ANSWER:

This is a strange question since it involves speculation in the first sentence that is later assumed to be fact in the second and third sentences. But the general idea is, “can markets be manipulated and if/when they are does it impact wave structure and, therefore, one’s ability to forecast.”

First, the world’s primary markets (currencies, Bonds, the stock indices of most industrialized countries, etc.) are too large to manipulate. To manipulate the Euro currency or U.S. stock market would require trillions of dollars. No one person or group has that kind of money. Individual stocks can be manipulated, but wave theory (as a result) does not work well with individual stocks. 

Second, wave theory measures and quantifies MASS psychology, not limited or individual psychology. As a result, it only works well when applied to large, man-made markets where thousands or millions of people are financially interacting. The smaller a market, the less its behavior represents mass psychology. If someone attempts to manipulate a small-cap stock or futures contract, they might be able to accomplish their goal, at least for short periods. On the other hand, such manipulation is likely to make wave structure indecipherable. So, for those practicing wave theory (at least NEoWave), they won’t be able to decipher structure so they won’t be able to trade, thereby avoiding the victimization intended through manipulation. 

Individual stocks can be manipulated, but if a person or group focuses their money on a stock or industry, the money pushing up their chosen equity must be pulled from another area or industry, creating a yen-yang balancing effect in the overall stock market average. 

Finally, even if someone had trillions of dollars to move into or out of a market, they could not do so without having a serious upward impact on price as they entered and a serious downward effect on price as they exited. Frequently, when such manipulation is attempted (in any market), the mere act of entering and exiting causes a loss for the person taking the position. I experienced this about 10 years ago when I was managing a multi-million dollar Australian fund. I was confident the S&P was about to collapse (which it did a few days later), so I got greedy and started trading the S&P futures 300 contracts at a time in the overnight market. At the time, the overnight market was not liquid. I entered my 300 lot Short position at the market and was immediately filled. Ten seconds later I entered a 300 lot buy-stop 10 points above the market. In the blink of an eye, my buy-stop was filled and ten seconds later the S&P was back down where I originally went Short. In other words, I WAS the overnight market, trading against myself. I did this 300 lot maneuver 3 times over the next 3 days, losing each time, before I realized I could not take such a large position in an illiquid market. Thereafter, I limited trading to liquid U.S. market trading hours only. Today, trading such volume is not an issue in the “overnight” S&P, but 10 years ago it was. 

What can we learn from my experience? Simply having large sums of money to trade does not mean you will automatically profit from or “manipulate” a market. Frequently, the “manipulator” becomes the financial victim, not only through big losses but due to high commissions, also.

ANSWER:

About 50% of the time, an X-wave is “involved” when a pattern is “missing” a wave, but it is not the cause of the missing wave. To explain, let’s say you drew a daily chart based on the high and low in the order they occurred (this is what I call a “wave” chart). Each high or low plotted will constitute “1 unit” of time. This applies no matter what time frame is chosen – monthly, weekly, daily, hourly, etc. 

After plotting your daily chart, you notice a “three time unit” advance that looks like a Zigzag, but it contains an abnormally large C wave (i.e., wave-C is 400% of wave-A). Based on the NEoWave “Rule of Similarity and Balance,” plus Zigzag design rules in Chapter 5 of Mastering Elliott Wave, you realize the move you are studying cannot be a Zigzag. You also realize labeling it a 1-2-3 will not work since wave-3 is too large in relation to wave-1. So, what is it?

There are only two possibilities:

1. The uptrend began AFTER the low (at the point currently marked wave-B or wave-2),

2. or, the uptrend started AT the low, is impulsive, but is “missing” wave-4.

How and why does this occur? Markets unfold on their own rhythm and time frame, not the time frame you happen to pick. For example, if you plotted the same market using the high and low of every 12 hours instead of every 24 hours, you would clearly see the “missing” 4th-wave. 

As you move from smaller to larger time frames, a phenomenon I call complexity compression occurs. This is what the NEoWave “Missing Wave” concept addresses. 

IMPORTANT: Please remember that “missing waves” can ONLY occur in a very limited environment when the pattern being studied consumes either 3 or 5 time units. If 3 units of time make up the pattern being studied, and the structure does not fall into any known wave pattern category, an impulsion (with a missing 2 or 4-wave) is the best explanation. If 5 units of time make up the pattern being studied (and again it does not fall under known pattern development rules) and the first correction is near the bottom of the range and the second correction is near the top of the range, then a complex correction with a “missing” x-wave (near the center of the pattern) is the best explanation.