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PureBytes Links
Trading Reference Links
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Centre for Elliott Wave
http://www.cewa.com/q&a.htm
Prechters' Online Elliot Wave home
http://www.elliottwave.com/index.htm
Prechters' Online Elliot Wave discussions - List
http://www.elliottwave.com/billboard/bpbmain.htm
Prechters' Online Elliot Wave Basic Tenents - the Corrective Waves
http://www.elliottwave.com/basic3.htm
Prechters' Online Elliot Wave Basic Tenents - the Impulsive Waves
http://www.elliottwave.com/basic2.htm
WinWaves-Elliott Wave software(previous known as EW-Analyser)
http://www.elliottwave.com/wwftpdty.htm
Alta Vista Search on Elliott Wave
http://www.altavista.digital.com/cgi-bin/query?pg=q&stq=10&q=elliott+wave&r=elliott+wave+
Advanced Get-Elliott Wave software
http://www.tradingtech.com/about/about.html
Free Elliott Wave Analyses
http://skansearch.com/freesite/sprefdly1.shtml
Professional Trade Advisor98-Elliott Wave software
http://www.rjwhite.com/tradeadvisor.htm
Elliott Wave by S Achelis - Technical Analysis from A - Z
http://www.equis.com/elliotwavetheo.html
In General
Elliott wave theory goes beyond traditional charting techniques by providing an overall
view of market movement that helps explain why and where certain chart patterns develop.
The three major aspects of wave analysis are pattern, time and ratio.
The basic Elliott pattern consits of a 5 wave uptrend( Impuls 1,2,3,4,5 ) followed by a three
wave correction ( Corrective A,B,C ). Each "leg" of a wave in turn consists of smaller waves.
Do check up on the above Corrective + Impuls web-pages, where the waves are well explained,
and they also incl. examples(GIFs) wich are the best for 'understanding' the waves' methology.
Elliott waves can be used to successfully define where the market currently is in relation to
"the big, overall picture" but is usually to unreliable for short term trading.
Below find the InvestorGuides' webpage on Elliott Wave, a short explaination.
Unfortunatly the Elliott Wave, as a much contributing part of TA, is NOT Metastock buid-in.
About time it is.
Groeten/Regards,
Ton Maas
Ms-IRB@xxxxxxxxx
===========================================================
Subject: Technical Analysis - Elliott Wave Theory
Last-Revised: 12 Dec 1996
Contributed by : lott@xxxxxxxxxxxxxx
This article introduces Elliott Wave Theory.
1. Background
RN Elliott "discovered" the wave theory in the early 1934, it is a method for explaining
stock market movements. It is actually a theory to help explain economics in general but
the stock market tends to have three attributes that make it quite applicable.
It is a true free market(i.e., prices are not fixed by the supplier, rather set by the consumer).
It provides consistent and regular metrics that can be measured.
It is manipulated by a statistically significantly large group of people.
2. Assumptions behind Elliott Wave theory.
The market is NOT efficient. Rather it is an inefficient market place that is controlled by the
whims of the masses. The masses consistently overreact and will make things over and
under priced consistently. This was, and until recently, in direct opposition to prevailing
theories that the market place was an efficient mechanism. The efficient marketplace was
the theory that was taught in B-schools and often continues to be taught until this day.
That if the above is true, then you should be able to do a "sociological" survey of stock
prices independent of other news that effects stock prices. ie., you will be measuring the
global effects that the masses will have on the stock.
(An interesting aside. We have all observed that stock prices move independently or in
the opposite direction that news about the company, the economy, or the stock would
tend to let us believe. The general explanation for this behavior is that the masses tend
to listen for the news they are ready to hear, and that the movement that actually happens
depends on other effects.)
3. General Principle of Elliott Waves
There are many things that have to be accounted for when doing e-wave studies of stocks,
and that one of the most difficult things to overcome is the personal ability to separate your
own emotions from affecting your analysis. You as a person have the same types of
fear/greed internal mechanisms that affect the entire market place as a whole and without
being able to work to dismiss those emotions you will not be able to sit in a position that
allows you to understand and profit from the sociological effects that you are measuring.
