The similarities between now and then are remarkable:
The blogger Afraid to Trade explains:
Looking at the charts side-by-side shows a chilling reflection of similar Wave structure progression that unfolded.
The structures contain the expected progression of 5-waves which properly subdivide into corresponding fractal waves as the big picture develops as the bear market progresses.
Keep in mind, there were no computers in 1937, no online brokerage accounts, no hedge funds, etc. What’s stayed the same – arguably – is human psychology as investors’ fear and greed interact to create these patterns. Also, Mr. Ralph Elliott almost certainly saw this 5-wave decline develop in the Dow during his time which perhaps was further confirmation of his “Wave Principle” he was developing at the time.
In the case of 1938, the circled 5 wave was the bottom (at 100) at that time before an ABC corrective rally launched. If past is prologue, then we have yet to complete the final circled Wave 5 to complete the pattern, though we’re much closer now than we were.
