ANSWER:

For nearly 25 years my long-term stock market perspective has been at odds with that of orthodox Elliott Wave analysts. It began in mid/late 1987 when I turned very bearish on the Dow, expecting a 38% market decline in just three months off the high. Turns out, nearly 90% of that bear market occurred in 1 day (from top to bottom the bear market took less than 2 months), but it did produce a decline of the magnitude expected. Where I really began to diverge from the orthodox Elliott Wave camp was when I turned “wildly” bullish in mid/late 1988 (see CYCLES magazine, the Sep/Oct 1988 issue where I revealed my 73 year stock market forecast, complete with a prediction the 1987 stock market low would not be broken for the rest of my life and that the Dow would exceed 100,000 by the year 2060)! Not only had such a long-term and specific stock market forecast never been attempted before, but it is the ONLY forecast made in that era by anyone that is still coming true today and still has 50 years to go! 

In the mid and late 1990’s, while nearly every Elliott Wave analyst was bearish, I was calling for a powerful continuation of the advance. Finally, on September 5, 2000 (which under wave theory was the actual day the bear market began), I told my subscribers the bull market was over. I remained bearish on the Dow until early 2003, at which time I proclaimed the bear market was over and that a 5+ year bull market – pushing the Dow and S&P back above their 2000 highs – was underway. At the same time, nearly all orthodox Elliott Wave analysts were calling for a major stock market crash, a deflationary depression, social upheaval, possibly nuclear war, etc. Finally, in late 2007, for the first time in nearly my whole career, I and many orthodox Elliott Wave analysts were finally in agreement, calling for a major bear market and a retest or break of the 2002 low. 

Sometime in 2009 or 2010, with the S&P around 500 and the Dow around 5,000, I will once again be a major odds with the orthodox Elliott Wave camp (and most likely the rest of the analytical world – just like in 1987) when I say the bear market has bottomed and that the 2009-2010 lows will not be broken for at least 50 years! 

So, to answer your question, NO I do not agree with the scenario that the Dow will return to 400 or that the stock market will fall more than 90% off it highs. As I have said many times in the past, the wave count that produces that scenario is flawed and has been flawed for the last 25 years, which is why most Elliott Wave analysts keep getting the major market turns wrong. My logical, scientific NEoWave approach allows for more accurate, unemotional and objective wave counting that tends to be right a far greater number of times than is possible with orthodox Elliott Wave techniques.

ANSWER:

Whether a Flat, Zigzag, Triangle, Diametric or Symmetrical is forming can only be determined (well in advance) by employing advanced NEoWave observations which focus on the price, time and complexity development between waves-A and B. 

Under NEoWave rules, a Flat or Zigzag is possible only IF wave-B takes the same amount of time or more as wave-A (wave-B will usually consume much more time in Flats than it will in Zigzags). If wave-B takes less time than wave-A, a Triangle, Diametric or Symmetrical is forming.

In all expanding and contracting Triangles, wave-A will be the most violent segment of the formation, even if it is the smallest in price (i.e., it should cover the most price in the least time from high to low, or from low to high). If this rule is not met, a Neutral Triangle is forming OR another non-Triangle pattern is underway. 

If wave-B is around 38.2% of wave-A, it must take less time than wave-A to be part of a NEoWave Neutral Triangle. As a result, in any A-B sequence where wave-B is around 38.2% of wave-A in price, but takes MORE time than wave-A, a Zigzag is forming, not a Neutral Triangle. As wave-B approaches 61.8% of the price of wave-A, the time it consumes will increase. As it does, wave-B may equal the time of wave-A, but if it is less, only a Triangle, Diametric or Symmetrical is possible. As wave-B exceeds 61.8% of wave-A, it normally will take more time than wave-A; if it takes less, a Triangle, Diametric or Symmetrical is forming OR the rally you are calling wave-B is just smaller wave-a of larger wave-B. 

In general, NEoWave theory tells us that the more SIMILARITY there is in price, time and complexity between adjacent waves of the same pattern, the greater the odds a NEoWave Symmetrical is forming. If time and complexity similarity exists between most of the waves, but not price similarity, a NEoWave Diametric is forming. If complexity is similar throughout, but not time and price, a Triangle is probably forming. If vast time, price and complexity differences exist between three adjacent wave segments, a Zigzag is forming. If vast time and complexity differences exist, but price coverage is about the same among three adjacent waves, a Flat is forming.

ANSWER:

No matter what time frames you follow (hourly, daily, weekly, monthly, etc), you have only two ways to plot them. If the high or low clearly came first and the trend for that period is basically one directional, then you simply plot the high and low in the order they occurred. 

If a high or low occurred twice (or nearly twice) in a month (I’m using a month to make it easy to understand), then you need to examine price action to see which order will produce the most accurate representation of that month’s price action. For example, if Gold bottomed at $400 last month, then $401 the 1st of the new month, rallied to $500, then dropped back to $405 the last day of the month, plotting $401 first doesn’t help much since it basically repeats the already-plotted low at $400. So, in this situation, plot $500 first and $405 second.

On rare occasions, if it is the only way to accurately represent price action produced by the market, you could consider triple plotting (which means 3 data point combinations – either Hi-Lo-Hi or Lo-Hi-Lo). If you triple-plot, make sure all three plots occur within the time span normally reserved for two data points. NOTE’ You should never attempt to plot 4 data points within one time frame.