That basic fear/greed mechanism is so inbred to our existence that will keep the Elliott
wave a valid study regardless the number of people that know and understand
it.
This is an important point: Elliott Theory measures sociological performance of the
masses and these sociological functions are so ingrained that even if individuals or many
individuals are able to understand and dismiss those actions the majority of the people
will not be able to.
Elliott waves describe the basic movement of stock prices. It states that in general there
will be 5 waves in a given direction followed by usually what is termed and ABC correction
or 5 waves in the opposite direction.
4. Wave Description
The following wave description applies to a market moving upwards. In a down market
(perhaps the stock is truly overpriced and the market has turned), you will generally see
the same types of behavior in reverse that you saw watching the stock on the way up.
Wave 1
The stock makes its initial move upwards. This is usually caused by a relatively small
number of people that all of the sudden (for a variety of reasons real or imagined) feel
that the previous price of the stock was cheap and therefore worth buying, causing the
price to go up.
Wave 2
The stock is considered overvalued. At this point enough people who were in the original
wave consider the stock overvalued and take profits. This causes the stock to go down.
However in general the stock will not make it to it's previous lows before the stock is
considered cheap again.
Wave 3
This is usually the longest and strongest wave. More people have found out about the
stock, more people want the stock and they buy it for a higher and higher price. This
wave usually exceeds the tops created at the end of wave 1.
Wave 4
At this point people again take profits because the stock is again considered
expensive. This wave tends to be weak because their are usually more people that
are still bullish on the stock and after some profit taking comes wave 5.
Wave 5
This is the point that most people get on the stock, and is most driven by hysteria.
People will come up with lots of reasons to buy the stock, and won't listen to reasons
not to. At this point contrarians will probably notice that the stock has very little negative
news and start shorting the stock. And at this point is where the stock becomes the
most overpriced. At this point the stock will move into one of two patterns, either an
ABC correction or starting over with wave 1.
An ABC correction is when the stock will go down/up/down in preparing for
another 5 way cycle up. During this time frame volatility is usually much less then
the previous 5 wave cycle, and what is generally happening is the market is taking
a pause while fundamentals catch up. It is interesting to note here that you can have
many ABC corrections happening.
For instance if the fundamentals do not catch up you will have two ABC corrections
and then the stock will have a 5 wave down cycle. (Odd number of ABC corrections
lead to the stock going up, even numbers lead to the stock going down.)
5. What determines the length and quantity of the move?
People tend to think of something being too expensive or cheap for the very same
reasons that they think something is attractive or not attractive. This subjective
judgement is called aesthetics. A measure of what is aesthetically pleasing has to
do with fibonacci sequences. They are all around us, they describe art, snail shells,
galaxies, flower petals, and yes, our own internal feelings of value.
The quantity of time and movement of a stock through a wave cycle tends to
measured reasonably well by fibonacci sequences. The measurement and prediction
of waves tends to be bound by these numbers and by the fibonacci fractions
(Roughly 5/8 and 1 5/8 and their inverses).
This page's URL is http://invest-faq.com/articles/tech-an-elliot.html
The Investment FAQ is copyright © 1998 by Christopher Lott.
Use this link to submit your comments: lott@xxxxxxxxxxxxxx
Please read the terms of use and disclaimer statements.
Click for advertising or syndication information.
Graphics by Nekotech.
--------------------------------------------------------------------------------
-----Oorspronkelijk bericht-----
Van: m.jonker@xxxxxxxxxx <m.jonker@xxxxxxxxxx>
Aan: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
Datum: woensdag 15 juli 1998 0:01
Onderwerp: Sorry: Elliot Waves
>Dear all,
>I just downloaded the Advanced GET demo, and my first reaction is: WOW!
>My second reaction, as a MetaStock owner is: how can I get hold of the
>Elliot Wave algorithms / theories / formulae etc?
>I know there's been quite a lot written about Elliot in this list, but up
>'till today it didn't mean a thing to me. Is there anybody out there who'll
>be so kind as to forward the Elliot discussions to me, or to provide me
>with a summary / tips.
>Thanks a lot in advance! Mark Jonker.
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