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Wednesday, January 5, 2011

Historical Count: 2002-2007

The purpose of this analysis is to examine the internal wave structure of the waves within a large corrective wave. I have done a wave count on a daily chart before for the 2002-2007 wave. But I wanted to dig deeper and take a look at the 60 minute charts from this timeframe to see how the impulse waves within the larger correction formed. (This is an essentially an impulse wave study, looking at their characteristics at several degrees of trend, within a large Cycle Degree corrective wave)

I did a detailed historical study of the 1975 bear market low (see Another Impulse Wave Study: A Look at the 1974-1975 Low and Rally). That was a useful exercise, but that wave (1974-2000) was a Cycle Degree impulse wave, whereas 2002-2007 was a Cycle Degree corrective wave.

This post will ultimately serve as a reference for future posts, and I wanted this analysis and count to stand on its own.

First, here is a look at the daily chart. I have provided this chart, or a version of it, in some form before. But I want to dig deeper into the Intermediate and Minor subwaves to get a feel for how the impulsive parts of this wave developed.

Intermediate 1 and 2 of Primary A

This wave starts out as a sharp reaction, and not a clean and distinct impulse wave, in a similar manner to the wave at the bottom of the 1974 bear correction: http://2.bp.blogspot.com.../ScreenShot124.png. The move morphs into a leading diagonal and the subsequent Wave 2 retrace is deep, much like in 1974.

Minor 3 of Intermediate 3 of Primary A

A pretty standard impulse wave. The difference being that the move does not start to accelerate until the end of Minuette 3. But we do get clear acceleration on the 3rd wave at the Minute and Minor degrees, which is what we expect.

Minor 5 of Intermediate 3 of Primary A

This ends up being the strongest wave in Intermediate 3, with a very extended Minute degree 3. Minute 5 ends up being truncated after the strong move with the large extension.

Intermediate 5 of Primary A

This is the most distorted Intermediate degree impulse wave in all of Cycle B. It does count like an impulse, and while there is not very good proportionality in the waves, they do display alternation, Minor 2 ends up being a deep retrace wave, Minor 3 is the strongest wave in the sequence with clear acceleration, and the Minor degree subwaves are impulsive. The Minute degree impulse waves here are characterized by very strong wave 1's, which is unusual.

Intermediate 1 of Primary C

As was the case with Int 1 of Primary A, this wave is also a leading diagonal. There was a substantial wave 2 correction by Int 2.

Intermediate 3 of Primary C

Pretty straightforward impulse wave. While Minor 3 is fairly "ripply", the internal wave structure is impulsive (each set of 1s of one lower degree moves past the 1 of one higher degree) and the move does accelerate in the middle of the wave. Minor 5 is a very clean impulse. Because of the very large extension of Int 3, Int 5 (not shown on this chart, refer to the daily chart at the top of the post) while not truncated is a short wave in comparison to Int 3. We expect this and saw similar behavior on Minor 5 of Int 3 of Primary A.


-- Cycle B is a large Cycle Degree Zigzag and Primary A and Primary C are clean impulse waves. The Intermediate / Minor / Minute degree impulsive subwaves (1, 3 and 5) upon examination are also clean impulse waves.

-- There were two cases (Int 1 of P-A and Int 1 of P-C) where the wave structure was not a clean impulse. But these waves did morph into Leading Diagonals and the subsequent Wave 2 retraces were ~62%-78% as expected

-- There was only one wave with a highly distorted impulsive waveform, and that was Int 5 of Primary A. Despite being distorted, Minor 2 was still a deep retrace wave and we see acceleration in Minor 3. We do not observe very small retrace 2's until the Minute degree. This behavior is clearly the exception and not the rule

-- In all, the impulse waves even in the middle of a large Cycle Degree corrective wave still exhibit the characteristics of an impulse (see Not All Five-Wave Moves Are Impulses: A Short Treatise on Elliott Wave) and are readily identifiable as such.
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