Here it is in brief: en.wikipedia.org/wiki/Elliott_wave_principle I think a good case can be made we are fast approaching "Wave 4" while being in "Wave 3." I say this because those waiting for the market to sell off to find an entry have had no opportunity to do so going on almost a year if not three years now. For an individual stock like Apple this is not true...but for the market as a whole this is definitely true. And if we look at the theory "in reverse" i think a good case that Europe is in fact entering a "Wave 2" downward trend...a scary thought actually. So who was Mr. Elliot then? en.wikipedia.org/wiki/Ralph_Nelson_Elliott fascinating character with a fascinating life as well. Clearly coming from the mid-west and spending your formative (professional) years in Texas and Mexico at the turn of the 20th Century would give you a bird's eye view of the USA "at the tipping point to super charged growth." The USA would leave Mexcio...and ultimately the world "in the dust" during this man's lifetime...but not without the Great Depression intervening. this decade long "slumber" would give a man like Elliot a wonderful opportunity to ponder the most basic functioning(s) of public markets...although certainly in the negative. In many ways this would remain true long after he had died. Indeed the USA probably wouldn't experience a "20's like bull market" until the 60's...and even that had issues. What i find interesting about his theories is how they can be applied to "low to zero interest rate environments" where Central Banks are all "easy" and "currency wars" are the talk of the day. Clearly we have the backdrop of wars and "Keynesianism"...but interestingly the capitalistic "scourge" has still been what is most prominent about our time since 9/11...with all major historical events since that time almost overwhelmingly financial/economic and budgetary in nature. This is very much the time of Ralph Nelson Elliot. Here is the web site: www.elliottwave.com/ clearly this is a "must go" place to understand...i would say BROADEN your knowledge from the "merely empirical" to the study of psychology...in particular mass psychology...and how "deterministic" (meaning creating a reality...but CRITICALLY... NOT making that reality) it in fact is. My thinking has been that because of the interventions of 2008 "market psychology never broke" and this has laid the framework...which has been effected now obviously...of a POWERFUL market recovery. Europe has done the opposite...and seems just as clearly to be paying the price. Japan and China of course "are the interesting middle grounds"...the latter seemingly incapable of bearishness and the former seemingly "coming out of the darkness" as the USA finally did deep into the 1950's. Again my personal view is that we are CLEARLY in a "Wave 3 uptrend" where those who have waited "for the break to enter" have been waiting literally for years now. Just as clearly I think we are about to enter...if not already have entered a "Wave 4" pattern. What say all of you? Do you think the theory applies at all? If so..."what type of Wave are we in?"
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.