” instead of pattems that obey specific rules, you have Thad serious difficulty po ‘market action. Rule adherence is considerably more Important than patiem appearance. Analytical liberties Wot all the prab- Jems of wave analysis can be laid at Ellott’s feet, Many of them can be blamed on those who have practiced hits philosophies. The association bye most wave analysts of market advances with tmpulsive patierns and market declines with coneetive pallems fs $0 pervasive t's dificult tocchallerge this status quo When a market advances. to new highs (even all-time mew highs) st does nol necessarily mean the advance: 1s tnupulsive: if a market declines, it does not necessarily mean the decline is correetive. Instead of asking “which dinection is the market moving” ax a way of determining whetiser to label the move Impulsive or corrective, the proper question to ask is “What rules does this collection of waves obey?” The answer to that we i sta “Songowor ana begs ta tues Aus 1900 6rr > question will mare accurately guide the wave labeling process, Jump start There are 2 few, simple NEaWave techniques you can implement immediately t0 begin, ta improve your arialysis, First, to guarantee structural Integrity. use cash data for all your analysis. One of the prinary Teasons wave theory remains 50 Controversial Is nearly everyone Apples its concepts to futures data (where continuously decreasing holding costs create distortions in price structure). Futures charts should be implemented for trading Purposes only after you are certain turning point is at hand. Second, when performing wave analysis, de not use bar charts, ‘which inecurately depict marker ac tivity by making It appear the high and low occurred simultaneous Wave analysis depends on the identi- fication of waves, which are best Profit from MetaStock’s ease-of-use. Aaeick he yo ne er, sswarier, and wth more confidence, ear dato skeet Seatac es ‘Sot eae SSramtam cra Crete ee Tab ie silane ad iam ‘ele ae Tat i et) ue tt toad ecg tg grt ta tebe lee arse ache tara a Ps ers na Ieeooreaaa albany tenes ee ee Sieber pene” Shines oon aioe ago ne “Fron a ec a feet "ida nay Tete mam seein bet Ss | Brame ieee Mes al ° oe rae ‘aban eur tt tyr or ape ‘aus ee pam tiseatns hl et mc Ta wei ree ‘Rou erat tn tie taoe en arte pane ‘Sesetiesin brs arene ‘ifr Meta weer Sele Erastus Wael te creck 1c hm ides mae Seda da sauna * oa arson este ke ce eal Lian ean core) mo a a ees ase, 1-900-882-3040 ext jou Seale ct mine Farrier re near es abies ses aed 82° ew idureemagcor August 1996 revealed with a specife type of line chant. To ennsimet, determine Ifthe huh or low accursed Bret each day, “Them plat them in their correct order, each on a separate line of tie chart ‘The result is a NEaWave chart, Whit has ovo advantages: 1 more accuraiely represents what te mar bet idan real tune, and i allows you to mere accurately kenaly pullers Third, to stare your wave count tn the proper place, frst determine the general trend of the market. If it has been moving upward, start this process from the lowest low af the chart. If it has been moving downward, start this process from ‘the highest high (see “Getting start- ed." page 41). ‘ext draw a. vertical line tntersoet- ing this highest high or lowest low and call that point “start dre.”‘Then, Koing backward in time, pick an Smportan igh ( you started fom a Tow) or an impertant low you start- ed from a high) that occured before start time. (This is relative rncepls The furdher you go back, the Janger the degree of the turing palnt youl identify) Mark that point “A,” rar a harlontal line from point A orward in. time until ft intersects future price action, Maris that potnt “B." Measure the time fom patnt A to start tine AN) and compare 1Lt0 the tne dom start ume (a pot 1B (segment By, ‘Then follow the direo- ‘ons below as they apply: * If segment B is less than or equal to segment A, begin your analysis a start time, * If segment B is grealer than seg- ment A, move start time forward to the first higher low (if you started fara a ork) or tie frat Janver high lif you started froma high, and epeat this proves. Incorporating these concepts will increase your success with Wave analysis. Having discussed some of the serions provalems with the standard tong-term Elliott Wave count and giving you some preliminary tools to Improve your wave analysis, next month we'll progress to more advanced and innovative concepts. oy ‘leon Nosy prosond