Monday, March 5, 2012

03-06-2012 Cycles and Elliot Waves

Elliot Waves are a methodology of tracking cycles.  I find it tedious with lots of rules and exceptions.  But here Elliot Wave in theory as applied to the growth (inventory or Kitchin cycle and its sub cycles):

OK, that is the theory.  May not be a perfect fractal as I interpret the Kitchin being divided into 9 Wall cycles.  Still I check EW sites from time to time to verify my analysis.  I am not an EW analyst, but here is the latest EW counts according to my understanding:

Hope - this enlightens.  I feel cycles and Elliot Waves are two different approaches to extract the same information.  I believe cycles are the simpler approach.

GL traders


  1. Yeah, I guess I could pick up a bit more RWM.

    Inlet, do you have a downside target for this correction?

    I still think with this being an election year, the PTB are not done pushing this market up.

    1. Doctrader - if I am right and this is the start of the 20 week Wall cycle and it runs for 10 weeks into mid May. Of course we will monitor and adjust estimates as it plays out. Based on the 20 week DPO (amplitude) the downside should be at least 150 points off the top (1225) and may be 200+ points (1175).

      Also, by May the 42 month Kitchin should be entering its last 12.5% of that cycle by May which is normally a "Hard" down phase of that cycle - so any bounce off the low is apt to be muted.

    2. Inlet,
      I realize that you are a "cycle guy" and thus perhaps less influenced by outside news items. But, I am still suspicious that we have not seen the top of the S&P. If the Republicans (admittedly the candidates are terrible) can give Obama any kind of fight, he will have Ben keeps these markets up into the elections.

    3. Doctrader - when it comes to politicians (D or R) I am totally agnostic. I don't believe either side has solutions and the economic cycles will occur regardless of what the politicians or FED does.

      At best they push the day of reckoning out a bit, but any interference means the final "flush" will be bigger, worse, longer than it had to be.

      This is not new information, but was covered 3500 years ago in the Bible (see Levictus Chapter 25 on Jubilee). There will be a debt deletion whether it is in Bankruptcy or through inflation and there is nothing man's institutions can do to stop it. JMHO

    4. Inlet,

      I agree with what you wrote. There are no solutions. This is the end game.

      Still, I feel there will be a final market push higher. One of lunacy and desperation. Similar to the complete nuttiness that was the dot-com bubble. I could be wrong, but I just feel the FED and the central banks of the world are not yet done. They have a few more cards to play.

      And,...went it is over, it will end badly and be prolonged. But, these things must happen for the world to repair itself.

  2. Doctrader - question is how long will the "sugar water" work. Indications (based on cycles) is it starts falling apart as early as May and we probably see a greater than 20% sell off by September.

    You can react to news - but if you see it coming is it really news? News to me is the unexpected (ie 9/11). News can impact cycles short term, but they generally revert to pattern after a few days/weeks.