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Strategies & Market Trends : MDA - Market Direction Analysis

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Jan 27 4:00 PM EST

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To: Psycho-Social who wrote (83966)	9/26/2003 12:50:35 PM
From: David W. Taylor	Read Replies (2) of 99985

You are describing the theory of Elliott Waves and a guy named Robert Prechter is the current modern day champion of this theory. Basically he maintains that the mood of the population tends to move in waves, which can be measured by any financial index that is influenced by literally millions of people. The waves are always in a pattern of 5 waves up and 3 down or vice versa. We have just flipped over the top of the wave that has been echoing the all time wave 5 top of March 2000, usually known as the Bubble. You should check out elliottwave.com for all that you can stand on this topic. His single most controversial idea is that news events don't cause the major changes in market direction. The changes in direction cause news events! Because Prechter is so controversial, he is often derided as a nutcase. To my amazement I have found that he is one of the most consistently correct analysts and that his detractors are always cranky when this is pointed out. To be fair to his detractors Prechter made a bad call in 1996, when he warned of a high that actually took almost 5 more years to pan out. Literally all of his other calls on major market direction changes have been dead on. Warning: fanatics ahead. Read at your own peril! David

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