Dalal Street Investments
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Market waves and behavior

July 2, 2008

According to Elliot Wave by Frost and Pretcher.

  • Wave 1 – Up – Rebound from recent Bottom. Mass pessimism ebbs here.
  • Wave 2 – Down – Test of Lows. But previous lows not hit.
  • Wave 3 – Up – Powerful Wave.Strength, Breadth, Easy-Credit , Real prosperity
  • Wave 4 – Down – Surprising disappointment. Signals that best part of growth over.
  • Wave 5 – Up – Final Advance.Psychology creates overvaluation. Leverage at highest.
  • Wave 5A – Down – Breakdown. Inexplicable fall. Viewed as buying opportunity [This is Probably the Jan-08 Fall ?]
  • Wave 5B – Up – Narrow, Emotional Advance. Aggressive euphoria+ denial
  • Wave 5C – Down. Worst of Bear market. Strength, Breadth, Fundamentals collapse

We are almost in 5C.

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