re Cr oe ee ising ELLIOTT WAVE MASTERING ELLIOTT WAVE Deena aA The First Scientific, Objective Moca aguanece d YT eo eo by Glenn Neely with Eric Hall Z a is 6 oy = ae 3 : Ee es Aq ae io true wher the theory) is proper oped.” fat Sok ‘er yeh Mies Pe WVAUIEyE vant See tn ‘eeMASTERING AOD WI it possible to AW ANY ict the future? ms Noted oe ide tires nme” Sore of be bc od Showed ae Tow ye eid frokcieg ch fe tare Serangoon og of he xs ron cred in lows predelondescin He ‘Send bere Tete targa recor ci (ig Beseckmale dwt bandh 0 Fay inca eicogy Wheto Showy blebs acest Respenonlnysty Thepralalsfomorst ‘icp inadchon poles elond be Sapermgmiamrepmer elie Bong ‘dinggonds deers on conmos podtareptonoearancderlopnrthh Paden nenpspocogy. Naeem pia Cag bo at ot Shotmober The pepecsaraks ores tral acen treing mown he gph ‘Shoda fas ep “elo Wve oye by RN Elon nh soy 19377 Sls, conte ond Satie be eryenon len fytlogrmereto) ion pena Sie NY thor deed prog to cry crn chek or conn nobel eee egerson ‘SSjug rd eho ott pct on onal engsherenfo cre soon Pann py edad resend re eect Vifornou,moorgelenn my eonaot co aoe rotring sane apcoen fh Tt Woe Thay wre baal coer, Mero dalek esheuve mea cl time tring ond teaching, Mr. Neely hos greatly ex fre te endl hs coc da Hone ean Nee anes SxTnclyel mpbpabhor steed et odin clipe dot on ssh cl ges woke acid wi ee re el yoo orm ro yet udesoding othe spree rr pt ton yes rl he ite pred he hrrer pf eb Keekihop you ace ta ul ero cher. Mastering Elliott Wave Version 2.0 Written, ited and Illustrated by Glenn Neely ‘Adttional Editing, Poduction and Computerized Rendering by Eric Hall by Evans Design Associates Published by Windsor Books for the Elliott Wave InstituteMastering Elliott Wave esion 20 Copigh © 198 Gen Ney ‘is iar eft fa wok ogi ublished ‘dete fou Waves a Mate? Copyright © 18 by Glen Ney Alligns reserved eligi of epics im ol vin pat any far yay tent out permis oe he ihe For information comact: ‘Winesor Books | P.O Box 280 Brightwaters, NY, 11718 Manufactured inthe United States of America ISBN 0.930233-441 For information on related product ad serves, write cal: Elliott Wave Institute 1278 Glemeyre - Suite 283 Laguna Beach, Califia (CA) 92651 Offve: (714) 497-0945. # TeleFax: (714) 497-0883 Disclaimer Nasting ca Wa" inependenty prods presto in Wave nse. very eon ase to ppl complts ed acute infamation. Howeve, ner Be are iow Pave Is, ox mone ee ‘Sse wiht pation sale ale fan ahi bs, danageiect ort cased oalepo a ‘Casey hisbook, ll dens an mati presented areal ths of tien not cess ree sof ‘Go publiir or becker, "Warning allconmesiy es pte chars sytem, ee. dcased nhs hook ferlasraie pposaly sndaenutbeconstutes ssa) recmmentasons Nometot trating riesingsfolrot wba {ty Thctorealvsy poss with avon elo vesting andrei an pas peformane ot aiagsyte or tebmigus i ano of fe vest sures. Acknowledgments ‘Thisbook hasbeen early adecade inthe making, Daring tha peri of tims. a multe of firs, ties and associates ave provided me with supp: helped me sly my ideas regarding the Wive “Theory and have indict assned mein creating te knowledge whichis peed in "Masteing Ellin Wave” Some fisted may not have realized er, throgh ime, my have frgovten thereon ‘my work. Here, I word like remember them fr tit consibutiors. Fit the curentaadpast“Elion Wave Telephone Course” clients to numer allberentiored, boutwho were insrumestal inthe culmination ofthis weatise. A few shouldbe singled out det their support beyond nommal expectations: Join Lux (ry very fist Cours client ~- you probly thought | forgot you; Coton, who gave me the encouragement andasistanceo write my fst ok (olonge available): George Limberg (gest te); John Porer hanks foal he help durin he carly newslter days, Jo Robens (oral the valable satiscs she provided); Percy Stokes (orks eterou suppor ay Walman hanks forleting mon yourshow and forbing a fiend); Robert B (aime teliever); Bob Stark (who hasbeen my fiend longer than canremembyr and has always ren ‘hee when T needed 3m; Mark Bante (one of Fe most devoted ad hepfl sudents Ihave ever worked wth; ike Waker who was notonly actin butaclose, pron ead from my hometown, Lafiete, La. and whe wil never forge thanks feral he fee corpus time, chars and supper Walter Koval (who, fr personal reasons, gives me the greatest sen of accomplishment for having taught; Donald Anderson (who curently holds te record for the hest amber of retakes of my ‘Telsphene course (s-times) and finaly and espesally Jack Suns (much more han acoure cit, hisbellet and support ave ben inaleulbte). Nes the close asiocits I would ike wo thankar: Davi Rif (ho provided ine wih some ofthe ‘most vlable knowledge Ihave ever eamed abut arkt behavior; Gerald risiman (thas bezo a plessure working with yu}: Jeanine Heery (hope ou relationship cortinuesforaengtime; im Bah (he best broker have ever known} Jeff Bower of Finacial News Network fr allowing me 1 bon 1isprogram an forbrng the ist one to exablish my Garu” stats; Richard Mogey of the "Foundation forthe Study of Cele fr maintaining te integiy ofthat orgaizaton and fr allowing me to beone oftciroccasional grt speaker; Larry Jcobs formtng me wo partpate in is annual Confereces; Irwin Mint frhisineestinexpandng the Institue’ shorzons:Phylis Kabn (of Gann Word forbing such caring tnd genous ren nda te lady; etn Gower ors romosionl plugs” ardent ter writing and simolatng conversation; Reber Debnam my best conse with Europe: Walter Murphy (Merri Lynchis resident Eliot Wave analy) Michel Jachschts for his valuable assistance and ‘fort above ad Beyer he cal of duty), Evans Design Astocaes fer rating the powerful grapes nie front coveran finally, Steve Sci of Windsor Books for hisinterestia pushing "Masting Eliot Wave" and for eting me doit my way. ‘A this point wea ike to thank a pecial grou offends who were invaluable in finalizing the nance of Chapter 3 (which Wok eight monhs), Teall hem my bea testers: Gary Long Calong-tie devote ofthe lion Wave lta hea for Caper were pirat design Jon Koons (he most enbosasic tester of Chapter 3 sho had some great des of his own), Ricard Slmolle (hanks forall hime you sent erorchecking ny rough dais), Joha Lomas (hanks for your ieas), Bill Wilsa (the most energetic Telephone Course client Thave eve taught thanks fr your inp) and to Bil Abas (that towering icon ofthe cast coast who beevoentl hel the "Big Ale in be palm of his hand).‘This nextperson hasbeen such abeiever and promeser of my spproach Eliott Wave analysis you ‘would think herana PR. fim end waschargingme forthe exposte. He his done o much tokelp me ‘overthe years andias never iskedforanyting in return (buy rendship) fat fel tony propriate ‘odevote an entire pragraphto giving him alongover de heart -ek" thank eu.” This wonerfl fl ‘ame is Tim West. Thanks, Tm, for you assistance at ry talks in New York City and Chicagoin 1989, "hanks for proof-reading so many of my manuscripts over the las ree yeas and forgiving ne your ‘opinions on prometionaliteretere and thanks feral your terrific Hess regarding Chapter 3, Tim West ‘is everthing you could expect ftom friend ani more. Even theugh we lire on opposite costs and I ‘virally never se him in perscn feel Tim poseses ll the quaities mos: people could oniyhope have. Tim, youra great frewl hope his makesup for any occasion nthe pat [andre] when have not remembered t thank You for Your help). Furthermore te fellowing personal frends who have never tpped believing nme: annie Bishop (shohias