| Elliott used the word
"failure" to describe a situation in which the fifth
wave does not move beyond the end of the third. We prefer the
less connotative term, "truncation," or
"truncated fifth." A truncation can usually be
verified by noting that the presumed fifth wave contains the
necessary five subwaves, as illustrated in Figures 1-11 and
1-12. Truncation often occurs following an extensively strong
third wave.
Figure 1-11
Figure 1-12
The U.S. stock market provides
two examples of major degree truncated fifths since 1932. The
first occurred in October 1962 at the time of the Cuban crisis
(see Figure 1-13). It followed the crash that occurred as wave
3. The second occurred at year-end in 1976 (see Figure 1-14). It
followed the soaring and broad wave (3) that took place from
October 1975 to March 1976.
Figure 1-13
Figure 1-14 |