Blue Flower

I use Elliott waves in my analysis in general.

But on a fairly near-term basis, there is a BIG problem with Elliott waves for the stock market.

Elliott waves are a description of natural market flow. It is a markets analysis technique.

But ever since the stock market crash of October 1987, the stock market as a whole has been ever-increasingly manipulated by the Fed in an effort to keep the economy going.

Elliott wave analysis has no way of accounting for this.

So at key times, at key points in the process, Elliott wave analysis, especially of the Dow, which is the (only) index that most people care about, will be wrong. The index will end up at a higher level than one would expect if there were no intervention.

The market is holding up far longer, overall, than some people expected based on Elliott waves.

It is doing so based on the law against recessions combined with the Kondratieff wave.

The Kondratieff wave is an economic analysis technique. It easily takes what is going on into account.

But, as noted, Elliott wave analysis has no provision for dealing with this sort of situation.

In a case like this, at most of the key turning points, until the very end, Elliott wave analysis will simply be wrong.

But on a shorter-term basis, in between interventions, Elliott wave analysis can be and often, even usually, is right.

And the intervention doesn't change the (very) big picture one bit - in fact, it actually enhances it.