The US Super Bubble Theory
Credit for this perspective goes to u/RS3175. They shared their log Elliot waves with me and I found it so interesting I had to chart it up for myself. They've done better labelling of the wave than I have. I'll post their pic at the bottom of the page.
Firstly, what are we looking at? A logarithmic chart covering all of the SPX trading history with the entire thing fitting inside the context of the Elliott Wave Theory.
Unless you really like Elliot, I'm sure you're beyond sceptical but let me tell you a few things of note about Elliot. Elliot lost his job in the depression and started to study markets trying to work out why. This was how he devised his theory. The rally up to the high and the depression crash is a literal textbook example of the Elliot Wave.
Even if you don't think Elliot Waves work - Elliot based his wave theory on this move. This IS the original Elliot Wave.
What Elliot noticed was that this shape occurred over and over again on small timeframes and built up to a huge version on a bigger timeframe. Like Russian Dolls, but in reverse. Elliot published his theory in the 40s and died soon after. Elliot would be dead before the the depression high was broken.
In his 1940s book Elliot referred to the depression as a typically ABC correction. Implicate to this statement is a forecast of a new bull market and that bull market developing in five main waves before then entering into a bigger correction. And that was a very good forecast of what would happen over the next 25 years.
So Elliot deserves some credit. There would not have been many people who made forecasts of new highs and trending through them in 1940.
Elliot deserves a lot of credit, to be honest. Because here was the next moves.
Paul Tudor Jones famously shorted this 1987 crash and there are documentaries from 1985-1986 in which Jones and his team are using a mixture of Elliot Wave theory and matching up moves of last decade relative to the 1920s. They were running a computer program tracking correlation, finding it incredible high and betting on it.
Jones was long the rally and short the drop - And it's documented a year before the crash trade that he was using Elliot for his forecast of it. If you look up Jones forecasts at the time he was actually completely wrong. He thought it was heading into a depression. There'd be the first break and then there'd be the 1930s style downtrend.
They thought this because the correlation of price moves in their time relative to 1987 were so high (I can't remember specifically but I think it was over 80%).
I think this lends a lot of credibility to Elliot's work. Not only would his 1940's book forecast these types of 5 leg bubble moves and then sharp corrections but it was also famously used in real time to trade the rally and crash of the 1980s. If you do not think Elliot Wave works, is has! On a big scale, it has worked so far. Elliot's implied forecasts happened.
When DJI was $100 Elliot was hardly going to call DJI to $33,000 but if he'd taken the perspective that the Depression was wave 2 - what he would have forecast would be an extremely accurate forecast of what went on to happen in markets for decade after decade to come.
One would have to think if Elliot was with us today, he might well be a bear.
Here's RS3175's chart:
The implied swings of this would match up with my Elliot bear waves forecast of 2021 (Even though we've took very different routes there).
Firstly, what are we looking at? A logarithmic chart covering all of the SPX trading history with the entire thing fitting inside the context of the Elliott Wave Theory.
Unless you really like Elliot, I'm sure you're beyond sceptical but let me tell you a few things of note about Elliot. Elliot lost his job in the depression and started to study markets trying to work out why. This was how he devised his theory. The rally up to the high and the depression crash is a literal textbook example of the Elliot Wave.
Even if you don't think Elliot Waves work - Elliot based his wave theory on this move. This IS the original Elliot Wave.
What Elliot noticed was that this shape occurred over and over again on small timeframes and built up to a huge version on a bigger timeframe. Like Russian Dolls, but in reverse. Elliot published his theory in the 40s and died soon after. Elliot would be dead before the the depression high was broken.
In his 1940s book Elliot referred to the depression as a typically ABC correction. Implicate to this statement is a forecast of a new bull market and that bull market developing in five main waves before then entering into a bigger correction. And that was a very good forecast of what would happen over the next 25 years.
So Elliot deserves some credit. There would not have been many people who made forecasts of new highs and trending through them in 1940.
Elliot deserves a lot of credit, to be honest. Because here was the next moves.
Paul Tudor Jones famously shorted this 1987 crash and there are documentaries from 1985-1986 in which Jones and his team are using a mixture of Elliot Wave theory and matching up moves of last decade relative to the 1920s. They were running a computer program tracking correlation, finding it incredible high and betting on it.
Jones was long the rally and short the drop - And it's documented a year before the crash trade that he was using Elliot for his forecast of it. If you look up Jones forecasts at the time he was actually completely wrong. He thought it was heading into a depression. There'd be the first break and then there'd be the 1930s style downtrend.
They thought this because the correlation of price moves in their time relative to 1987 were so high (I can't remember specifically but I think it was over 80%).
I think this lends a lot of credibility to Elliot's work. Not only would his 1940's book forecast these types of 5 leg bubble moves and then sharp corrections but it was also famously used in real time to trade the rally and crash of the 1980s. If you do not think Elliot Wave works, is has! On a big scale, it has worked so far. Elliot's implied forecasts happened.
When DJI was $100 Elliot was hardly going to call DJI to $33,000 but if he'd taken the perspective that the Depression was wave 2 - what he would have forecast would be an extremely accurate forecast of what went on to happen in markets for decade after decade to come.
One would have to think if Elliot was with us today, he might well be a bear.
Here's RS3175's chart:
The implied swings of this would match up with my Elliot bear waves forecast of 2021 (Even though we've took very different routes there).
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