(App. A4-p. 3) IElliott's Waves DATE T.P. DEG. WAVE DATE T.P. DES. WAVE 11/28/28 17.69 4/18/38 14.19 1 3/26/29 15.27 A 5/27/38 14.19 2 5/6/29 14. 13 1 7/25/38 14.44 3 5/31/29 14. 13 2 9/28/38 14.44 4 9/3/29 851. 92 B 3 11/10/38 63.04 A 5 11/13/29 52. 16 1 1/26/39 12.20 1 4/16/30 52. 16 2 3/10/39 12.20 2 5/5/30 10.97 a 4/11/39 31.43 B 3 5/14/30 10.97 b 6/9/39 9.13 1 6/25/30 19.00 c 6/30/39 9.13 2 9/10/30 19.00 d 8/3/39 14.30 3 12/17/30 27.52 3 e 9/1/39 14.30 4 2/24/31 27.52 4 9/13/39 31. 43 IV C 5 10/5/31 39.34 a 1/15/40 6.31 1 11/9/31 39.34 b 4/8/40 6.31 2 1/5/32 28.62 c 6/10/40 25.69 A 3 2/19/32 28.62 d 8/12/40 5.50 1 7/8/32 851.92 I C 5 e 8/16/40 5.50 2 9/8/32 63.83 A 11/8/40 25.69 B 3 12/3/32 18.60 1 5/1/41 14.22 1 1/11/33 18.60 2 7/22/41 14.22 2 2/27/33 63.83 B 3 12/24/41 8.95 3 7/18/33 34.46 C 1/6/42 8.95 4 10/21/33 34.46 1 4/28/42 Ill. 02 V C 5 2/5/34 32.34 2 7/15/42 4.78 I 7/26/34 32.34 D 3 8/5/42 4.78 II 12/6/34 5.36 1 11/9/42 4.16 A 3/18/35 12.86 2 11/24/42 4.16 B 11/20/35 8.02 3 4/6/43 5.90 C 4/30/36 15.22 4 4/13/43 5.90 D 3/10/37 Ill. 02 II E 5 7/15/43 13.55 III E 6/17/37 16.58 A 8/2/43 6.45 A 8/14/37 16.58 B 9/20/43 6.45 B 8/27/37 2.29 1 11/30/43 13.55 IV C 8/31/37 2.29 2 1/11/44 3.57 1 9/13/37 6.73 3 4/25/44 4.96 2 9/30/37 7.45 4 7/10/44 5.86 A 3 10/19/37 21. 91 C 5 9/7/44 5.86 B 10/21/37 10.65 a 10/6/44 2.78 1 10/25/37 10.65 b 11/16/44 2.78 2 10/29/37 21. 91 1 c 3/6/45 6.91 3 11/23/37 19.91 2 3/26/45 6.91 4 1/15/38 19.91 3 6/26/45 6.00 C 5 2/4/38 13.43 4 7/27/45 6.00 D 2/23/38 13.43 D 5 12/10/45 4.84 V E 3/12/38 4.66 1 3/15/38 4.66 2 3/23/38 2.83 3 3/24/38 2.83 4 3/31/38 63.04 IIIE 5 Fig. A4-A
(App.A4-p.4) 11 --- -------+-----+----/-t--+----+---t----t I ELLIOT;r'S WAY S Derived fro hi' charts nd lobul tions. (See Bill iogrClph~) -- _. - -- ._-+----+----/-t--+-----I---+---I hos been ste ndardized: Deoree -- - - I ][ m III J[ est ----- A B CDE ----- 12345 v. ------abcdll 3001-+-4--1-+0----+-- ----f--+-+-+f-- ------ - --+------+c-c:---:-Ic------- -- ---+----+--+---1 200 f----fl----+"- r D a :J3[ I 1 N. a • e :l[ ., ~I An "'n .rted Ziq 09" • E 1Ir "Five lesser woves trion le , • c - AI ' 0 A 'V V'll I • • ! \1 e , • Y\+---+------------- ------",------+-+---j--+-----jf----:Hl a C -------.----~- ---j- -+---+----f---tH-+I • • a •-- II - I ; I --- • , I D I - ---lltt-+--+--+-t-tt--.--n-- . II,ncludes Ile.tensio~ _N' r- -- j ! ---+---+---tttr ---+--tt+-'+--+t--+~-i-tt-~I+t------'~---r--+---1 r-f----+HI--f--t-it I ' f-----+---Ifl-+---+-- - 150 f--+-.....,+-+---+--+- , I 100 f------;--+ttt---+-ft-tt-I-U-iiI 70 -- e A Flo' • A8 DE d 9r•• ,. a'. "Intern ,diot. I/ov •• 60 I 50 , • A CD d 9 • her. 0" hQ! • , • Primar)' Mo ement· Mal 40 . 1929 '30 '31 • '33 '34'3! '37 '38 '39 110 '41 '42 '43 '44 115 I c x '38 FIG. A4-8
ELLI OTT (App. A4-p. 5) VARIATIONS - IN LINE OF TRENO5 !I ;/! 2 Extension in Wave I, upward trend. Extension in Wave I, downward trend. Extension in Wave 1, upward trend. Elliott found that waves in the line of trend (1,3,5) sometimes elongated into fi ve waves of the same degree - rather than breaking down into fi ve waves of a lower degree. This elongation could Occur in waves I, 3, or 5. but not in waves Z or 4. It us wlly occurred in the last or fifth wave. He called these elongations extensions. 2 Extension in Wave 3, I 4 downward trend 3 5 5 ;J! 2 4-14 Extension in Wave 5, upward trend. Extension in Wave 5, downward trend. FIG. A4-C
(App. A4-p. 6) I ELLIOTT VARIATIONS - IN LINE OF TREND 9 / 7 8 3 6 I 4 2 ' 2 4 3 6 6 8 7 9 FIG A4-0 (y) y !5 II e 3 a d e 4_ Ell ten.ion of Mlnuette Wove -----.Eaten.ion of Minute Wove ..---------_.ElIten,ion at Minor WOVl! ,+------------------+~ Intl!rmediate Wave FIG. A4-E 5 .. I, 1 '~ t.Extention ~seeond Retrocflllint [First RI tr Deem.nt Fig. A4-F 4-13
4-12 (App. A4-p. 7) Since extensions are comparable with the other waves in a series, they may be equal to them and the entire movement may seem to be nine waves of about equal size. (Figure A4D) At the end of a major move, there may be a series of extensions of extensions in the fifth wave. The move comes to an end finally on the last minuette wave of the last minute wave of the last minor wave of the last intermediate wave. (Figure A4E) Elliott found that extensions tend to be "double- retraced" i , e. by a downward and then by an upward move. (Figure A4F) This is interesting only in an extension of the fifth wave, since an extension in the first wave is retraced by the second and third waves and an extension in the third wave is retraced by the fourth and fifth waves.
