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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: David W. Taylor who wrote (83970)	9/28/2003 8:21:04 AM
From: Psycho-Social	Read Replies (1) \| Respond to of 99985

Flaws in Elliott Wave System: The idea of the Market moving in waves seems quite reasonable to me. What I find objectionable about Prechter and the guy who invented the system is the notion of determinism, that is the idea that there are 50 yr cycles etc that are determined long in advance and it is only up to the Elliott Wave student (disciple?) to correctly interpret the signs that are somewhere present. My own view is that the observed wave formations are the result of a number of different, but somewhat variable factors that tend to occur at regular intervals, or operate over more or less constant time frames. For example, demographic peaks and valleys tend to occur about 40 yrs apart and thats why there were significant lows in 1896, 1932 and 1934; while important highs occurred in 1929 and 1968 or so (allowing for distortion caused by the escalating inflation rate.) The 4 yr presidential cycle is another recurring factor of an intermediate term nature, and the Fear Factor is a short term leading indicator. I would describe the interplay between news and investor emotion as a circular "chicken or the egg" phenomenon. For example, a terrorist threat is reported as fear-inducing news, but then the media executives, seeing that the public has an appetite for terrorist related news, will run news segments, magazine articles etc on the subject to maintain or augment their audience ratings, or their circulations numbers. That, in turn, induces more fear. Eventually, something else grabs the public's attention, and pushes the terrorism news out of the way. Bottom line for the weeks ahead is that this Market sell-off is the result of a downward (terrorism news is rated negatively) spike in the Fear Factor that was primarily associated with the 2nd anniversary of Sept 11th. Given the customary 3-5 wk lead time, it'll probably bottom during the first half of October. I've been raising cash by selling my bond fund positions and will soon begin to commit the $ to stock funds.