What Makes Us Different

The basis for analysis and forecasting at Elliott Wave International is fundamentally different from everyone else’s. 

Most investors and economists think that news and events buffet financial markets as if they were a mechanistic system. A few coincidentally timed events and market moves have made people think causality is involved. But they have not studied the matter. Careful academic studies have shown that there is no reliable correlation between dramatic stock market movements and news.  

Our thesis is that crowd psychology is immutable. When a particular market catches the herd’s fancy, it bids up prices in a seemingly chaotic but actually structured series of steps. When the herd reaches maximum commitment, the trend reverses, and another series of steps takes the market back down. The model that describes this process is the Elliott wave model. 

The same causality governs the social experience. Naturally occurring waves of social mood are the engine of social action. As the herd moves from optimism to pessimism and back again, it behaves in a predictable manner, socially, culturally, politically and financially. 

To us, what matters to market forecasting are four things: social mood, herding behavior, chart patterns and market psychology. Everything else is noise. 

To understand our entire philosophy of financial markets and macroeconomic causality, read The Socionomic Theory of Finance, which you can find under the Books tab in the drop-down menu under Education at the top of the home page at elliottwave.com.