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In expanded flats,
wave B of the 3-3-5 pattern terminates beyond the starting level
of wave A, and wave C ends more substantially beyond the ending
level of wave A, as shown for bull markets in Figures 1-33 and
1-34 and bear markets in Figures 1-35 and 1-36. The formation in
the DJIA from August to November 1973 was an expanded flat
correction of this type in a bear market, or an "inverted
expanded flat" (see Figure 1-37).
Figure 1-33
Figure 1-34
Figure 1-35
Figure 1-36
Figure 1-37
In a rare variation on the 3-3-5
pattern, which we call a running flat, wave B
terminates well beyond the beginning of wave A as in an expanded
flat, but wave C fails to travel its full distance, falling
short of the level at which wave A ended, as in Figures 1-38
through 1-41. Apparently in this case, the forces in the
direction of the larger trend are so powerful that the pattern
becomes skewed in that direction. It is always important, but
particularly when concluding that a running flat has taken
place, that the internal subdivisions adhere to Elliott's rules.
If the supposed B wave, for instance, breaks down into five
waves rather than three, it is more likely the first wave up of
the impulse of next higher degree. The power of adjacent impulse
waves is important in recognizing running corrections, which
tend to occur only in strong and fast markets. We must issue a
warning, however. There are hardly any examples of this type of
correction in the price record. Never label a correction
prematurely this way, or you'll find yourself wrong nine times
out of ten. Running triangles, in contrast, are much more
common, as we'll see in Lesson 8.
Figure 1-38
Figure 1-39
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