Forum Archive Index - January 2003

["andrew cottingham" <arco@adinfinitum.co.nz>]

Brenda

 

I have not studied EW in depth, but from what knowledge I have gained I do not find it to be overly useful in determining share price movements. It does works loosely at certain times and on some shares, and can perhaps be used as an additional tool in ones arsenal. However, I would not rely on it totally. The 3rd and 5th leg are particularly useful (if you can identify them), and the a,b,c retracement is worthy of note. However IMO, much of EW is retrospective.

As a TA, EW it is something I can do without............... Now, support and resistance lines , that is something entirely different, and extremely useful. 

 

 

 

----- Original Message -----

From: Brenda Fox

To: sharechat@sharechat.co.nz

Sent: Sunday, January 12, 2003 12:01 PM

Subject: [sharechat] Elliott Wave Theory

I have spent the past 18 months gathering information about various sharemarket technical analysis methods. I have obtained an enormous amount of material from books, websites, and many discussions on various forum boards around the world.

The method that intrigued me the most was Elliott Wave Theory because of its popularity and so I spent the past several months specialising in looking at the merits of this method. Apart from many headaches, hours of analysis, and slow website times, I came to a clear cut conclusion.

I can't list the research work I undertook, there's just an enormous amount, but here's a brief summary of my findings and personal conclusions.

1) There are many EWT analysts, but given the same data, there's usually a 50:50 split in their interpretations as to what will happen. Half say trend going up, and half saying going down. This happens due to the complexity of wave pattern confirmation and interpretation.

2) Nearly all EWT analysts adjust their interpretation after the event has occurred, and either confirm that they were correct, or (if they were wrong) state that they made an error in analysing the initial wave pattern, and what happened should have occurred. Basically hindsight analysis.

3) From a given set of live sharemarket data spanning over the past 15 years looking at EWT analyst predictions, they were in fact wrong with their initial forecasts of what was going to happen in over 80% of the cases!, and after the events unfolded, with their updated chart analysis, they were (obviously) correct in over 80% of the cases.

My own scientifically researched conclusion about Elliott Wave Theory is that it is overwhelmingly a load of technical propaganda rubbish, with many followers making it a self-fulfilling prophecy at times, but the people really making money out of it, are those who sell books and subscriber services. You only hear when they call the shots right, but rarely do they admit to being wrong, which is in fact, most of the time. Those who actually make money from EWT are lucky (like a pokie machine) but there are far more losers than winners.

Has anyone else done work on EWT, agree or disagree with my findings, or have any other comment?

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