of te Bion We inet Pago eh, ale tel ts cle trad or NEOWane ha Sr Andrea, Soden ueractnal call earegeo epeeTRADING TECHNIQUES A new wave paradigm In this second of three articles, Clenn Neely discusses some NEoWave innovations that solve longstanding problems: associated with the Elliott Wave Principle. By Glenn Neely @ nature clearly demon strates, that which does not adapt dies. Elliott wave — a reat discovery for tts me — worked well during the early to mid-20th century, but because of subsequent mutations of Elliot's orthodox wave patterns. it cannot deal with the complex, high-tech finanelal environment of the late 20th century. As a restill, most Ellott wave analysts have expert enced extraordinary difficulty pre- dicting market activity for the last fie to 10 years, New concepts are needed to broaden Elitt’s original foundation and guide the forecasting of today’s markets — techniques that promote ‘ercurnte wave counting ane provide A more comprehensive deseription of 20th-century pattern development. To address these needs, Il present three areas of innovation to tradl- tional wave theory and provide tools for thetr real time employment, Degree Eibott’s concept af degree — the comparability of one wave to. another — Is an essential part of wave theory and accurate wave | counting. Unfortunately, while Elliott spoke of waves in specific terms like minor, intermediate and primary, he never precisely Time and complexity timits ieee omer eee nl ement / 4 / i AR \ VY f x CORREGT: Tine /* Groosamatan AL i / 3% winwfituresmagcorn September 1005 | defined degree. Eliott Wave analysts repeatedly present wave counts in which pattems of smaller degree Constimie mare time and mace price than paticrns af a larger degree — a logically suspect practice. 'NEaWave does not support stich analylieal freedom. To determine whether one wave segment is ofthe same degree as another, you must consider three factors’ the price eoversd, the lime consumed and the coniplexity exhibited by the ‘waves you're comparing, Ifthe: tela Uonship between the two vaare ments does not meet specific NEnWave standards, they are nat the same degree, Extensions Equally essential to proper wave counting ts he "exten sion® convept. Unfortunately, Eat ‘was less than clear on this subject, An extension, he said, occurred ‘when one of the trending waves {1 3 or 5) ofan impulsive patter was ignifleanily longer or sigificanty more subdivided (or both) than the other two, So-far 52 ead, but Eliott Went on to say an extended wave may or may not cccur in an impul Sve sequence, Confusing the issue even further. be said the extension might subdivide in a mariner sinal- Strict rales govern NEoWa¥e pattern development, hep: Ing to remove subjectivity from wave Mntification, Jar to waves of one larger degree, ‘making it impossible to identify. By contrast, under NEaWave. extensions art precisely defined using three separate but eo-depen- lent rules involving. price, tine suid complexity. nan impulsive pattern, the trending wave lelther wave 1s 3 ‘or 5) that traverses significantly ‘more price than the other two is called the extended wave (price extension); Ue trending wave that consurnes significantly more tiene than the others Is ealled the pre longed wave (lime extension); the trending wave cesses signill cantly more, subdivisions than the bothers t called the Subdrvded wave (complexity extension. NEoWave demands that every impulsive pattern possess at least tuo of the three above Rinkes of Ex- tension, Failure to meet that re- quirenient indicates the pattern is rot impulsive —i's that simple. ships that ean and Ietween waves ofthe samedegree, ‘For esaumple, each figure tn Pree limits" [above right] is composed of humerous manowaves b.e.. individ ual wave segments) monowave Is labeled wave 1, To confidently say wave 1 is part of a larger uptrend (e., an impulsive pattern), NEoWave rules require Wave 2 retrace between 25% and 75% of wave 1. If-wave 2 retraces more than 7596 or Ness than 25% of ‘wave |, the marke ts nat forming a standard impulse patter. making the wave I labeling Incorreet lunless it ts part of a terminal Impulse pattern). IE the retracement of wave 1 by wave 2 Is less than 25%, wave 1fy Eoin should be telabeled wave Aor wave C and posi- med within 2 complex series of corrections. Al Of the above retracement observations Wo apply ta the relationship between waves and Vofan & Impulsive sequence. ‘Time and complexity Limits