Wave Principles and Stock Markets
January 24th, 2008 by daria
U.S.economy is according to some on the verge of the recession, according to others it is already in recession. The stock markets are falling down. Not only in USA, they are falling down across the globe.
Breaking News Alert from NYT
Stock Markets in Europe Plunge 7 Percent
Stocks Open Sharply Lower Despite Interest-Rate Cut
Asian Stock Markets Plunge for Second Day
The experts outdo one another in economical prophecies. Media sound the alarm about the inflation. Everyone across the world seems to be touched by the problems. I think it is very interesting to observe. It reminds me of the snowball effect. The more it rolls the bigger it gets.
It is like with Elliott waves that show the collective investor (or crowd) psychology and interactions move from optimism to pessimism and back again. These swings create patterns, as evidenced in the price movements of a market at every degree of trend.
From R.N. Elliott’s essay, “The Basis of the Wave Principle,” October 1940.
“The wave patterns are an organizing principle for myriad social behaviors, ranging from newspaper sales figures to the fortunes of national leaders. The reason Elliott waves can tell us all this is simply because they are direct reflection of human psychology – the rhythms of human emotion, as Elliott puts it.” (I know what you’ll do next summer, New Scientist, 31st August 2002).
Interesting how the herd behavior and emotions influence even the stocks market. It is incredible to see how everythink is linked and depend on one another.
One Response to “Wave Principles and Stock Markets”
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Wauw – what a great post. Lately I’ve been thinking that the recession-fears are spreading around the world like shockwaves http://www.shareabrainwave.net/2007/02/03/when-shock-waves-flood-the-media-and-the-world/
And this post really puts things into perspective – and thank you for the link to the Elliott-waves. Very relevant aspect to explore.