I ELLIOTT (App. A4-p. 8) VARIATIONS- OORREOTIONS I ZIGZAGS I b 'y\c c N b MINOR MI NORINVERTED INTE R M EDI AT E INTERMEDIATE INVERTED Elliott recognized corrections of five types: zigzag. flat, irregular, triangular, and complex. Thev will be illustrated by Figures A4-G through A4- L Three sizes of "Zigzags" are illustrated by Figure A4-G In the minor size, each wave is single; in the intermediate size the distribution is the usual 5-3-5 found in the "Basic Elliott" chart Figure 15- A In the major size the two longer waves are doubled. Note that the "inverted" versions are included. These are corrections of a downward trend. c C c c MAJOR- A DOUBLE ZIGZAG MAJOR - INVERTED FIG. A4-G
(App. A4:-p. 9) I ELLIOTT VARIATIONS-CORRECTIONS I FLATS I B C B c A MINOR MINORINVERTED c In a zigzag the pattern is 5-3-5; in a flat it is 3-3-5. This gives the "flat" correction a level appearance - and its name. Examples of this correction are in this Figure A4-H An example is marked in Figure 15- A with a "zigzag" also marked for comparison. INTERMEDIATE - INTERMEDIATEINVERTED MAJOR 5 C C 5 4-10 B MAJOR - INVERTED FIG. A4-H
ELLIOTT (App. A4-p. 10) VA RI AT ION 5 - COR RECTI 0 N S I IRREGULAR] B )\I\T. ," A I C I IRREGULAR TOPS ~\ O.T. 5 "Irregular corrections" are distinguished by the height of the "8" wave, which advances to another top higher than the orthodox top ("0. T~'). Since the correction makes a new top, it is also called an "irregular top". An example is the 1929 peak. Normally "C" terminates below B the bottom of "A". Liquidation in the third or "C" wave is usually a e more intensive than in the first wave. b I 4 3 6 C B Y\ c B c 2 b I 4 13 3 A 5 C B c 5 C MINOR INTERMEDIATE MAJOR (In the larger and mo r e important corrections the "c" wave may consist of three smaller five-wave sets. ) FI G. A'4:I
[ ELLIOTT (App. A4-p. 11) VARIATIONS - CORRECTIONS TRIANGLES I Triangular corrections have five waves or legs each of which has no more than three lesser waves. In the small triangles the legs can be single waves. Triangles are found in the fourth wave of a five wave movement - exclusively. They form the base for the fifth wave or "thrust". One of the boundaries of a triangle may be horizontal. The fifth leg may terminate within or outside of the bounda rie s . --. \ \ \ \ ---~ - 4-8 a "'- (I)I :;'1 ~I ~I• 1 1 • \ -- - - ----':;4- d \S \~ \~ Triangles have been as short as seven hours (a short example is in (Fig A4-K) and as long as 13 years. A. Hamilton Bolton has outlined a 21. year triangle in his analyses. FI GURE A4-J
(App. A4-p. 12) - Dow Jones Industrials - Hourly Data- "A small triangle a peared in th hourly record in October 1937 (it signalled a immediate acceleration and ext nsion of the downward movement; the dyn mic Octobe 18-19 'panic' followed." R.N. lliott 6/28/39 40 35 30 THURSDAY 10/14/37 FRIDAY 10/15/37 - SAT. 10/16/37 FI GURE A4-K
I ELLIOTT (App. A4-p. 13) VARIATIONS - CORRECTIONS I COM PLEX I / / , , 2 4 6 " /'VVV\" DOUBLE THREE / I 3 5 7 , / / 2 4 6 8 10 ' ,,'VV\;/\!\./\.,,, TR I PLE " I 3 5 7 9 II " 3 2 4 6 \,'/": ~~. - - 1 This group includes some final complex variations. In the words of Elliott: "The rhythm of c o r r e c ti ve movements is the most difficult feature of the wave principle. " THREE ,/'~I 3 5 7 I I I 3 2 4 6 3 , \ 0t!I " \ I 2 '. 2 x DOUBLE THREES MIXED -UPWARD a DOWNWARD \ \ , \ \ FIGURE A4~L 4-6
4-4 (App. AS-p. 1) Appendix A5: CAN THE ELLIOTT THEORY BE MADE SPECIFIC? Elliott had some problems in the application of his principle. Many of his turning points were debatable; his wave patterns tend to proliferate into variations. The s election of turning points is crucial. You can identify almost any pattern IF you select the proper turning points. A method of measuring turning points has been developed; it is described in Appendix A3. When Elliott's turning points are put to the test, some will be found to be rather light. No doubt he had his reasons, and could give them to us if he were alive. He skipped over some very important turns, and included some that are rather puzzling. (Compare Figs. ASA and A5B with A4B) Another problem is the division of waves into subwaves. You can divide a wave into almost any number of subwaves, if you make the subwaves small enough. We have tried to read Elliott's mind, from his limited writings, in order to develop a basis for a measured analysis: Waves and Subwaves: (1) In the breakdown of waves into subwaves, the first and most promising line of attack is a study of Elliott's own examples. These have been charted from his writings in Figures A4A and A4B in the preceding Appendix A4. The turning points that he used were tabulated and evaluated, and the average wave amplitude was measured.