also must be addressed. Most tmpor- | tantly. corrective waves should never take leas time and should never be lest cam plex [han impulsive waves of the same degree that precede them the Same pattern, Faure in adbere to that one Ss responsible for the mast per probiesn in the ansuas of Etiaes Wave ‘analysis. Eilloticians pre sent wave counts in whieh wave 2 consumes less time and eshibits Jest complexity than wave 1, erin which wave 4 bales less Rime dnd possess es less complensty “Setting boundaries,” | Elliott must take some of the blame for this (echnical jaw pas: Studying, diagrams, you could. assume Elliott believed car- rections were short, sharp affales — Sale are noc ld bepn to Tecognize this when he stated in 5: “Usually the duration of a market is longer than tle pre- mus Dull market.” Because pat- tems follow thie se rules on every degree, Elliott was acknowledging that corrections usually took lone than impulsions. If all practitioners simply followed his lead and stopped allowing wave 2 co take less time tham wave 1 and wave 4 to take legs time than wave 9, they would immediately improve their ‘wave fount accuracy, Except during rare terminal Impulse patterns, the minim time and complexity required for waves 2 and 4 is always 100% of that taken by waves 1 and 3, respectively, Self-confirmation Two of the endur- ing questions that bedevil Eliott wave analysts are how to know When thelr analysis is correct and haw to know when one pattern ‘ends and the next begins. The self confirmation process answers thse ‘questions by defining the post-pat- tem behavior required verify the re wy Ze a conclusion of all wave patter removing subjectivity and uncer. tainty from the analysis process, Sclf-confirmalion dictates that ia shange in price direction i the start of a new frend and nat merely a reaction to an ongeang und), it wl announce its arrival through dra- matie changes in price behavior, time consumption and complexicy development. Ta fully understand this concept, let's snake eae com- ponent ofthe coafirmation First, if a new trend has just started (Le., 2 new save forma. ton), the initial wave of the new trend must retrace 100% of the final wave of the previous trend, Second, that 100% retracement ust oceur in an equal oF lesser amount of time than the fal wave of the previous trend. Third, that 100% retracement must be ne tore earuplex than te final wave of the previous trend. Faihure to follow these guidelines wall result tn inaccurate analysis Contemporary patterns Wien price action does not fotlawr established 8 usaoOTOnC af ae |b wane 2a nt Tg owe pics, 2 abana ean oan Fu wave 2 ole rules af pattern develop Fosse Foes) ment, by default, a new jy pattern (or varialion om + \\ aun old pattern) must be h \ forming, | J "Tle Gecore evident an t 2 1990 when pattern de- velopment in the U.S, stock market began to change: formations started appearing that Elliott's orthodox struc: ture did not explain, making accurate mariet prediction fmpossibie. It was dur ing the 1900s. through logical dectuction sind a process of eltnina- | lon, that Twas able to discover NoWave formations and orthodox pattern rata following it fre vo ofthe most algean os Neutral triangles Neutral triangles ‘Alla old nat has existed! betoreen ig ad trlangles for 50 years. Inatead of the market forming the longest wave first (lke wave A ting trian), or the longest srave last (ke wave E tn fan expanding triangle}, a neutral triste és created when dhe middle | segment orave C) is the longest among waves A, C and E. Im “Neutral territory" there Is an example of a neural triangle found in notes in 1906, Based em discussion, ihe conelusi trend requires a radical ch priee behavior, time ronsumption and complexity. Notiee tal the highest paint of the neu angle (where most wauld be tempt- eal to sinrt the new tren, Ket does nat react property after the second high, wtzich Daly SF] neon Comma egme ite gear ars h 56)y, Card an aes sree: ne aoe ol Setridt wast Ande sta aly ty Meenas ae «| Ae _ oe da hte ns li Sead | Sepetee a itt, see Ww" 1 Sor nwa bean de aN al Vt tei y WW“ — forthe a as 6 |, ilmemermrad 86) Neowave reunalwiange yf | ot ‘uo8 aids tue September 1906 35 = Se ee eaTRADING TECHNIQUES ™ where the neutral triangle | c Dut because a diametric is the | “thrust” of such a pattern. All dla- ended and the new trend began. only wave formation composed of metric features, behsavier tuts ane seven segments that does