The chart above is a stretched weekly chart which shows any vertical moves in a more dramatic fashion. The Elliott Wave Principle was observed using the DJIA charts and coincidentally the DJIA and the other indices all have similar patterns and wave counts. Always reviewing the largest degree levels is very important, as we have to make sure that it still fits into the larger picture that we think we are in. The reason why all these 3-4 sets of waves appear, is because we always have to look for wave 3 to be the longest or extended wave. Since 1932 any wave 3 has never been extended, but it’s always been the 5th wave that the experts extended. 5th wave extensions “never” travel across multiple generations as 5th waves are fundamentally very weak.
When the majority of expert wave analysts didn’t see the bull markets coming both times in 2002 and 2009, I knew this SC and GSC degree hype had “MAJOR” flaws in it. As soon as any part of the largest degree level has failed, then the entire 5 wave sequence from its start, “MUST” be thrown out. Of course, this is too much like work, so the majority of wave analysts just makes a few cosmetic changes, and “bingo”, they end up with a new and improved, wave pattern. Cosmetic wave counting doesn’t work, and if we just keep making pretty changes, we will miss every major bull market that will ever come in our future.
Just by not being prepared before any high degree bull market starts, makes the Elliott Wave Principle very inefficient and pretty useless. I was brainwashed with this GSC degree mania myself, and once I realized that the DJIA would not implode in 2011, I knew a major flaw was still present in all our wave counts. It’s pretty sad when expert wave analysts miss a bull market and leave 300% gains on the table.
Any person with a very healthy investing account can not afford to miss any bull market in their lives. It takes time to make the mental switch from a long bearish phase and then back to an impending long bullish phase. It takes time to accumulate strong ETF positions so we need lots of early warnings. Even Warren Buffet screamed how bullish he was back in 2008, and my favorite contrarian was turning very bullish as well. It wasn’t until March 2009 that any wave counts were ending, so wave analysts were close to 6 months out, in recognizing that a major bottom has arrived.
In late 2008 conventional conditions were already showing us that the 2008 financial crisis was coming to an end. Insiders buying their own shares back, is a clear sign that the bull market was coming to an end. Insiders don’t buy if the 2009 bottom was just a wave 1 in Primary degree. They already knew that the markets were oversold on a massive scale, so it was a no-brainer for them to buy stocks. Even the VIX started peaking out in late 2008, which all helped to seal the coffin containing all the stock bears.
My top in 2000 was wave 3 in Intermediate degree with its start in 1982. Once the markets crashed in 2002, it was followed by a 5 year bull market that most wave analysts also missed. From this 1982 bottom it was exactly 20 years to the 2002 bottom, which is part of the 20 year cycle so prevalent in the markets.
Each peak progressively gets higher in degrees, but Supercycle wave 3 is still far away in time and price. SC degree wave 3, never mind GSC degree wave 3, may not end until the 2029 time period. Not until “All” 5 waves in Cycle degree are found and confirmed, can we progress into any SC degree world.
The 2009-2017 bull market was a very choppy bull market, further confusing us into believing it was just another bearish rally. It wasn’t until the DJIA was past the 2007 peak did wave experts look for alternates.
Hindsight has to be turned into foresight, and I have been very specific with the wave counts that we need to confirm a Cycle degree bear market. This is so we can catch any major errors as soon as possible. When I’m wrong, I’ll be wrong in spectacular fashion. Short term, wave counts are always foggy to say the least, but we want to get the biggest degree as close as we can, well before any real bottom is in.
When the markets are pointing up, and the majority are all guessing how far that this bull market still has to go, I have already painted the picture for when the markets point down again. Bull market tops are the breeding grounds for bear markets, and the reason this is so, is because there’s “nobody” left to get in.
The bullish preachers are preaching to the crowd that has been converted for months already. All we need is for the, “Greatest Fool” to crawl out of his cave and he will be left holding the bag of falling asset prices.
Buy Low, Sell High is a very important PDF to understand, which combined with the beautiful color PDF chart below, makes a powerful case for contrarian thinking. www.longwavegroup.com/market/charts/_pdf/Anatomy_of_A_BullandBear_Market_with_Money_Flow_0930.pdf
Like Rick Rule says, ” you’re either a contrarian, or you become a victim”.
If you have progressed, or lucky to have a strong net worth and you would like to enhance the contrarian point of view, then I strongly suggest that you subscribe to Steven Jon Kaplans True Contrarian Newsletter.