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« Triangulating on the Wave Count | Main | The Great Wave Debate - Neely vs. Prechter »

Friday, May 27, 2005


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Zoran wishes to clarify certain points - errors I made in the post above about his work - and sent me this comment. The main point is that although some of Neely's concepts may seem similar, Zoran has largely developed his theory from orthodox Elliott modified by Chaos Theory, in particular the work of Nobel Chemist Ilya Prigogine. Enjoy:

1 - BIFURCATION comes not from Neely but from Ilya Prigogine and Chaos theory. That Neely is using the term is new to me. As far as I know nobody used that term in the past. I had a long debate on the word for my medical friends insisted it was the wrong use of the word. It was due to Ilya Prigogine work that I finally used that term to define the precise point where the market reaches balance and can run ether way.

2 - The fast move after BIFURCATION is also Prigogine. However, Neely does comment after a 5th wave completes the subsequent return move should take the fifth wave out in less time it took to form. In this way Prigogine and Neely would look similar - something that would be so - if both were observing natural systems and they indeed worked that way. It is possible to arrive at the same conclusion from entirely separate fields without copying one another.

3 - The 1987 end being an wave three end and 94 being a RUNNING WAVE 4 and from 1994 being a FIFTH EXTENDED wave from 1982 is an EWP count long time before it was accepted by Neely as being the most likely labelling. In his book he also starts the count in 1976 not 1982. Here he does not seem to keep to his own rules.

4 - His count of the DOW to 100,000 is attention seeking and useless. The task is figuring what the DOW is going to do this year, next year - the next ten years - if you have gone backwards even three years you may be completely out of the market, so you can forget DOW 100,000 as a marketing ploy. Gets interviews and give a good feeling to the audiences.

5 - One of the points in EWP is that the future seeks to order itself and will do so precisely and in many ways as possible. But in doing so it will need to go through BIFURCATION or BALANCE POINTS which may swing the market either way. In other words the future is unpredictable but because of the natural self-seeking order in all systems all will always look predictable and orderly looking hindsight. If the markets are as orderly as they seem why do we get it wrong most of the time! In other words, there are endless possible futures, all orderly. That is in fact what CHAOS THEORY is all about.

6 - I have quoted Neely in the past as well as Prechter and Elliott. They have all various insights and observations. Wisdom is available everywhere. I do not mind standing on someone's shoulders and peering a little further over the horizon. In this, I have a great deal of respect for Ilya Prigogine and a great deal of EWP conceptually is based on his work. A leading Elliottician suggested that I was wrong for my labelling did not follow rules. I presume he meant his rules. He should have realized I also have capacity to invent my own rules. However, I do not have the arrogance to claim that "my rules" are the only correct ones.

7 - EWP is still completing the fifth and final wave from 1994. It still has not started 50W4. In this way EWP is again different from the rest of the crowd. This count has been so from November 2003. And yes! it is a possible orderly future amongst many.

Bill C

Very interesting. I think we will know if Neely is on the right track by the shape of the correction over the next few years. I am more inclined to believe Prechter's call that we are ending/ended a Grand Supercycle wave because of the length of the fall in the S&P 500. Other indicators like sentiment and the potential of a housing bubble lead me to believe we are likely to fall further than a wave four would allow. But it is difficult to say this when you are in the middle of it. I guess my problem is that predicting large waves is not very relevant to investment decisions. Either way, we are in a correction for a while.

I had forgotten about Neely and his prediction before I stumbled across your blog. I will be back!

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