mot con variations are’ not yet known; as Diametrics | discovered diametsic | tainan ¥-wave, | had to add two let- | they continue to occur, more Wil be formations in the summer of 1991 | ters to the corrective alphabet. As a | learned over time, while watching the S&P 500. The | result, a diamietric formation is | Adaptation and change are esser= pattern started mut Tooking like a | labeled a-b-ed-e-fg. The most sig | tial parts of lie, For the open mind contracting triangle (see “Mirror | nificant cine that a diametric forma- | ed, NEoWave coneepes dramatically image,” right), When tt did not | tion is developing is when price | reduce the diffieullics lypleslly Produce the post-triangle “thrust™ | action mimics a contracting triangle, | associated with Elliott wave amaly- necessary to confirm the pattern. | but 1s not followed by the typical | sis — difficulties you may have it became tmpassible é g tizumed you simply had to categorize under El- ‘Monthly S&P 500 . aes ___ Miror image Se 2 eanaceaege fee ml mate tia fhe acc tor as | Boetrgt ates Oia row, cn naee 6 Dine ua: polish inher entzcly now patter 42 7, etaneen dade — fe carl rmate fon the U.S. stock marke. category. [ts carly ~ \ A\ Placing my concepts on stage contraction, fol- ait mm A, ves. the Line, I'll reveal how Towed by its later stage | py accurate that. forecast was eerncee te 4 “J x Saber ir has changed metric the general | cover the last 10 years. it shape ofa boule. on | ae i ea ot eas PM ‘Glows Neaty i presiaent af Se rst Wining UU sien otchanebic the Elle Wand Institute Ie fangs iw adrocker NEoWave clametne formation Ce Sek Oa eee fn cormplex corrections 98 tel ter for MEW might be a-b-e-x-a-b- evel aes eS Sega alee Get a winner's market view (elcome Ore) rm Recoanition sturn —xtraordinary Profits + Ph.D. Mathematics: s eee mewn Options Division + Best 1-year gain: 4+1370% (1988) From bockod purbars cal st up ‘pect cad accourt 800-475-3600. Fate ns cb is oy pre Formato, ds 2030 Pa a Rene pee OB 36 wieufeurceragcmn Septeber 1998MITRADING TECHNIQUES Setting the record straight In the final installment of a three-part series, we show how NEoWave ‘concepts can be applied to construct a long-term forecast of the ‘stock market. The outlook may surprise you. ‘By Glenn Nooly 1 approach to market analy sis is only worth Jearning tft works, While many wave analysts have had little suc- ees predicling the stock market in recent years, my long-term frees from 1468 has accurately described the path of the stock market up ta the present tume. “As we approach the new milllennl- Jum, a reassessment of that forecast, using the concepts presented in the first fo iestallments of this series, 4s in order, [n the process of making sense af the past 200 years af the US. stock market, some surprising sonclusions regarding the future feourse of the sock market tito de next century will be revealed. ‘A bold statement The first long-term NeoWave stock market forecast appeared in Cycles mgezine in 1588, Witten just 10 months after ion br barr ae fpemes ereteri cotvices Sar ane nee meee ea a Siecbva “The original NEoWave fore ast vs, the actual path of the S&P S00, 132 scum fueeragcam Octobe 1996 | the October 1987 crash — the worst price slide in stock market history (a one-day 500 point drop) = it specifically diagrammed how the U.S. stock market would unfalel for the next 75 years and made the “absurd” prediction the Daw Jones Industrial Average would ot teak its 1987 crash low of 1616.20 for 200 years A the tame, my Elott wave year bear market to end with a drop below 1000 in the Dow — some ‘were even forecasting 1 drop below 100. Extremely pessimistic books Uke The Great Depression of 1990 and The Reckoning were big sellers in the years immediately following the erash. reflecting the economic tunel social amdcty of the tics. ‘The steadfast optimism of my foretast practically unhinged the rthodax Elliott wave cap, Far sev ae ral months, 1 responded to a bar- rage of letters from readera fiercely opposed to ty perspective; they ridiculed my spproach and pointed the abmtrcties of my forecast, But eight years later, the Dow 15 ‘more than 4000 points higher than, 1987's crash low — closer to 10000 thar 1060 — and the 1988 NEoWave forecast tS the arly long. term wave count on the U.S, stock, ‘market to have survived unaltered for nearly a decade. “Forecast v5. reality” (below, lett) shows the fare east's avcuracy, in terms af both direetion