Let me start with an important disclaimer: I know only enough about Elliott Wave Theory to be dangerous. I am very, very new to this, and I am currently studying Applying Elliott Wave Theory Profitably with the goal of understanding this topic better.
I imagine I would have endeavored to learn about this topic many years ago, but I felt very badly burned after reading At the Crest of the Tidal Wave back in 1995. The author, Robert Prechter, made what I thought was a very compelling case for the Dow to hit a wall at something like 4,500 and plunge to Depression-era levels. It was my fault to take the book so seriously, but I definitely felt "cheated" out of the incredible surge from 1995-1999 based on my embrace of this book.
Long story short, I was so disenchanted with my experience, I decided the entire topic of Elliott Wave Theory must be a big load of crap.
I also am sensitive to the frequent dismissals of EWT based on the fact that proponents can change their prognostications and predictions at will simply by saying "I had the count wrong!" I am a stickler for technical analysis being either Right or Not Right about a given prediction, and I don't allow myself "rubber trendlines" or other such graces in my own work. Revisionism is the road to ruin.
Having said all that, I still want to give EWT a shot. I become interested in the subject again by tripping across Tony Caldaro's web site, The Elliott Wave Lives On. I don't know Tony, but when I wrote him a few weeks back asking permission to display one of his charts, he promptly wrote me back and said yes. So he's already a good guy in my book!
Anyway, back around the start of the year, he created this intriguing chart and had the testicular fortitude to make a prediction. I was so interested in the chart, I printed it out and have been toting it around in my backpack ever since.
I was re-examining this chart a couple of days ago, and, to my eyes, what unfolded was pretty remarkable. I'm not sure if Tony would agree with my own very "greenhorn" analysis, but what I see is:
The big question, of course, is whether the B-wave has finished or not. Third time: I barely know what I am doing, so I have no idea. But if the analysis is correct and the B wave precedes the C-wave downward, which will push it below this year's lows, that would mean a return of some cool times for the bears.
Having issued so many caveats, I hopefully have defused any egg-throwing. But I'd be interested in hearing people's thoughts on this topic and EWT in general.
