Microsoft Word io elliott Wave Theory doc

Lesson 27: THE WAVE PATTERN UP TO 1978 
The Grand Supercycle from 1789 
This long wave has the right look of three waves in the direction of the main trend and two against the 
trend for a total of five, complete with an extended third wave corresponding with the most dynamic 
and progressive period of U.S. history. In Figure 5-2, the Supercycle subdivisions have been marked 
(I), (II), (III), (IV) and (V). 
Considering that we are exploring market history back to the days of canal companies, horse-drawn 
barges and meager statistics, it is surprising that the record of "constant dollar" industrial share prices, 
which was developed by Gertrude Shirk for Cycles magazine, forms such a clear Elliott pattern. 
Especially striking is the trend channel, the baseline of which connects several important Cycle and 
Supercycle wave lows and the upper parallel of which connects the peaks of several advancing 
waves. 
Wave (I) is a fairly clear "five," assuming 1789 to be the beginning of the Supercycle. Wave (II) is a 
flat, which neatly predicts a zigzag or triangle for wave (IV), by rule of alternation. Wave (III) is 
extended and can be easily subdivided into the necessary five subwaves, including an expanding 
triangle characteristically in the fourth Cycle wave position. Wave (IV), from 1929 to 1932, terminates 
within the area of the fourth wave of lesser degree. 
An inspection of wave (IV) in Figure 5-3 illustrates in greater detail the zigzag of Supercycle dimension 
that marked the most devastating market collapse in U.S. history. In wave A of the decline, daily charts 
show that the third subwave, in characteristic fashion, included the Wall Street crash of October 29, 
1929. Wave A was then retraced approximately 50% by wave B, the "famous upward correction of 
1930," as Richard Russell terms
it, during which even Robert Rhea was led by the emotional nature of the rally to cover his short 
positions. Wave C finally bottomed at 41.22, a drop of 253 points or about 1.382 times the length of 
wave A, and completed an 89 (a Fibonacci number) percent drop in stock prices in three (another 
Fibonacci number) years. 

---

92
Figure 5-2 
Wave (V) of this Grand Supercycle is still in progress, [as of 1978] and is further analyzed below.