(App. A5-p. 2) (2) A second line of attack is a study of the "basic Elliott" chart Figure 15A in Chapter 15. This chart outlines a complete cycle. If you will count the number of waves of major degree, intermediate degree, and minor degree, you will get the following; Major Degree: 8 waves Intermediate Degree: 34 waves (4.25 times as many) Minor Degree: 142 waves (4. 18 times as many as in the intermediate degree.) Using this as a guide, we counted down the rank of turning point degrees: Degree: 80% 400/0 200/0 100/0 50/0 Number of turning points: 4 10 44 170 540 The frequencies in the Basic Elliott chart of 8, 34, and 142 are similar in proportion to the actual count in the selected groups of 10,44, and 170. (3) A third possible approach is based on Elliott's statements that "a wave is divided into waves of the next smaller degree." If waves (or turning points) are ranked in any given period of time, from the highest degree to the lowest, and the rank is scanned downward, you will find at a certain point that the waves are parts of preceding waves. This is evidence that you are moving into a subwave classification. For example, the ten most important turning points in the period 1928-1962 are the following: (1) 851. 920/0 9/3/29 (2) 851.920/0 7/8/32 (3) 111. 020/0 3/10/37 (4) 111. 02% 4/28/42 (5) 63.830/0 9/8/32 (6) 63.830/0 2/27/33 (7) 63.040/0 3/31/38 (8) 63.04% 11/10/38 (9) 52.160/0 11/13/29 (10) 52. 160/0 4/16/30
4-2 (App. A5-p. 3) You will find that numbers (7) and (8) are, in time, between (3) and (4), and evidently form a subwave. No. (9) and (10) are between (1) and (2) and evidently form a subwave. A similar method was used to check the other groupings. The three approaches outlined above were combined and cross-checked to yield the following proposed classification: Degree: Nomenclature: Cycle 800/0 I, II, Ill, IV. Primary 40% A, B, C, D ..... Intermediate 20% I, 2, 3, 4 ....... Minor 10% a, b, b, c, d .... Minute 5% Figures A5A and A5B chart all of the 10% turning points from 1928 to date. The waves and subwaves are marked with the nomenclature in the above table. The same classification formed the foundation for the tables in Chapter 15 on page 15-4.
(App. A5-p. 4) -TURNING POINTS== 10% DIGRItIt Ik x 1--- .001---r-----r---~----i----t~~ 3/10/37 --1----- --,--+--,·-+1+1 2 A ---- V -- -- 7 9 50 r-------- f--.---- f-.---------t..-----4-1 I-- 3 B - -- Fig.A5A
FIC A50 I I (App. AS-p.S I 0 I I TURNING pOllns 10% DIGal1 a: BIGBIR I I 0 I IIII (10% CLASS WAVES) A 9 I , , r Dow Jo nes IndustrIals· 3-10-37 10 date - 1 01----- .--- '\~ A 0 8 A~ I l 6 0 -- ---- m A B C A I 2 3 I 234 5 12 34 5 6 1 B9 I abcobcobcdefgtl iabcdeobcabc abcabcde c e e e e abc ef90bcdeabcabc obe ~----- .-. r ------ 1\ -- .__ .~ V '~ A f- -- -- --- ,- II 'L -- -- _._-- .8.__2_ -- 2 - -- -- --- \ti '-- _. - ----- - -- 2 4 --f--- A~A 1 \ - - _._- -- ---- VV h\r-:- 4 - _. - ._- ._--- -- II V ! A- I -- -- - I 1 ---- -_. f----- f-f-- --f- f---.- -- -_. ._-- --_.- -- - -- ITm 3 A 1----. --- -- "" 1937 '38 '39 40'41'4243 '46 '41 4849'5053'55 '56 '57 '59 'CO '61 -62 I I, I II I 70 90 90 80 60 300 500 250 150 40 100 200 5-1
-- =. DISTRIBUTION or SUE - - PRIMARY MARIlETS PRIMARY SWINGS SECONDARY REACTIONS PERCENT AMPLITUDE ABOVE 180 Iii 340Y. 160 II 140 12 I 110% II 100 II II 90 ., I 60 -MEDIAN - Middle--Middle I 70 1111 50% eo% 111I 62-4 60 -- of cases of casee 'II I 50 ttI+ I I 45 I - 40% 40 I 11+1- I 35 r---35% III I I 30 - Middle - r-Middle III 27 'II. ntt _ Ttt+ III 25 -Medion- -50% -- eo% 26% _tttt I of case, ot cou. III 20 I 1114- nit 16 ill 11I1 17% 16 1tI+ III 15% tilt 1111 14 Middle - _Mlddl. _ _, 11I+_ 12 _M.dlon - 50% -- ·80%- "rt+I-1II1 10.6% 1M 11I1 _ot ca ••• • of co ... _ 10 II 1111 9 111+-1 8.4 -14 8 III 1111 7 111I 6 6% II 5 II 4.5 4.0 III 3.5 Fig. A6A i 'tl >0- I 'tl ... -
5-3 (App. A6-p. 2) Appendix A6: HOW SHOULD SWINGS BE CLASSIFIED? The Dow definitions in Chapter 14 are not specific enough for our purposes. They require "interpretation". We are fortunate in this analysis. for one of the most authoritative of the Dow Theory experts, Robert Rhea. has set down dates and classifications. These are tabulated in Appendix A9. We have summarized his turning points and swings in Figure A6A. A tick mark method of scoring is used. There is quite an overlap between the size of the three types of moves. However. if you will concentrate on the middle 500/0 of the cases, you will find very little overlap. Consider the primary markets. There are seven swings with a magnitude below 500/0 which have been classified as bull and bear markets. Some of these have been qualified because of their duration. However, when we consider duration alone, Robert Rhea classified fi ve swings as "major" which lasted less than a year. If we balance duration against swing. we have picked up all but two of Rhea's major swings with the definition "All swings greater than 40% or more than one year in duration. " The great primary move in a bull market is considered to be broken up into "primary swings" in the upward direction. which are interrupted by "secondary reactions"in the downward direction. In a bear market. the primary swings are downward and the secondary reactions are upward. Still smaller moves are called "minor movements". In the preceding paragraph we have set up the qualifications for the largest classification. What is the qualification for the next sized move?
