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Elliott Wave Principle concluded
that the wave IV bear market in the Dow Jones Industrial Average ended
in December 1974 at 572. The March 1978 low at 740 was labeled as the
end of Primary wave [2] within the new bull market. Neither level was
ever broken on a daily or hourly closing basis. The wave labeling
presented in 1978 still stands, except that the low of wave [2] is
better placed in March 1980 or, labeling the 1982 low as the end of
wave IV (see following discussion), in 1984.
excerpt from The
Elliott Wave Theorist
September 13, 1982
THE LONG TERM WAVE
PATTERN —NEARING A RESOLUTION
This is a thrilling juncture for a wave
analyst. For the first time since 1974, some incredibly large wave
patterns may have been completed, patterns which have important
implications for the next five to eight years. The next fifteen weeks
should clear up all the long term questions that have persisted since
the market turned sloppy in 1977.
Elliott Wave analysts sometimes are
scolded for forecasts that reference very high or very low numbers for
the averages. But the task of wave analysis often requires stepping
back and taking a look at the big picture and using the evidence of
the historical patterns to judge the onset of a major change in trend.
Cycle and Supercycle waves move in wide price bands and truly are the
most important structures to take into account. Those content to focus
on 100-point swings will do extremely well as
long as the Cycle trend of the market is neutral, but if a truly persistent
trend gets under way, they'll be left behind at some point while those
in touch with the big picture stay with it.
In 1978, A.J. Frost and I forecast a
target for the Dow of 2860 for the final target in the current
Supercycle from 1932. That target is still just as valid, but since
the Dow is still where it was four years ago, the time target is
obviously further in the future than we originally thought.
A tremendous number of long term wave
counts have crossed my desk in the past five years, each attempting to
explain the jumbled nature of the Dow's pattern from 1977. Most of
these have proposed failed fifth waves, truncated third waves,
substandard diagonal triangles, and scenarios for immediate explosion
(usually submitted near market peaks) or immediate collapse (usually
submitted near market troughs). Very few of these wave counts showed
any respect for the rules of the Wave Principle, so I discounted them.
But the real answer remained a mystery. Corrective waves are
notoriously difficult to interpret, and I, for one, have alternately
labeled as "most likely" one or the other of two
interpretations, given changes in market characteristics and pattern.
At this point, the two alternates I have been working with are still
valid, but I have been uncomfortable with each one for reasons that
have been explained. There is a third one, however, that fits the
guidelines of the Wave Principle as well as its rules, and has only
now become a clear alternative.
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