and magnitude, com- pared to what actually happened in the SAP 500, ‘Resolving the past To determine if changes (o my original long-term eount are nessary, we'll re- examine two centuries of stock | market data. Because there was no U.S) stock market 200 years ago (hence no data). I needed to design wave concepts for the back- ‘ward projection of market behav- joron both a price and time basis Application of those concepts Yielded a starting price of 0.30 and @ starting date of 1765 for the ‘Tomi-term data (sec “Resolving the | past." obove, right): it is there we | wll beain ou analysis, 1765 to 1830: Integrating the | projected starting price and time With the histarteal record, we can | confidentiy say that from 1765 to 1830, an impulsive advance ecurred that should be labeled ic period from 1830 io 1080 consists af three distinet parts ‘Well look at each invlivciualy. 1890 to 1865: There is no doubt the price action from 1830 to 1865 Ib a corrective pattem. But becauseeam Mo eee rig ef 50 ada tn Aes are inc 1850 1928 Ing date ef 1765 forthe 200-year stock market advance. '"""""| should be labelad a corrective rally. ‘coat Ie ein are tie, ona) errand wade, or ee ee \ Thar haeforoar rr) Ne cg tetera x PAS ayia terre ; Wieerinsmenseneomne nett i Ax Remora 4} Masami mpeurt tessrort Cipepont bea yowatneess U8 woah 000] on een ‘roo is sano ahaa isso 2000 ‘t consumes less time than wave 1, it cannot be the entire wave 2 According to NEoWave, it can only be the first phase of a larger, mone complex enrrection, 1865 to 1929: As noted In “Picking Up The Eliott Wave Pieces" (Futures, August 1998), despite ts duration and magnitude, 1866 to 1929 is a eorrective rally, Because a correction that starts downward cannot end upward, no possible termination point for the correction beginning in 1880 can exist until aller 1929's peals. Therefore, lagi cally, 1865 to 1928 must be part of the erigning complex correction that began in. 1830. 1929 to 1949: This period ts | clearly comeetive and is similar in price and time duration. ta the cor- Jection from 1850 to 1868 meaning they are of the same degree, and feauld be part of the same larger for mation). Aa a result, in 1949 — for the first lime since 1830 — enough structure existed to conelude the vorreetion that began in 1830. Ultimately. the partern evolved into a NEoWave formation called a dau- bie three running correction fa var ation of R.N, Elinit's Dauble Flat). ‘The result is a 16-year, upward slanting correction that separates two impulstve advances fone from 1768 to 1890 and the other from 1949-10 present), just as wave thec- ay requires (scr “Double three run correction,” abervel ‘The concept of a century-long, upward-slanting correction is 30 diffiewlt for most Ellott wave ana- Iysis to understand, their intttal reaction 4s wholesale refectlan. They fassume all Inrge inarket advances (and cyen small market advances) are impulsive and should be labeled 124-9. This simplistle appraseh to wave analysis is the reason mast Elhott wave analysts are compelled their wave counts ais Ere guently as they do. It is not the to change fault of w neous bias of the analyst (forcing wave structure to fit a preconceived situation) chat creates the 1 1949 ta 1966; st lke 1785 to 1830, the 1949 to 1966 period appears impulsive (see “Double three running corvection,” above): Ik is retraced little by a multi-year consolidation, which then ts fol lorved by more upside movement, 1966 to 1982: This period con. sumed enough Une 1949 to 1965 rally, but the sub 7050 ‘rc 750 ioe 18801500 —x950 000 2080 ‘sceurred, that it beeame possible to ‘conclude the cnrreetion tat started in 1968. However, It will be some ime before we can confirm whether | an impulsive pattern began in | 1994, If ene did not begin in 1994, | fastest markel advances in history | thenry; it's the erro- the correction from 1966 is stl unfolding. If an impulsive pattern ‘did begin in 1994, « 28-year correc: tion endec there. ‘As an interesting side note, the similarities of 1830 te 19 and 1966 to 1994 represent a phenome sion f call “pattern mirroring," If you study 1949 0 1904 in “21st centu ry null” (below), you will notice st mimics the desigh sind behavior of to fully correct sequent 1862-1987 rally also is cor | the 1765 to 1949 period, But is of reckive in |. Therefore, we can. | one lawer degree, hot label 1982 tke end of earec- lion, The bull marker ending in | lato 2000 Here's « look at the stock, 