Once upon a time a fellow named Ralph Nelson Elliott became so ill that he did nothing but study stock charts. He came up with astonishing results. He found a wave with a complex construction in which advances were related systematically to declines. He theorized that each wave was a wave of waves in which the basic structure was repeated in fractal form. The closer you get to the shorter time frames the tinier the waves become.
The contemporary master of the Elliott Wave Theory is Robert Prechter, who does not offer much advice for free. If you want Prechter's analysis in detail you will have to pay for it. I think of him as the modern-day Pythagoras. As a market trader, I'm paying for his opinion and glad about it.
Well let me qualify that. To know Prechter's approach is to know a vision of the next decade that is not gladdening in outline. The long-term wave we seem to be on right now is the yin to that yang we were riding during the good times. If Elliott was correct about the underlying form of market waves, and if Prechter is correct in the application, then prices are really deep disclosures of a psychic life that buoys our collective consciousness. And no, dear reader, you are not reading a Pynchon novel just now.
The Elliott Wave school strikes me as Jungian in flavor, so it will be an acquired taste for most. Something about Jungian archetypes runs counter to mainstream thinking, so we shall soon see who teaches whom the greater lesson. For my part, the older I get the more sense Jung makes. And the Elliott Wave has a serious following among Real Investors.
Related to market theory is an emerging trend in "social investing." A visit to the KLD website will give you the essential orientation to social consciousness as it has been monetized by the investment classes. Also, a brand new ETF trading under the ticker symbol JVS brings a new style of valuation to the American investor by way of principles mandated by Sharia Law. I have written a little more about these items under a project called abetterorder.com. I own some JVS.
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