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Tuesday, January 8, 2013

Discrepancies with Dow theory that lead me to try out some inconsistencies in this theory.

We have always been interested in analyzing some of the main ideas of the Dow Theory which then have become axioms. Our interest stems from one of the basic ideas behind this theory such as proposing that there is a “smart money” and a “dumb money” or, the money of anyone who is not Smart , namely the general public. This single idea has intrigued me because it goes against one of the foundations of the Elliott waves theory ,which is that there are different degrees waves and the structures Elliott described also meet the common definition of a fractal (self-similar patterns appearing at every degree of trend) so, the 3 Elliott rules and his waves definition, both impulsive and corrective, to be applied in any degree, according to their fractal characteristic. If we accept the idea that there is a “smart money” buying the public, without they realize that there is this secretive process, prior to a rally or “smart money” selling to the public or   distributing quietly, before a downfall of Price, means that “smart money” has to be alert to any wave degree acumulation or distribution stage, say of a primary wave as well as a micro wave, because each wave degree has to respect the same rules as soon as has to respect its fractal definition.

Another major discrepancie of the above Dow theory axiom,  with the Elliott theory is that the Fibonacci Summation Series is the basis of The Wave Principle. Numbers from the Fibonacci sequence surface repeatedly in Elliott wave structures, including motive waves (1, 3, 5), a single full cycle (8 waves), and the completed motive (89 waves) and corrective (55 waves) patterns so The Dow theory “Smart money” has to continually tending to fulfill this mathematical sequence.
These profound discrepancies between the Dow and Elliott theories generated in me the need to devote myself to study in depth the Elliott theory , of whom I am her follower and admirer.
As we have announced in this blog, as well as in other important forums, we have proved the existence of 4 new rules. The first of which was filed as "accuracy".
The intention of this post is to go documenting and proposing for discussion, some basis of my studies and observations I have tested and will allow me to support the existence of my new 4 rules, to be used in the count of Elliott waves.

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