slip sliding away, page-11

Hi mongombolo

I do NOT profess to be an expert on Elliott Waves but I'll give it a go & if of interest you might have a look at the sites below [in order of complexity]. EW has a maths base - linked to Fibonacci / fractals [1.618] but also represents the ebb & flow of investor sentiment.

eg. In a new listing / bullish market investors first rush into the stock & SP increases until buying interest wanes [end of Wave 1], investors take profit & await a suitable re-entry point when it looks like OK value [end Wave 2]. Buyers are now serious & know the stock better - SP increases as perception is that company is going well with minor ups / downs due to daily market events. Point is reached where stock appears to have matured / flat - looks expensive so investors take profit [end of Wave 3]. Aggressive traders may now short the stock causing SP to drop quickly until it again looks like good value [end Wave4]. Investors still like the stock though & surf Wave 5 in search of the Heavens but often wait too long, miss the real end of it and end up with Ulysses sirens.

Elliott Waves also apply to bearish scenarios [reverse of above]. Rules apply to each wave & if broken the structure vaporises [so to speak].

The end of Elliott Waves 3, 4 & 5 are often not confirmed unless they exceed or touch a Bollinger Band. It is often said that Elliott Wave traders give money they earn by riding Wave 3 in a bull market back to Mr Market by identifying the start of Wave4 & going short [eg. as per WPL's recent run up, looked oversold & some would have shorted it from $55 onwards].

In a bull market a steep & long Wave 3 will likely mean a short Wave 5. Etc. Etc. Etc.

http://stockcharts.com/school/doku.php?id=chart_school:market_analysis:elliott_wave_theory
http://www.acrotec.com/ewt.htm
http://en.wikipedia.org/wiki/Elliott_wave_principle
http://www.investopedia.com/articles/technical/111401.asp



Regards,

Lapdog

4YIO - NFA