(App. A6-p. 3) = SUMMARY= PERCENT SWING· • Middle 50% of 011 coses ond Medions (M) - (High -Low) Percen1 :. .100% (Low) 6 DATA-1897-1964 (JUNE) II SWINGS In Bear SECONDARY Markets REACTIONS 24 f In Bull In Bear Markets Markets '--v---' ~--' 17(M) 17 t 14 t 1 II II(M} 1 9(M} ! G 7 In Bull Markets 26 1 16(M) t P RI MARY 15 Bear Markets '--v---' 90 t 67(M) I 35 Bull Markets 140 96 1 (M) 60 1 -15 I 9 8 7 15 50 4 20 3 80 70 60 150 100 5 Fig. A6B
5-5 (App. A6-p. 4) The Dow Theorists set up the general description for the secondary reaction to be: Duration three weeks to three months; Amplitude sufficient to retrace one-third to two-thirds of the preceding Primary Swing. However, this definition first requires a definition of the Primary Swing. We can kill two birds at once by specifying the lower limit of a secondary reaction. The primary swings are the remaining pieces in the bull and bear markets. To this end, we have measured the "secondary reactions" tabulated by Robert Rhea, and have set up the following definition for our analysis: "A secondary reaction is any reaction exceeding 50/0 in amplitude and more than one week in duration." Robert Rhea included five secondaries which were less than 5% in amplitude; however, he did not include 55 swings which exceeded 5%. Our definition, therefore, includes almost all of Robert Rhea's "secondaries"; it also includes a sizable number of swings that did not qualify under hi s definition. (Some of these, no doubt, were not qualified because of a lack of confirmation by the Rails. ) With these specific definitions, we are able to proceed with the work of counting and measuring. All of the movements are dated and charted in Appendix AI0. In Figures A6B through A6E we have summarized the size of the movements. For an example of the use of these charts, consider the 1962 slide. It was a swing of 40.03% and lasted 222 days. The amplitude qualifies it as a bear market under our definition. In Figure A6B you will see that it is within the middle 50% of the swings of the 15 bear markets. The swing is far above that of the typical secondary reaction.
(App. Ab-p. 5) = SUM MAllY = DUIlATION = - .,. Mid dIe 50°4 0 f a II cas esand M ed ian s (M 1 - - D urafion = Calendar Days -- 15 Bull Markets DAYS J 1500 1000 800 600 500 400 300 200 150 100 80 60 50 40 30 20 1480 794(M) 1 j 365 15 Bea r Markets 800 GGO(M) • 1 3G5 PRIMARY SWINGS In Bull Markets SECONDARY In Bear REACTIONS 123 Mar kets t In Bear 77(M) In Bull Markets ! 68 Mar kets t ~--- 62 43 44(M) 49 t ! 1 38(M) t 26 25(M) l 18 15 10 DATA - JAN 1897-JUNE 1964 Fig. AbC
5-7 (App. A6-p. 6) In Figure A6C, the duration is found to be short for a bear market and long for a typical secondary. On the basis of duration, it is in a gray area. The amplitude however, is sufficient to qualify it under our definition. In Figure A6D, the range of "legs" is tabulated. It's interesting to compare this table with Elliott's wave theory. His basic bull market had three primary swings, plus two secondaries. The average in Figure A6D is seven primary swings, interrupted by six secondaries. In the case of a bear market, Elliott specified a typical two primary swings and one secondary. The record shows a typical fi ve primary swings (interrupted by four secondaries.) Elliott's count seems to have understated the situation. In Figure A6E. the "per cent retracement" by secondary reactions is charted. Hamilton set the size of a secondary as "40 to 60% of the preceding primary". Rhea set the size at "one-third to two-thirds of the preceding primary". Our chart suggests the r ang er "usually one-third to seven-eighths of the preceding primary swing. "
(App. A6-p. 7) 2 SUMMARY NUIIBER 0' LEGS = 15 Bull 15 Bear Markets: Mar kets: { ••d;o.- 9 9 Middle 50% of all 7 5 cases --- 5 5 Fig. A6D = SUMMARY = PI RC I NT IlITRACIIiINT = (Secondary Reaction Retracement, in Percent Of preceding Preceding Primary Swing) Middle 50% of all cases -- In Bull Markets { 80.67. Median -+ 56.1 'Yo 37.1 % In Bear Markets 86.3% 59.0% 39.5% Fig. A6E