meant more tome hax se wll ever know) all the Avcoins (where saa begin Mrs Aucoin Yourean inspiration o sal, Cara «Ilineverforget you, youarethe best fiend lhaveeverhas, Kevin « the mos creative person Iinow, Kim and Doug, Keith and Mr. Aucoin; Ese Hall (without wim his bok could no have been done; Billy Leblane thank for beng fiend Claude -a terrific and long term frend, Kip-thanks forheing me get stared; Travis, Chueh, Hanna and Wright ~ the people to ‘esow in New Orleans; Myrle Blanchet, 2 reakor and an inspiration - she was things he way and ‘veryone steps ase to let hr have it Renee’ Havg, the most eninine and well adjusted Chinpractor ‘7 the west cust in to my wenderfl brothers and sister (Bobb, Brent, Karen and Ma), Finally, standing ovation o my mother, Doris Neel, who provide the most deal upinging {maginable, who his been an incredible pillar of strength (moaly financial and psychologically) ll these years, and vho has unccnsciously implanted the drive for perfection and the confidence that ‘enabled me to creat this book end wio I miss very much adda, whois the best proof eader ix ‘te state of Loulslan, helping tw mate “Mastrig Ellon Wave” a: error freeas possible ary errors sill remaining are exclusively of my own maki) Glenn Neely - 1989 (revised April 1990) Table of Contents eos Discos ate tne ene iSiesoeer vost tne ine ee eee togreeeetaces ee ii smyaetereea oe eRe Fe ‘Sees 5 soy Crt i rr sane Sr ed ae seer Eo savoir aie vara rec Sonics iS tsos Seteedtiaeate man cone senate ami SPS et a sigan orgs si pes Moet it may ‘ony senGeneral Concepts Whatie atone"? Wy Do Wives Occ? Winy Are Maes Important? eect Pca Patens owe You Categorbe Waves? Deve How Do ou abel Wives? Orono Prorat ‘Wha Daa old eed To Ante Wat How De Yer Plot Date? ow Compa Do Waves Get How 1s Ths Kaowiede Used To Analyse? Preliminary Analysis ‘Chart repraton ane Dats Management ‘teen torner Irn ‘af Nobn Gctigy Ralf Oharion Inpenenson Peston rs Pn init Did epee Splmsie Synopsis Chapter 3 2 eben 3 a a a am se sal Intermediary Observations Monowave Grape Rule o Simriy and Balance Rounds igh 3) “igang "DETOCR™ Test Contral Considerations Construction 3 Polyaves Ba Comers cmaualsacint geri eo og Trg tare ein tu on ‘Sahaine SW Bein acetone onstans arse ge ti eWay a Swoebme Daas Loney 2 si si se 0 raSire on UNeoLiniing Pot Tame ews ‘rea in Romig win dt Comrie Cot Seb cod Chapters 6 through 12 are almost exclusively the Neely Extensions of Eliott Wave Theory Post-Constructive Rules cf Logic Impubions TroSapee Pate Coimatin a VaneBcen Sinan Enero SaReneFaier Corrections Roginnens Pacem Caiman 30 53 3 So S36 o e Conclusions ‘Compaction Prederes Icgrn Progra Reset Complexity Ra nate Ware Rosia ‘Flow Carta rire Nely Method itt Wars Anais Construction of Complex Polywaves, Multiwaves ete. ‘Contruction of Complex Palyaves “Stan pe Nonidet “Sic Rance Cones Crt wi Sal We) Sem Corona rH) ‘Construction of fiaves npn ofan Whisk Wa xd Knowing Where Start Count Hs ft 49 rs a wrBasic Neely Extenslens: ‘Trendline Tout ois Time Rule Independent Rae SimtanenssOvcarrnce Escepton Fae “ae ‘tees Necesly of Maintining “Strate Integrity ocking i tractre laa "Progr Libs expansion a ates) Advanced Lopic Rules ‘astern Ilicatons -AutCarectns cept Tris) Treat Tretia ‘lngnigae ‘tng Tim, eet Noeceqe ‘reer Ieee alae Tagen ‘DokeArec amin Corecon Tap ier ene Corn Tene 4 a 105 ms 06 Ii Advanced Progress Label Application ‘mouse Pat-ns re) Moe dN Ene “hae SNe Ede Termin Niessen Nee SN Brendes Correstve Paterns Fs iene Serta Reig 13 a M6 aeTrnges oom, Advanced Neely Extensions Channing oie tien) Deacon fav, De The Weed gry Input lettin its Chanting Doe tsenn Correstions dentin ith Chanting eee Troe ete coe 2 ua ua 126 P10 mp Comptatatene