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The Economy and Stock Market


Brentastic
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Still curious about your qualifications.

I probably don't have anything that's worthy of being labeled as 'qualifications'. I spent some years as a day trader but the last 4.5 years I've worked a 'normal' job as a business analyst. Starting last year (after not trading or watching the market since late 2005) I began studying the market A LOT. I'm a student of an extremely contrarian theory of the market, called the Elliott Wave Theory. I am in no way an expert and don't claim to be. But all that time off has brought me a very clear view of how the markets move and a better understanding of the economy in general. And the EWT is a philosophy I've already lived in 'real' life (ie... non-market related), so using it to forecast market movement is just natural.

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You are happy that it hit 10,800 and then tanked? Will you be happy if the market crashes down to 1,000 because you would then be right?

 

I for one hope the market does not crash but hey that's just me spouting off. :wacko:

 

no, it's said in hopes that people will listen...

 

the fundamentals are bad for the long term and even short term....why cross your fingers for something to happen when all the factors are pointing to something bad happening?...

 

prepare for the worst and hope for the best

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Wiki:

 

[edit] Criticism

The premise that markets unfold in recognizable patterns contradicts the efficient market hypothesis, which says that prices cannot be predicted from market data such as moving averages and volume. By this reasoning, if successful market forecasts were possible, investors would buy (or sell) when the method predicted a price increase (or decrease), to the point that prices would rise (or fall) immediately, thus destroying the profitability and predictive power of the method. In efficient markets, knowledge of the Elliott wave principle among investors would lead to the disappearance of the very patterns they tried to anticipate, rendering the method, and all forms of technical analysis, useless.

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Wiki:

 

[edit] Criticism

The premise that markets unfold in recognizable patterns contradicts the efficient market hypothesis, which says that prices cannot be predicted from market data such as moving averages and volume. By this reasoning, if successful market forecasts were possible, investors would buy (or sell) when the method predicted a price increase (or decrease), to the point that prices would rise (or fall) immediately, thus destroying the profitability and predictive power of the method. In efficient markets, knowledge of the Elliott wave principle among investors would lead to the disappearance of the very patterns they tried to anticipate, rendering the method, and all forms of technical analysis, useless.

That's correct, the Elliott Wave theory disputes the efficient market hypothesis. If the mass acceptance of any theory was always right in the now, the world would still be flat and the sun would revolve around earth. Also, wikipedia is not the gospel on every topic.

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  • 4 weeks later...
Ok, so now that the market has climbed up for 4 straight weeks - how many of you are bulls still/again? How many of you think my forecast is losing steam? Just curious, and fwiw, I still stand with my view.

I would like to know how your wave theory hypothesis explains this rise in the market. Given your posts a month ago, you did not seem like you were expecting the market to go on a month-long increase. What happened?

 

(edit to add, I honestly am not trying to be a dick here, but I would like to know why you think your model failed here)

Edited by wiegie
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I would like to know how your wave theory hypothesis explains this rise in the market. Given your posts a month ago, you did not seem like you were expecting the market to go on a month-long increase. What happened?

 

(edit to add, I honestly am not trying to be a dick here, but I would like to know why you think your model failed here)

 

Rut Roh, Raggy!!!

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I would like to know how your wave theory hypothesis explains this rise in the market. Given your posts a month ago, you did not seem like you were expecting the market to go on a month-long increase. What happened?

 

(edit to add, I honestly am not trying to be a dick here, but I would like to know why you think your model failed here)

rogue wave :wacko:

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I would like to know how your wave theory hypothesis explains this rise in the market. Given your posts a month ago, you did not seem like you were expecting the market to go on a month-long increase. What happened?

 

(edit to add, I honestly am not trying to be a dick here, but I would like to know why you think your model failed here)

From what I understand, his model hasn't failed since it's only a month (or a year today if you include the rise from the absolute bottom) and the market is still about 4,000 below where it was in Oct 2007. I think his model utilizes way longer periods than a year.

 

I still think it's all bollocks though. :wacko:

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I would like to know how your wave theory hypothesis explains this rise in the market. Given your posts a month ago, you did not seem like you were expecting the market to go on a month-long increase. What happened?

 

(edit to add, I honestly am not trying to be a dick here, but I would like to know why you think your model failed here)

No problem - the recent rise is a correction of a bear market decline. In a given trend (down) the market moves in 5 waves - the odd number waves (1, 3 & 5) are actionary and move in the same direction of the market trend. The even numbered waves are reactionary waves and are corrective. All of these waves are fractal, meaning waves 1, 3 and 5 are subdivided into 5 waves themselves and on the flip side, they comprise bigger versions of themselves. The recent move up is a wave 2 correction of the 3rd wave of primary degree. All trend movements, as you know, see-saw their way in that given direction. I did expect this correction since that is part of the wave theory, however, the duration of any wave is never predictible and therefore duration is the least predictive component of stock market movement. Also, the waves are best used as an outline of market direction or a description of where the market is headed or currently is.

 

If you shoot me your email, I can send you a chart.

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From what I understand, his model hasn't failed since it's only a month (or a year today if you include the rise from the absolute bottom) and the market is still about 4,000 below where it was in Oct 2007. I think his model utilizes way longer periods than a year.

 

I still think it's all bollocks though. :wacko:

This is partially correct. While the EWT does forecast all time frames because of it's fractal nature, it is more accurate with larger time frames. I use the analogy that the EWT views the markets from above the trees rather than from in the jungle.

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well, how very nice of you not to tell anybody about your expectation until after it happened

I guess I made some wrong assumptions - that any of you actually have been following what I've wrote and that you have looked up the wave theory and the basic premise. The term 'waves' should imply that any given trend moves in a roller coaster fashion, just like waves. Here are 2 images that visually describe the fractal nature of waves. These are 'bull market' views.

 

http://www.fx-track.com/en/edu/technicalanalysis/elliott.png

http://static.seekingalpha.com/uploads/200...kar-Mutyala.png

 

Full cycle (bull then bear)

http://3.bp.blogspot.com/_ot1WH5p4Xr4/S0kc...rM/s400/0.1.PNG

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