Читать книгу Supertiming: The Unique Elliott Wave System - Robert C. Beckman - Страница 16

While Elliott’s work held certain common philosophies with those of the cyclical economists there was also a strict point of departure. Whereas Kitchin, Juglar and Kondratieff attempted to apply a fixed time frame to the behaviour of economic cycles, it was Elliott’s belief that the time frame was only relative. Elliott was far more concerned with the behaviour of the component parts of the cycle, since the evidence he collected did not justify the repetition of share price movements over any fixed period, either short term, intermediate term or long term. We have no idea what methods Elliott used to collect and quantify his data. What we do know is that it took many years for the academicians with their elaborate computer programs to arrive at the same conclusion, to wit: share prices demonstrate randomness over all of the time periods which were tested. Obviously, the work of Elliott would corroborate the findings of Eugene Fama, Bachelier and Paul Cootner. While many “chartists” insist their work has never been suitably tested, the evidence provided by the aforementioned would appear to be overwhelmingly in favour of price randomness over fixed time periods. To my knowledge, only the work of Charles Dow and R. N. Elliott has been able to withstand the challenge offered by the academicians.

In a sense, the Wave Principle, developed by R. N. Elliott, is not truly a cycle theory. True cycles are observed repetitions of events at stated intervals. Aside from the economic cycles previously referred to, some examples of similar cyclical phenomena which have been discovered in the natural sciences are the 18-year sunspot cycle, the 9.2-year cycle of grasshopper abundance and the 17-year earthquake cycle. (There is an interesting 9-year cycle of electric potential gradients of earth-air current in London which could conceivably effect the amino-acid blood balances of individuals living in the city. A likely result would be a fixed periodicity rhythm of optimism and pessimism. I leave that subject for further investigation!)

Elliott had no intention of making any further contribution to the many cycles of fixed periodicity which were being discovered in his day. He believed that just because the stock market behaved in a certain manner, one, two, five, ten or twenty years ago there was no reason why it should behave in the same manner during a succeeding time frame of the same magnitude. He steadfastly refuted the “decentennial pattern” of Edgar Lawrence Smith who claimed to have discovered a 10-year pattern in share prices in 1938.

“It will work until it stops working,” was Elliott’s comment.

Not unlike the basis of Charles Dow’s investigation, any classification of Elliott’s work into the cyclical variety must be so quantified as having psychological derivations. The psychological theorists of market action are those analysts who place more stress on, or attribute more independent influence to, action and reaction, rather than cause and effect. Whatever the cause of a change in expectation in share prices, it is the consequence of that change, including the concomitant element of uncertainty, that the “psychological” theorist believes will trigger the next phase of the cycle.

Periodic repetition is irrelevant to the study of share price movements whose motivation is largely emotional. This was recognised both by Charles Dow and R. N. Elliott. The tenets of Elliott state that the waves will unfold somewhat regardless of the time element, and that each subsequent wave will reflect investors’ response to the extent and duration of the previous wave. Here is the only important time frame reference. That is, each wave must be related to the previous wave in terms of time, but need not follow a path of fixed periodic repetition. While this time frame reference may seem somewhat vague, it will prove to be the most important element in wave classification and offer the most pragmatic approach to the subject of cyclicality ever devised.

As the Elliott cycle unfolds one will find a series of “impulse moves” which ultimately rise to a level of excess due to over-speculation. These “impulse moves” will then give way to corrective moves so that the excesses can be eliminated and the cycle proceed. The time frame relationship is that a “corrective move” must lie within a similar time frame to that of the “impulse move”. In other words, if we are dealing with an “impulse move” of two weeks in duration the “corrective move” should be of a similar duration, say seven or eight days. If we are dealing with an “impulse move” of two or three years in duration, such as suggested time frame cyclicality of bull markets in the U.S., the “corrective move” would take place over a period of 18 months or so. As we develop the wave theory, we will see the manner in which the time cycle is developed in accordance with the periodicity of the various moves in the cycle. What I have said thus far is primarily to demonstrate the difference between Elliott’s concept and that of other cyclical concepts dealing with fixed cycle periodicity.