The Elliott Wave Principle

By Pauline Novak-Reich

February 28, 2017 Reprints

In our first two articles on the building blocks of technical trading we

examined the basics of W.D. Ganns Square-of-9 Principle, how it can
be used to define market peaks and ways to see it more clearly
through understanding its coordinates and the Law of Vibration. Here
we delve deeper into Elloitts Wave Principle.

The Square-of-9 and the Wave Principle are intimately related. A

basic Elliott cycle constitutes five advancing (bull market) and three
declining (bear market) waves that subdivide into lesser-degree
cycles. The reduction process of the largest eight-wave cycle breaks
down into 144 lesser scale-order wavelets (see Charting waves,
below).
The most credible method of establishing a swings termination is to
compare the day-count of two adjacent intervals by mapping them
onto the Square-of-9. A complete interval-pair forms a 180 or a 360
angle.

Market ups and downs, (below) illustrates a typical Elliott

eight-wave cycle. Irrespective of numerical order or magnitude,
peripheral waves C & 1, C & 5, 5 & A, 5 & 1, 5 & C, A & C and C & C
map onto the Square-of-9 at a 360 angle.

Likewise, irrespective of numerical order or magnitude, inner waves 1

& 2, 2 & 3, 3 & 4, 4 & 5, A & B, and B & C map onto the square at a
180 angle.

The bull-market side of the Elliott cycle constitutes five waves:

impulse waves 1, 3 and 5 and corrective waves 2 and 4. The
bear-market side of the cycle constitutes a three-wave A-B-C
correction made up of impulse waves A and C and countertrend wave
B.
The eight-wave cycle is akin to Russian Dolls. Waves 1 and 2 of the
first pair of the cycle subdivide into an eight-wave lesser-magnitude
cycle that mirrors the original. Likewise, impulse waves 3, 5, A and C
subdivide into five lesser-degree waves each, and corrective waves 2,
4 and B subdivide into three waves forming a lesser-magnitude
a-b-c correction in which waves a and c are longer than b.

An irregular Wave-B on the S&P 500 is still underway. The recent Nov.
9 rally altered the wave-count and labelling of the 2009 to 2017
advance. What appeared to be a three-wave pattern turned into a
five-wave advance showing major Wave-B as the longest swing.
Turning points, page shows two possible wave counts, each
showing that Wave-b of B was, in fact, shorter than Waves a and c
of B.

Turning points (below) also illustrates the distribution of different

scale-order waves to their designated cardinals and diagonals on the
Square showing major peaks and troughs alternating between the
east and west cardinals.

Oct. 31, 2007 Mar. 9, 2009, Wave-a of A, 496cd, EC

 The failure of Wave-a of A to map at 360 with Wave-V (496 & 1702cd =
180) signalled a temporary pause in the direction of the main trend.
Mar. 9, 2009 Apr. 29, 2011, Wave-b of A, 781cd (785 SE)
Apr. 29, 2011 Nov. 25, 2011, Wave-c of A, 211cd NE, Total = 1483cd,
SE
The 360 angle between the short and long spans signalled Major
Wave-As termination.
Nov. 25, 2011 May 21, 2015, Wave-a of Major B, 1273cd (1279 SC) =
longest span
(Alternative Count) Nov. 25, 2011 Dec. 1, 2015, Wave-a of Major B
1467cd = longest span
May 21, 2015 Feb. 11, 2016, Wave-b of B, 267cd (265 EC) = shortest
span
(Alternative Count) Dec. 1, 2015 Feb. 11, 2016, Wave-b of B, 72cd (73
NE) = shortest span
Wave-a of B = 1273 or 1467cd (depending on the count). Wave-b of B =
265cd (the shortest), and Wave-c of B currently heading for the Square
easts 411 will peak on March 28, 2017.
Feb. 11, 2016 Mar. 28, 2017, Wave-c of Major B = 411cd EC, Total =
1950cd (1959 EC) = Wave Bs termination
A 360 angle between the short (411cd) and long (1950cd) spans, both
c-waves, will mark Wave-Bs termination.
Waves V and B (1695cd, WC, Oct. 31, 2007) and (1950cd, EC, Mar. 28,
2017) must terminate at a 180 angle.
Given that a 360 angle between the overall span and the final interval
indicates wave termination, the above forecast skips the east cardinals
number 334 the next inline following 265cd recorded on Feb. 11, 2016.
A 334cd-interval, due on January 10, 2016, will make Wave-B 1873cd
long, 79cd short of a 360 mapping.

360 mapping of price

Price and time peaks/troughs distribution to their designated axes on

the square is controlled by the Law of Vibration.

As Logging Reversals, below, shows on a S&P 500 weekly chart,

closing prices correspond to the numbers running along the Squares
cardinal and diagonal lines. They seem to appear in clusters, each
possibly characterizing a different cyclic wave, yet the absence of
input from coordinate-X shows no orderly swing distribution. The
Indexs major waves gravitate towards the squares diagonals, the
intermediate ones alternate between east and west, while others, of
a similar scale-order, adhere to the square north and south.
The S&P weekly chart shown in Logging reversals could stay,
however delete the arrow pointing to August 2016, including the AUG.
16, 2016 on the top right and replace with Mar. 28, 2017 instead as
shown below.

Forecasting the highest or lowest price a swing will reach relies on

time. The Law of Vibration makes it possible to discern the axis upon
which the peak/trough value will show close to the swings maturity
date.

Having grown out of the Babylonian zodiac, the Square-of-9 is the

worlds second measuring instrument. It is also a cosmic clock of
space-time embodying every vibration in the solar system (see
Origins out of this world, below).
When pulled from the number 1 at the center, it morphs into a
pyramid revealing tiers laid out in an Archimedean spiral. Yet, as the
pyramid rises from the base up, it does so logarithmically. The
pyramids of Egypt, like all others around the world, are two-way
spirals embodying the Time Factor and Law of Vibration. It seems that
no matter how ancient civilizations with no contact with one another
built pyramids, it enshrines the X and Y coordinates into them.

Elliott and Gann have been able to understand these basic principles
and apply them to the world of markets. The best quote related to
modelling price and time comes from Stephen Hawking and Leonard
Mlodinovs The Grand Design (2010). They wrote: A model is good
if it: Is elegant, contains few arbitrary or adjustable elements, agrees
with and explains all existing observations and makes detail
predictions about future observations that can disprove or falsify the
model if they are not borne out.

The Great Pyramid of Egypt, like all others around the world, is a
two-way spiral based on the Law of Vibration and Time-Factor. It
embodies the cosmic clock of space-time the mechanism
controlling vibrations in the universe. As the pyramid rises from the
base up, it follows a logarithmic spiral, however, the shape of its tiers
follows an Archimedean spiral.

It appears that ancient civilizations, believed to have had no contact

with one another, built pyramids all over the world in order to
enshrine the X and Y coordinates onto them.

Readers interested in an Excel Spreadsheets of the Square-of-9 (3000

& 10000) are welcome to contact the author here:
https://www.facebook.com/pages/Demystifying-Ganns-Square-of-9

About the Author

Pauline Novak-Reich is the former manager research-foreign exchange at

the ANZs (Australian & New Zealand Banking Corp.) dealing room from
1980 -1993. Her duties involved analysis and forecast of currencies, interest
rates, equities and commodity markets trends, as well as overseeing
dealers intraday trading. In 2005 she authored The Bell Does Ring (John
Wiley, Australia). This article is an except from her upcoming
book, Mystifying Square, Divine Proportions -- Natures Black Box. You can
reach her
at https://www.facebook.com/pages/Demystifying-Ganns-Square-of-
9/661551103858428