5-9
(App. A7-p. 1) MONTHLY iCH NGED . DC W ON S I [DUST I ,1 S = 921· OC II" . +-- f----- . , " ... d, • e , , e , . ·, .· · . . ·.. 0 · · ·, : , · D,' 00 · 00.. 0 e s 0 d' ° 0 0 , 8 ° , ° i r--' J' · 0 0 -- ,0 00 . 0 00 0 0 0 .. . · . 0 ;p 0 ° : o. 0 . / · . ( · . · , , ·· , , , e , , , , , . , e , , " · . ~- . f · · · ... · . e - '. . g ·· .. ... · .. 0 .· .. ·· ·. . % · 0 e " . e . ·· -'- .a ° ·. , · . . , " · , ,.. ". '.., 'J' e .·, , · · . · .- · '. . . · - . .. 0 . - 0 . . ~- · · . · . - ;c · · · ·. . - ·. · , · • .' ·I~ . · .'. "f · . :.. . . · · .··. '" · . ·· '~ . . · · - . EDIAN 001-0 (of '" AIRp' Iud I Leost squor !l r qre &io . ( 0 11.180 -0. 89 (La - or: ['t) 0 15.1 (0 1° 71 08 .;. OJI) · -- . - ° Not.: To make eere ••• camp r I to incr as" 100 I t 0 . co. ., d erta •• i , 0 oJI 01 'ho ond , ho m ", - · ° \. MAl c I 02 0.3 0.4 0.50.6 0.8 I 2 3 4 5 8 78 91D 15 20 30 40 50 40 50 60 200 100 400 800 500 700 300 600 70 e Cl OD Ilil 90 lI: e .. 80 OD ..:l 150 < lIlI .. OD I:> Cl lI: PIICINT AMPLITUDS = Fig.A7A
5-11 (App. A7-p. 2) Appendix A7: HOW DO SWINGS VARY WITH PRICE? Stocks with low prices seem to move up and down, percentagewise, more rapidly than high priced stocks. Some observers have concluded that the variations tend to change with the square root of the price. In Figure A7A, the monthly percentage changes of the D-J Industrials, for each month in the last 43 years, have been charted against the D-J average. The percent changes tend to be higher at the lower price levels, as expected. A median line (dashed) traces this tendency. The relationship isn't close, however, and the data are scattered widely. A least-squares regression line (the solid line) casts some doubt on the square root relationship, when applied to a stock average. This calculation results in a 0.7108 root rather than the O. 5 root.
5-13 (App. A8-p. 1) Appendix A8: THE DOW JONES AVERAGES - WEEKLY BAR CHART - 1928-1964 The charts which follow present some interesting history. The swings can be compared with the text of this book. The scales are logarithmic, so that equal percentage changes on all of the charts are comparable. If you would like to compare the current situation with preceding history. you can trace the last chart on a thin piece of paper. This can be transferred to the earlier charts for a definite visual comparison.
400 350 300 250 200 190 180 170 160 (App. AS-p. 2.) --- - ..~.IO H, I I'~ - - IMlljll~ I--- r Wi J w; I. M -(MIG • a 0W'9 f f- OAl ,. CL 9£ 0 LV 1921 1929 IU. 'V L150 140 130 120 110 100 90 80 70 I-- IMAl 1931
- 1934 - - - - - --'----- 1933 6 5 fj---++--+--~-+ --j----j--- 80 f----+-Il--+ - -- - FIlAr 50 r-++---+--t---+--+--t--+- 85-1-- 5 5 HII-*--+--~-+--+--+----- -r75t------b1l--+ - - -- f- --~I I 70f--- -- - -- - 1-- 6 0 1-9t-ttt~--+--t---+--+--t--t--1 4 5 I-----'--..L.---J'---t--..L.-'---'------i (App. A8-p. 3) 110 u 105 f---- -- - 100 -- 95 i --- ..~~'lIM' 90-- ~u IftIIIiIP~ 1----e-- ._- - - - -- - e- - --- -_. -f--- 40.158 MAl 19 32 90 50 95 65 75 85 55 70 80 45 .0 60 100 5-14
(App. A8-p. 4) I[ ;MAI I 90 1938 1939 !.-.- - _. - _.- - -,. -- -_.'. --- )0 I---t--t- - r- 1-- t---j-- 1--+----1 .---' -- ---f---t-- +-- 1-- - t-- t--- - - - 1-- IOr--'--ll--t-- .-.-.- --- --- .-- 1935 1936 1937 ..---.----,-----,-----,----,---,--- ---,--- ---'j'" --'__ .l_-i----l -.. --- -J-+--t---i-----t----r- - -f---t- - -- i---- I---+----t-- I I I OOI--+--r---:-I --- i .-+- ---- r--- -- - i j~ -J-- l-r- -1---1-- --- t--- --- --. i ! i r--+----------- I 90~_+_+_---,-I-l I '. . ,I _ jl , _-J-_ _ I~ BO'\---+----r-HT ,~ :: -t-- e-- H I_r-__ .___ +-_I- __~-+ 1--+---;-.--j-'~. i - .. I I 'oc--- ~t±t~11-I _ _ ....~... ..--_-jj I t- I! i ! I 1 100 I, Ii, ,-- --- 1_ . - - ---I ,,=e~=4 . ~+l- -- -' I 1>0 - i "-I~ I~ .0 -- - i-I +.. 1. ---,----- -- . --~'1 I ~~I- b 4e \ c--- " 1 +-,- j- ~e I I ,O~ Jl-f+.. - 1- I.~ I 1>°1 - 11- r i I I I~ I wc--- ..- - c---t Il .~ - '] f- -- - .-- -. - 1----1 ir----- -- - .~ i I ; II i 10 l---t,iIII-+t--- - I-- 1-- ---f-- ----- I I -: I ! \100' I I I