Dest Tze Dante leone ha i me Danica ripe han Danie Tongro enttyng th Completion of Waves ‘Advanced Fines Relates Inge Pats Scan Comets Sechtece act mie Dad Tigran oe asta pera cee Mion een dtr? owt ey sca Wyse? Whicker pie? Elaon Danie Tp cies InWoebacson SiktneBaenn pansion of Fonitis Localized Progress Label Changes Appendix Forecast to tke Year 2060 na a tas 33 aedleation ‘This book is dedicated to Richard J, Teweles, Charles V, Hislow and Herbert L, Stone. None of these people have I met ortalked with, but they ae the authors ofthe back "The Camm Futures Game." Te was while reading hat book that If et my eyes en the phrase “Elion Wave Theory.” Forme, thats where it all began, his book was written withthe intent ofsgificanly advancing the viability of Elie: Wave ‘Theory by introducing a scientifi,objestive approech to market analysis. Tis innovative apprach, kw as the Neely Wethod of Elliot Wave analy, ithe result ofa decade of rang, eaching and— ‘exensiveresearchb he author. Inreading this book, you wil quick realize itslike no other you ave ‘ever found on market analysis. Preserted herein isthe fst step-ty-step agproich to Elion Wave analysis ever devised No aspect ofthe Theory i left for you to pender. Every detail i thoroghly expltined and inthe nord of Bruce Babcock (Commodity Traders Ccasumer Reports), "every senence Is devoted to something important ‘The concept ofthe Wave Theory was original presented tothe investment world by R.N. Eliott in te early 1930's. Going well beyond the original discoveries of. Elliot, this book reveals new techniques, rules andrarke price pater never tefore disclosed to fhe public ‘These new discowres will dramatically increase your market forecasting cocuracy and your confidence in trading, “Mastering Elion Wave” deals in get detail or the subject and aplication ofthe Neely Melo. In suppor of sch dtl the acuratepresiction ad orofitable wading ofa mirtetcn continuous basis requires a complex understanding of economic and financial price activity, nether reason fo this ‘eensive deals tensure the book serves as a valuable guide and reference for yest o come, Ifyoudesirethe lity to forecast ane profit fethe complex undlatons economic activty.his ‘bok wil help you achieve that gol keno other. Tn addition, ever effort as been made to cree in "Mastesing Eliot Wave" a wulyinteracive learning envionment wich willallw yout fell» the ‘book’nstuctions wal simultaneously analyzing real-time market tion, You wil definitly findthe [Neely Method tobe challenging and am confidert you wil find reading this book tbe ine wel sent. [Now tum the page and prepare yourslffora newacventure; yourentrace int the world fhighsech market analysis Glenn Neciy - December 1987 (revised Aprit 1390)Natwatnon rec Aedes ct ‘dtc Wey Lear ict Wave Theory? Mitts Maiterestetatn ewe eine near, Mephindtoner Cec Wy neon nei Pricing Sq Years Mater eines Poet Dacian et Simp sean nde ow Sou Yen Lente Ther? Wi Asher Bok on Ws Nea Adilind Techie gaeg NEY Spey Pcetn acta er ny Where the They Appia caer ow Shute tras wii A Werk wih andere? Oren dy nats What is the Elliott Wave Theory? AAAI Ee Price Patterns of Psychology From an Eliot Wave perspective, the plot price aciviy ofa markets the graphical epesen- {ation of erowd psychology. The Wave Theory describes how local plated data relates to surounding da, how data shoud behave under «multitude of circumstances, ven and bow psychological tends begin and end, how ane psyehological environment mandatesthe unfolding ofanther and what general — shapethe price atioshouexhibitupencompleicn.Inather words the Eliot Wave Theory orgies {he sosmingly random flow of market price action int identifiable, predicts ates bse nthe natural