|  AUG 1990

An Overview In Elliott Terms by Mark Thompson

An Overview In Elliott Terms by Mark Thompson I began to plot a chart in January 1987 in an effort to discover exactly where the stock market would peak. Basically, I agreed with Robert Prechter's long-term wave counts. But to my surprise I came to a conclusion different from other Elliott wave analysts. The 1929 peak in the market was the top of Grand Super Cycle I and 1990 will see the peak of Grand Super Cycle III, according to my analysis. The chart I constructed includes the Axe-Houghton Industrial Average from 1855 to 1932, and from 1932 to 1989 I spliced in the Dow Jones Industrial Average (DJIA) and adjusted the chart accordingly (Figure 1). In the left-hand corner I used the chart of the Cleveland Trust Rail Index from 1831 to June 1932 and then spliced in the Dow Jones Transportation Index from June 1932 to December 1988. Overlaying the transportation and rail index, I placed the Kondratieff waves, developed by a Russian economist who observed in 1926 that the United States had undergone three long-term cycles. According to my chart analysis, we are currently at the end of the plateau of the fourth wave. The Kondratieff wave theory shows the current bull market peaking between 1987 and 1989.

by Mark Thompson