(App. AS-p. 5) lf~+t- ---r= ~~-=-- -- -~~~ ::W-t iji-'_~=~c=-=-~: ,1-, fll t - -~ -~ 80 f --t +.-\'....-..··1- -"'-- ---... --- ----- .. -f--- ----- IOU \--~+--II..--1------ --f-- - ------ - -- _....+--+-- 170 -1----- t- -- ---- 1--- .----- --r-- --r---+7& , -I --- I -,-- ---- -_. - --ti--_I-- --- -! 160 ,---1-- --- I -/ i ---I-- ----------+--+- 'uu I ---t- +--+---+- -+---+---i ,: f+~r-f=~~- - JJ I 1--- I -----I. ~". .lli ----:! 'T -~ I --IN - '1-+ -- 'I - I ' - I j- -- i ;(, i -- -- ,+-- --t -I L_~ ~wt: i l+I-J- -- ~-- i P-l '1 J_L!-lfitt;-tJ : ! !,,, 194. lUI 1942 r 19f3 19U 5-12
(App. A8-p. 6) 1---+---l------1----1.- -.--+--+--+--+--+--+--+--+--+--+---1---+--+--+---1 -----f- .-- .-.f-.- ..-1-- _ . _ . __ -- .- __ l.- -. 1--- .-- --- 1---+-_+-.. 1---. ---. -- l.- I- -1--.-1----- .- - - .-- 1--.--.-e·- -- ._- - .._. 1----+-+---1---1 -f--- f--.I---- -_ ...~. r1r "q 1801---I--·-l---- ,-- II I---.J---l---- -1----+--" - --.- .- .--+----1---+".--+..- --1- .-. 1---1--.- ~.I ~IJ~ 160 ] 150 r,~'-_I____I---I--_I____I-__I_-_I_--I-__I_-----l-+-I__+-+_-+-_+-+_-+__+-__I 1---+----1---.- --- .-. ---1----1----1----1- --'- -.I---!--.--I--+--+--+---I------1 1401---+----1----1--·- 1...----1---. 1------l----+-----1I----.J---1------1~-_J_----I-+-+-_+--+-+-____I I---+----I---I---+----I---I--_J_----I---I---I--I--- 1---. \--- --1--+----1---+---1------1----1 1 0 I---+---l----__I---l-----I--.I----<-----1--.-1------1-----I---I------If.---- I--- _J_---I---I- ----4---1-----4 1-----+--1--1_---+--1------4--- -- 1--- - - - -.\-- -!-- ~- -.+--1-- --1--.!-- 120 I--_J_---l---I---_J_---+------Ii------l-----l------II------I----l------II---_J_---l---I---+---l---+---+---1 I---+----l---I---+-- .- -1-----1--+-1_---1--+-1------1-·-+-1----f-- e---I-- 1I01---+----l---I----1----I----I----1-----'I--·-I-- - - -- ---- - - - -1-- I,.. 19f' I'" 'MAl 1-----'---- ------'---'-----'--.--1----1-- ---.,-----.---'--- lU5 1'46
(App. A8-p. 7) -----~ .. _. -- .. _ . f-- -_. -- I---1- .. ---- _.-- .-1--- - 1-. ... ---_.- -_._.-- - ~Oi _.. ........ -- --- -- - _. f--- L_ _._... _.. -1--/---- 1---+-.- .-I-- ---- - r 1-- _... -- - _.- .._.- - -I- .. ---- --_. .". --- ..__.. ----- _._,..- -- - ... ilso 1---. _.. ---- - 1--- - --1--- -- -- -~. -- . - _. .. _-,.- _.- -- I----1--- -~ I--- --- I--- -- --_. - - .. .- -_.- ----. I~' - + 1--. ---_.- ._- --- --- -- - - p' -.' J! 300- tI' j IV 'p 1---1--- .. -- - r"- .-..- ---1- 1 I~ ~~ rr~~ r~ 1~ '-. f---- ~_L- ... .- ,~ IIIJ~ . ~ " p ~'i '-1--- _. 'r ---I--- ._- . ~ r-~t _ .. .- -_.. _.- f- _.. ..- I-- 250 I rr- --1--- ---- -_. - _. --f--. ---_. .._..- I---- .- 1-- -- - L I 1--- ._--I-- - ·'0-I-- __ I.- -- I--- ._+-- - --- /---- +-- _. -- f--1--- I-- .-l--- f -.- --.~ '.-1--- -- _. t-f-· ....- f--- 0 - '--.. - ._- -- .-1---.- I--- ..- ---- _. ~-~- - 1---.. .- .. ---I- --/-- -- 0 ---1--- . I--- --- -.. -- ---_.. - _. _..~- --- I--- MAl 0 1-- .. .. ._ .._-f--- . -- '---- 1951 1951 1952 1953 1954 19 18 20 250 400 350 300 5-10
800 700 600 500 450 400 350 (App. A8-p. 8) r----. --'---' 1'1 0 0- - --I- -00 I ~~ I , - A~" I 1",00 .- -- -- .-1-.-I-- , ~ • ~I J b. ld j~1 ,j~ , ; d I-- -. f-- - 500 .._-f-- .~ ~d, J m ,1Jl~ ~, .~ ,~ ~I' .J ~II IJI ~W --450 lr~, lu g n -- IlII' IU I N'W .- - .----- -- _. f-- --- -_.- _. -_ .. ._- - 400 - _. _._. -_.. 1--.. .-f-- -- --- - ..- - f-- .- -- - 1---. 1--...- -- _. - -_ .. --f--- -_. L-__1--- .. .. .. ---~- --I--.- - - -' -'-f---. -- ..- -- . --- ...- ---- ._--- '-- - '---- .- .L- -- -_. MAl ~.~-~..- Ins 1956 1917 1911 1919
MI 1 (App. AS-p. 9) 800 ,Jr1----1tI._+--+-I----: I ~~' J-1I!I4A"'--.J-.llI'.!i--l---.,II----J..--+- -+-- +----1- --II- I- eI" I---+-----.jl---!jlrlll-~-- I--- - - I-- -- I5-8 1960 1961
(App. A9-p. 1) Appendix A 9: DOW THEORY DATES AND DATA - The data on the following two pages are the dates and prices for the primary and secondary movements of the market as reported by Robert Rhea, one of the most authoritative interpreters of the Dow Theory. The sources include his books and his market letters. These data are charted in Figures 14B and 14C in Chapter 14.