progression af crowd psychology. Individuals beheve in certain ways depending on theircuret opinions al feelings. When eed, that individuals actos wil invariably be distin different fom he seme nviduals ations when ‘kpressed. Just the way one person can feel exced or concerned about his cher personal utr, he same felings ean permeate and be manifested by society. When a majority of people have sind fesings (favorable, unfavorable, indffren) about thei, or society’, prospects forthe future, thet ‘mulitive ation ufos in predictable patems. Ha adition, the sme way an individ can hange ‘sor ker mind overtme (occasionally in an instant, scan the crowd. The Cash of 1987 was a ‘exinple of nalmos.anivers, instant” change inthe crowelsopinion ofthe sick narketandthefiare ‘ofthe United States economy. Once acerainpsyshologca mood asrunits course, people tendo get bored with anideaor concept (sometimes financial ruined by them),sothey gabontonew ideas, Ii this charging from one nood tothe next that ermeates one psychological tend price pattern) ard begins nother Natural, Non-Periodic Phenomeron ‘Theamountof i consumed by aspecificpar-soietal mood apears to have noshsolute nin ‘or axcmum ime retirement, but there are gene Kms. By analyzing previously completed pateros and applying cain rincples of ime behavior, is possible to approximate ‘he Best ime pci for ‘completion of formation. These techniques, many of which Ihave developed over the las ten yeas, will be discussed in hter chapter, Sorry Desa rr‘The “structure” of market movement shoul almost always supersede time observations. Some people consider is an annoying apect ofthe Tacory since they want to krow "when? to make rade, ‘naatvance! Elie virally proves tat absolute anticipation of market movement is impossible, Tae _reatest degree of predictability occurs immediately after a move hs teminated. Tn other words, you wait fora patero compete, then you take action, AUnique Anaiytical Toot Unlike most forms of ectical analysis, the Wave Theory was developed sity from « price tchavior standpoint. The Theory helps the analyst realize that wiatever the maket does, it des for & ‘asoa, There iso “chance” in market activi, a0 aberrations and no unkasifabe price betavior. A arge portion of market technicians spend ther ime trying to manipdlae price dat ond tht “magica key indicator. How eanairansformatonof peice dat be better thnthe original data Inher ‘words price shou be considered theultimate indicator. Is the only inator of market action tht «canbe absoltely dependsion and te only onethat directly affects your becom ln. Itdoes ot make {ny ference what Someone thinks or what an indicator signal, he bottom ines, what il the market ‘db? If prices are going up fand you are log), you make money, If prices r= ing down (you ae long) you lose meney, al oer indicators notwithstanding, ‘Some ofthe remarkable aspects ofthe Ellit Wave Theory ae: 1. Its adaptability to new technological developments and unexpected fundamental news; 2 Its thoroughness in describing ALL posible market behavior; ané 3. Ils progressive and dynamic characteristics, ‘The Theory inkerently indicates man and his markets, continually char new teitory andtypesof behavior. I stpuates that at no point in hstary js a markets ation or psychological environment ‘ential to any otter period. Skilartes are allowed, but at exact duplication. This canbe aoblem fortaders, and especially “stem developers, who endeavor wo formulate steps based on historic pice action and behavior. Unike most systems and forms of atayss, te Wave Theory warns the 'tnalystto look for shang ad warns him when and whee a mick will ot behave ait has in he past. ‘The “Elin” print of view, that "istry does nt