1087 also must be part of the ear- | market's future course, rection that began i 1966, ‘Time targets: In almost all eases, Similar to what happened from | exoept when wave 1 1 the extended TSO to 1949, 2 complex corrective | wave, wave 3 will take more time to pattem began in 1966 and contin. | develop than wave 1. In this tase. ued throughout de bull markets af | that means. wave 3 must consume the 1980s ane 1990s, it was not | more than 65 years, making its ear ‘unlit 1994, when one of the largest, | lest eonelusion date 2014. we vooe0en | swe | no) roo vee 0 1S ay 2908 The NEoWave forecast for the stock market into the next century. y sien ore eee : aaa erates Sameer ar | 7 e000 zim zt60 Pures Qeber Las 3%DING TECHNIQUES m Wave 3 also must take less me to develop than wave 2 (Le less than 116 years), Adding 116 to 1940, we arnive at 2065 a8 the lat fest conchasion date for wave 3. Price targets: The best way to pro- Ject the topping area for wave 3 1s to double the original channel, which 3 formed by drawing a. line across the low of wave | and the lowest point near the conclusion of wave 2, “Bist eentury tiul” (page 33) shows the original channel, which has i tw Thacer's Accoss en-cf-lay uote corehoonding save (0 ar Interstates yn: ho reine quote fir stocks vious, tices atl funds options, ob Oli OonenC the seeehe (825 ari Windows orimpon the pmbos fara oslo Ti dic on mie to dowriond the Yo il abt bee derevel i fey ar only take fer litle angen Jere Serie The eet ser aia rei oa Fan cen Enrol 1s Four eb oer aces spec we cain pases, Yes ve pou hr Do Angie gander they individual types 5k 0th seam eile for historical dt previous day history ies Once the shane dsralosced, Aelesabally amp te te ia oar Trader's Arceonsedtmare or uci the SC ies yourself ad ean futvesrmanccen. October 1980 Dowxtoap Crosixe Quotes 7°14 been. doubled in width to ereate the dashed line above it. The Dew and the SAP are likely to conclude ‘Ghat upper dashed line, Depending on how Jong Ht Lakes to conclude wave 3, the upside target will vary from as Jos a8 90000 to well over 100000 in the Dew. The S&P would experience a siullarly spectactilar acivance, exceeding LOD00. From an ariilunetic perspective, those target ranges may appear ridiculous, but when viewed loge é a ON © Downioauting Mane # Plana Tool gervace) Month to Month SGAPUSA SUP Canada/HL/ AK For ap 0 200,000 ucts mene Plan (antservice) Pay a year ta {avance jor Pan A and gaye Hie cs me. Usa, $917 Pirane: i fear im sclvance Tate ste Usa 2 Ma 80 ‘Unlimited acne snada/ HI) AK ce) Pay yearn a Sua gues en. Genser Month $16" UsA.si" =) Colentes Quotes for matsie Po vsra'yenrinad vance Plan fan ‘Cu (85) TBSPING Et. 2 Te Sour Osesr Fon Os Free 20 Paar Brocane! "Te er Sra Pape ea eee even ca einen pone ane riunically (which 4s the way mar: kets evolve), these price targets ai reasonable and believable, Consid: that from 1765 te 1996, the Do daubled more than 14 times 6 231 years doubling on aver: ‘very 16.5 yours). To exoted 10009 from current levels, the Dow w have ta double just a little me than 4 uines in 70 years — fectly plausible seenarin based the historical growth rate, Social implications Vor a raging market fo continue into the n= century, elearly some tremendous social, political and econo changes ane ont the horizon. f United States. Because economic progress achieved only through incr: efficiency, the first trigger fo ceanomic boom already has eeurred — dhe global col communism. The frecing third world economies has alr provided large U.S. compe with entirely new markets for Uheir products and se: Through snformation tech smiallet U.S. companies begin to market to the © world, creating unprece prosperity for the United Stats The resull wall be the biggest market in history, conc the late 2 Lst century, Man's natural drive toward © clency also will affect sore most entrenched institution Expect massive reductions U.S. welfare system and the repose ation of the imeome tax (cx currently either in the proce belnng overhauled or und: ‘ ‘Within the next five to 10 years While my long-term pr have, in the past, provokes <-> ism and even outrage, the strated track record forecasts makes them debate, The level of ebjects detail NEoWave introduces wave analysis process mak valuable tool for analysts substantially improve casting accuracy and tr ing to improve thesr Dot Glenn Neely te presi Ware Insets im Laguna © ‘uifior af Maecen airecton of tracing dress, So