[App, A9-p. 2) DOW THEORY - DATES OF PRIMARY AND SECONDARY MOVEMENTS - from Robert Rhea - (Prices are D-J Industrial Closing Prices. ) 5-6 -.-8/10/96 29.64 I 11/9/96 44.08 gt 4/19/97 38.49 ::: 9/10/97 55.82 I 3/25/98 42.00 +- 8 / 26 / 98 60.97 10/19/98 51. 56 4/4/99 76.04 5/31/99 67.51 9/5/99 77.61 12/18/99 58.27 2/5/00 68.36 +- 5 / 15/ 0 0 56.62 6/1/00 59.38 6/23/00 53.68 7/23/00 59.02 9/24/00 52.96 _ 6/17/01 78.26 +12/ 14/01 61. 52 9/19/02 67.77 12/15/02 59.57 2/16/03 67.70 8/8/03 47.38 t 8 / 17 / 0 3 53.88 11/9/03 42.15 1/27/04 50.50 3/12/04 46.41 12/5/04 73.23 + ::: 12/12/04 65.77 4/14/05 83.75 5/22/05 71. 37 1/19/06 103.00 3/5/06 92.90 4/3/06 98.19 7/13/06 85.18 10/9/06 96.75 ~ ~ ~ ~ ~ ~ 7 ~;: ~~ 11 /15/07 53.00 1/14/08 65.84 2/13/08 58.62 5/18/08 75.12 gt 6/23/08 71.70 ::: 8/10/08 85.40 19 / 2 2/ 08 77.07 11/13/08 88.38 2/23/09 79.91 11/19/09 100.53 ~11/19/09100.53 (1) 2/8/10 85.03 3/8/10 94.56 T 7 / 26 /1 0 73.62 8/17/10 81. 41 9/6/10 78.35 10/18/10 86.02 12/6/10 79.68 S 2/4/11 86.02 + - 4/22/11 81.32 6/19/11 87.06 9/25/11 72.94 9/30/12. 94.15 12/11/12 85.25 1/9/13 88.57 3/20/13 78.25 +- '"' 4/4/13 83.19 6/11/13 72.11 9/13/13 83.43 12/24/14 53.17 [a] 1/23/15 58.52 2/24/1554.22 4/30/15 71.78 ::: 5/14/15 60.38 + 12/ 27 /1 5 99.21 4/22/16 84.96 11/21/16110.15 2/2/17 87.01 3/20/17 98.20 11/8/17 68.58 t l l / 2 3/1 7 74.23 12/19/17 65.95 2/19/18 82.08 4/11/18 75.58 . 5/15/18 84.04 6/1/18 77.93 § 10/18/18 89.07 12 / 8 / 19 79.15 7/14/19 112. Z3 8/20/19 98.46 11/3/19 119.62 (Note: [a) This is a new series, to be comparable. multiply preceding figures by 0.7339 ) Fig. A9A
(App. A9-p. 3) DOW THEORY DATES (cont'd) T1l / 3/ ., 119.62 T 9/ 3129 381. 17 12/22/19 103.55 10/4/29 325. 17 1/3/20 109.88 10/10/29 352.86 2/25/20 89.98 11/13/29 198.29 tl:l 4/8/20 105.65 4/17/30 294.07 III 5/19/20 87.36 6/24/30 211.84 ., 7/8/20 94.51 tl:l 9/10/30 245.09 8/10/20 83.20 (1l 12/16/30 157.51 9/17/20 89.95 ., 2/24/31 194.36 12/21/20 66.75 6/2/31 121. 70 5/5/21 80.03 6/27/31 156.93 8/24/21 63.90 10/5/31 86.48 12/15/21 81. 50 11/9/31 116.79 tl:l 1/10/22 78.59 1/5/32 71.24 1= - 5/29/22 96.41 3/8/32 88. 78 -.4--6/12/22 90. 73 7/8/32 41. 22 10/14/22 103.43 9/7/3Z 79.93 tl:l 11/27/22 92.03 2/27/33 50.16 III tl:l 3/20/23 105.38 e. ., 7/18/33 108.67 7/31/23 86.91 - 10/ZI/33 83.64 8/29/23 93.70 t 4/6/3. 161.99 10/27/23 85. 76 4/29/36 143.65 2/6/24 101. 31 3/10/37 194.40 5/20{24 88. 33 6/14{37 165. 51 8{20/24 105. 57 8/14/37 190.02 10/14/24 99.18 11{24/37 113.64 ., 3/6{25 125.68 + 1/11/38 134.35 3/30/25 115.00 3{31/38 98.95 2/11{26 162.31 4/16/38 121.00 tl:l 3/30/26 135.20 tl:l 5/31/38 107.74 1= - 8/14/26 166.64 1= 8{6/38 145.67 - 10{19{26 145.66 -1--9/26/38 - 129.91 10/3/27 199.78 11/12/38 158.41 10{22/27 179.78 til (1l 1/26/39 136.42 5/14/28 220.88 ., 3/10/39 152.Z8 6/18/Z8 201. 96 1 4/ 8/ 39 121. 44 11/Z8/28 295.62 tl:l 6/10/39 140. 14 lZ{8{28 257. 33 e. 6/29/39 130.05 Z/5/29 322.06 - 7/22/39 144.71 5/27/29 293.42 8/24/39 131. 33 9/3/29 381. 17 Fig. A9B
