ANSWER:

The concept of “price behavior” is covered indirectly throughout Mastering Elliott Wave, but is specifically addressed in the complex logic sections of Chapter 3 and in the “confirmation” sections of Chapter 6. 

The NEoWave concept of “price behavior” focuses on how a monowave (or group of monowaves) relates to surrounding waves (or wave groups) from a price, time and complexity perspective. In general, whichever direction a market moves the most (in price) in the least amount of time IS the direction of the trend of one larger degree. So, for example, if you see an advance in Gold of $10 in 1 day, followed by a reaction of $5 over 5 days, Gold’s “price behavior” tells us the trend in Gold is UP. Any wave count that disagrees with that “fact” will probably be wrong. 

For example, let’s assume that after the above $10 advance I place a wave count that implies Gold is topping. The slowness of the $5 decline that follows would quickly FORCE me to change my mind and alter wave structure. Why? Because my past assumption of a terminating advance would be in direct contradiction to current price behavior implications (i.e., the implication that the trend is still UP). 

It is because of the above concept, and many more NEoWave concepts (such as self-definition and self-confirmation), that I’m frequently able to talk about markets so objectively and matter-of-factly, as if I’m “reading tomorrow’s paper,” instead of merely expressing my own beliefs. I’m simply telling you (my subscribers) what the market is telling me to say in real-time based on its behavior, not just its wave structure. It all has to be in-sync to make sense, be logical and predictable.

ANSWER:

Determining the direction a market will “thrust” after a contracting Triangle is pretty easy. First, wave-A in such a pattern will always be the largest and most violent wave. Next, the “thrust” out of a contracting Triangle will always be in the opposite direction of that first, violent A-wave.

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.