repeat exactly,” sthe perfect explanation of why ‘cost mechanical ystems (and the forms of analysis based onthe expctatom of exact repetition fail Thisis particularly evident when amarketchang’s roma bullish bearish environment orice verst ‘Tre compute sge has dramatically and probly permanently’ altered certain aspect ofthe ading =nvironment ands markeibeavior. Thisisarexample of why working wit historical data way back 'a “who knows when” will nct necessarily make a mechanical system function any better. Ever ‘xpanding technology coniuousl transforms the decision element of the market, people. The way ope eat to, use ad lean from new technology cannot be decided by histrial study, A form of alysis which explains categorizes and stuctus progress, not repetition, is needed, Thats what the itt Wave Theory is capase of doing. Additional Examples “The 1987 crash vas. perfectilusrtion of hw a study of history could not have prepared ore for ‘whathappened Oct 19,1987, Even he args decining day during the rsh cf 1929 was only ball as detrimental (perc=stage-wis) asthe one experienced in 1987. Anyone ving the 1929 crash asa tcom:er may havecccided to buy the market aferithad fallen 10% So the Say of Octobe 19,1987, ‘expecting no day tobe worse than that experienced 1929, Of cour, anyonetaking such an apposeh ‘would have bea infra very unpleasant surprise Ding the 1987 advance, remembe: continually hearing people tk about (and secingadsespse) the exteme similares between 1982-1987 and 1920-1929. They assumed everything would corinue concou'se exactly (sme ime and percenage advance), with he 80 bull market eating he nine year ‘boom a if it were arcther 1920-1928. Unfortunatly, those who believed such ar easy comparison of Iistory was their oad to sches may now be doing something besides iavestirg ir the stock mare. Why Learn Elliott Wave Theory? mena TILT TLE ‘To the beginning student, the Theo's complet, multiple pater variations, alternate cunt” possibilities and appwent subjectivity stem almos-nsurmountabe tnd appear to uli the Thar’ validity. Thisis de tthe extreme demandof specifies required ofthe Elion Waveanalyst.Allgexeral ppatemcategores, arceachof its variatien,reqiresiferentrelaoaships, channeling, pice befuvie sl tecnica characterises, This creates the isin that the Theory is purely subjective and cin be ‘molded ofitanyone's opinion. While here may have been some jastication this tance in the past, before the publication ofthis book, thissimpy isnt true anymore. The Pre-Constructive and Post- Constructive Rules of Logie (Chapters 3 & 6, respectively), n elabortca with mamerous, om pletely new technics developed by the autho ver many years, wil greatly enkance you abil 10 ive ata single wave pattem conclusion. Caveat” These techniqnes, andthe specifies involved in plying them, ares numerous an vied that hei proper application can tke years of practice and real-time trading. Asareslt until you boroughs understand the concepts presented inthis book your conclusions may freyaemly be incomec, Multiple Benefits ‘Thelong-temn bereits of" Mastering Elio Wave" are numerous. Asa businessperson or investor, you can frequently amcipate major changes in the economic environment allowing you to sidestep aster or even prot fom the winds of change. Proper understnding of erowd psychology (he fundamental basis of te Theory) ean help you ave financially dangerous business dealings athe end of an exonomic eye Multi-area application ‘The Wave Theory can be applied to virally all areas of mass human endeavor: the stock market, conmedites, real eine, peoduction of godsand services, et; allthis required isaccuateconstent ‘dea. The beneis of the Theory’s moltarea application are obviows. il