Tuesday, September 22, 2015

Large Fourth Wave?

Large fourth waves are not only possible, they are documented, and they can lead to 5 = 3.

So with yesterdays invalidation of any upward diagonals, the downward count changes to the count below, with minor waves 1, 2, 3 and 4 complete, and minor wave 5 in progress. This is the Plan B count that was shown before and now becomes the 'main' count.  But a key issue involved in this chart is whether the fourth wave should be as large as it is, and I committed to review various materials and find out if large fourth waves make any sense.

Four of Five Minor Waves Lower in the SP500 Index

Reviewing Mastering Elliot Wave by Glenn Neely, Chapter 5-14, 'Realistic Representations' does, in fact, show impulsions with large fourth waves relative to their second waves when the third wave is extended.

So, then the Elliott Wave Principle by Frost & Prechter was searched, and, in fact, Figure 80 on page 100 of the 2nd Ed, (which is the same figure as  Figure 2-16 on Page 85 of the current 10th Ed), does in fact show a wave where the fourth wave measures much larger than the second wave. Using modern charting software, that wave is reproduced, below.

The Wave 4 in the EWP which is very much larger than Wave 2

You can see that the claimed fourth wave retraces 50 - 62% of the third wave. But in the Elliott Wave Principle, the next wave is cut off after only a very small portion of it, just like you see above, so it is very difficult to tell if a proper fifth wave was even made, or what occurred as a result. So, in order to check this out, the additional bars were added to the chart below.

As you can see, not only was a fifth wave new high made, but the extent of that fifth wave is such that wave 5 = 3. Personally, I take this to be a real warning sign for those expecting a quick rebound after a brief new low below wave 3, the August 24th low, and another indicator that a primary fourth wave might be in real danger.

Anyway, my commitment has been met, and I hope this information helps you in the days ahead.


  1. Great work, thanks a lot for your insights.

  2. Thank you very much for your master articles.

  3. Thanks for the additional research!! Your work is always top notch!!