Elliott Wave Principle: Key to Stock Market Profits (Alfred John Frost and Robert Prechter, 1977)

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  • Motive wave (1,2,3,4,5) + corrective wave (a,b,c) = cycle
    • 1,5,21,89 + 1,3,13,55 = 2,8,34,144
  • Progression
    1. Bottom: question of existence, survival, depression, war, recession, "panic", limited wars, "bad news".
    2. Rebound: from undervalued levels, recognition of survival.
    3. Test of lows: same bad news.
    4. Powerful wave: best fundamentals.
    5. Surprising disappointment: best part of growth ended.
    6. Final advance: market performance improved, psychology creates overvaluation.
    7. Top: prosperity and peace appear, "good news".
    8. Technical breakdown: viewed as buying opportunity.
    9. Narrow, emotional advance: technically weak, selective, euphoria and denial.
    10. Worst of bear market: fundamentals.

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