Apr

25

Aka how to get in the news:

"Elliott Wave investor Robert Prechter says a Depression-like shock is coming"

Stef Estebiza says: 

"As I've explained here, Elliott Wave theory says public sentiment and mass psychology move in five waves within a primary trend, and three waves in a counter-trend."

Maybe the book is interesting, but Robert Prechter was very wrong in the past with his elliot theory. After the recent change that has seen rivers of money only for some, rates to zero and the central banks traders on the markets, I doubt that we can talk about investors, psychology and the public. The only mover of the market is the orchestrated national deficit > QE whatever it takes… 

Ralph Vince writes: 

Prechter himself is but a symptom of what is going on– this all-over asive,"low frequency," fear, as I have been talking about, and that is it biggest driver of prices here. This is not the "breath-stuck-in-your throat, 2008 kind of fear." Rather, a constant low frequency, ubiquitous background fear pervading everything.

Fear not only sells but it is both contagious, and it is relative. It has become so pandemic that we don't recognize how fear-motivated our actions are (and I contend it certainly IS manifest in the markets). Look at the rise on gun sales, the blue glove swarms, bike helmets, bottled water, political reactions (much of the "green movement" itself is fear-motivated), fear of losing people's jobs, credibility, etc.

Finally, fear, like volatility itself, though it can come on very quickly, dissipates slowly. This is WHY bull markets persist, and why the majority are never aboard early on succumbing to the contagion of fear.

This is the bass line guys, the bass line to what's goin' on in the world and hence capital markets as well, and if you listen to just the base you'll move just fine.

Russ Sears writes: 

It is with trepidation that I will disagree with both Larry and Ralph, but I must in principal. The "opposite" of optimism from belief in the individuals working together is not technical analysis, nor is it fear…those are but symptoms of the opposite of the force of human progress and wealth creation. No, the opposite is betrayal of the individual. It is when the markets thought were working for the good of their "team", turn out to be for example taking huge loans and buying lumber land in Canada, or helping individuals fill out mortgage loans pretending that these are same standards as the past, or perhaps at a higher level some branch of government that is to be "by the people for the people" is scamming the people or outright demanding more from the people. Yes there are the dot com bubbles and the East India Tea bubbles but these are not caused by over optimism of the human spirit, rather it is from a clear understanding the enormous progress in wealth creation is about to be made… which do occur… but just not how when or where the market was expecting.  


Comments

Name

Email

Website

Speak your mind

2 Comments so far

  1. anand on April 25, 2017 1:12 pm

    I was sucked into Elliot Wave Theory several years back. It seemed to have 3 things going for it which pulled me in as I suspect it has done many others.

    1) EW has a strange mystical air to it, its the most convoluted technical analysis methodology out there, which in a odd way drew me to it. How could something SO complicated be bogus? LoL Funnily enough this is a great defence for its proponents as critics like the Chairman probably don’t have the time or inclination to spend a lot of time proving its nonsense.

    2) Robert Prechter sounds like he’s a highly intelligent guy. There are references of him taking part in a trading competition and generating huge returns. I haven’t verified this in any way.

    3) Paul Tudor Jones mentioned just a few posts previous, used to praise Robert Prechter. In the CBS documentary ‘Trader’ featuring PTJ he is on the phone talking Elliot Wave Counts with some broker. Something along the lines of is it a b wave or part of a wave 2 which if you follow Elliot Wave is all you seem to do much of the time. This kind of subjective interpretation can switch the way you interpret wave counts so you could take a bullish or bearish view looking at the same chart! The fact that PTJ made his name shorting the 87 crash and Prechter calling this crash (amongst many others that never happened) made me assume that Elliot Wave was probably the analysis used to call this top.

    Anyway, suffice to say using this method ended in absolute and utter cataclysmic disaster LoL Misery and despair followed but the silver lining was that I discovered VN’s work as a result. Strangely I’m not annoyed by Prechter who I think is deluded in the same way a cult leader is, PTJ though is infuriating as he’s led many through his endorsement of EW off the edge of a cliff whilst he himself enjoys his billions with his Australian trophy wife whilst all the while grinning through his face lift. Grrrrr.

  2. R S on April 26, 2017 5:54 pm

    These are all good points. Bob P is likely a v nice fellow, but has been wrong on his calls for financial Armageddon for a v long time. To be fair there are times when I’d like to believe in such an Armageddon, e.g. when I look at the heinous: debt-levels, mis-allocations of capital, financial misconduct etc; however with global central banks propping up asset prices (to infinity & beyond) that day is likely very far away. JBTFD.

Archives

Resources & Links

Search