5-4 (App. AIO-p. 1) Appendix AIO: DATA AND CHARTS - BULL AND BEAR MARKETS - PRIMARY SWINGS AND SECONDARY REACTIONS - 1897-1963 The charts which follow outline all the bull and bear markets since the beginning of the Dow-Jones Industrial average in 1897. The Primary Swings and Secondary Reactions are included. The swings are based on these definitions, which were developed in Appendix A6: (1) The great primary Bull and Bear Markets include all swings of the D-J Industrial average with an amplitude of more than 40% or a duration of one year or more. (2) The Primary Swings or Legs are smaller swings in the direction of the primary market, which are terminated by Secondary Reactions. (3) Secondary Reactions are all contrary swings within the bull and bear markets which exceed 5% in amplitude and one week in duration. The size of a bull or bear market can be measured by three yardsticks (These are tabulated on each chart): First: How far did it swing? This can be measured as a percentage. The charts have been put in this order. The biggest swing is first; the shortest is last. Second: What was the duration? How many days? In these charts the duration is calendar days. (See Appendix A13. ) Third: How many Primary Swings or Legs? In these charts, the primary swings or "legs" are solid lines; the secondary reactions are dashed. If a move in the primary direction is part of a secondary, it is dashed. The horizontal scale is only an approximate expression of time. The curve moves forward one space for each price reversal. The vertical scale is logarithmic, so that all of the charts are visually comparable. The current market is charted on Figure AIOH. Space is included to permit up-dating. A suggestion: Trace this chart on thin paper and lay it over the other charts for comparison.
(App. AIO-p. Z) Bull Markets: 400 ------- .. (I) 8/2411921 - 9/3/1929 2932 Day. 496.51 % 21. Primary Leg. J, J', ~, ~J'J; I G , ~I, I 250t---------------- -_ ...- 200t------------ ------- 150 I-----------t'..... II1:f---7~,. +iic--~'-- ---------- -- \1I , , ----- III I" ! I X, .1 J, , I , I I ~~ ! !4 .. o ---------.---- .._----_..--------- !'" o IE .. " 80 701-+--------------------------1 60L-------------------------! Fig. AIOA
(App. AIO-p. 3) Bull Markets: Bu II - {2l 212711933- 3/6/1937 1468 Days 287.70% 13. Primary Legs. --- r, 1 1\ "I 'i '. II, t ''.'' I I II •• 8 "~ , , " , "I: I I " • • R. I I " W : I'" I II , -. 8 I ' & , V J 0 0 0 I I o IA 8 90 7 6 5 150 200 100 Fig. AIOB 5-2
(App. AIO-p. 4) Bull Markets: Bu II - (3) 6114/1949 - 4/9/1956 2491 Days 224.13% 13 Primary legs. 600 Bull (4) 11/911903 -1119/06 300 I I . • I I , r _.__._.. .... \_.- -~ I 7. Primary Swings 80 [ I 701 ! 90 110 802 Days 144.37% 100 ... 0: C '" Z I---_.__._._-+---~-- il: o z 2 '"!!! '" 5001---------------+--1 400 ---------.- 200 250 150 Fig. xroc
(App. AlO-p. 5) Bull Markets: Bull (6) 7/30114-11/21/16 845 Day, 110.13% 9 Pri. leg, 0 I 1\1 18 , /'.~,~ 1~ t I I v~ II: .. ;0 l 0 :t: I • r; , 0 , :II! I .. I 0 w .. fOyjl 60 90 70 BO 50 120 100 Bull (5) 4/2B/42 - 5/29/46 1492 Day, 128.69% 7 Primary Swing, .; K '" • :I 0 -; l- S .: > w .. 0 7' ~, , /",I I , "~ I ,- 90 100 150 200 220 Fig. AlOD 6-1
35·---- Bull (7) 4/19/1897 - 9/5/IB99 869. Days IDI.64% G. Primary Swings 80 70 60 50 40 \IJ "g 0- :> z ;0 Q .."' ,. , <i I '" I I 0- I i on • 0" •• 5 'I"' 11 (App. AIO-p. 6) Bull Markets: Bu II (8) 7/8/32 -9/8/32 62. Day s 96.64% I. Pri. Swing 90 80 70 60 110 100 90 80 70 60 50 Bull (9) 11/15/07-11119/09 735 days 7_ Primary Swings 89_68~ 0 f.j "J J, , \ • "AV Fig. AlOE
(App. AIO-p. 7) Bull Markets: 6-3 Su [I (10) 12119117-11/3119 684 doys 6. Prj mory Swi ngs 81.38% 130~------1 100 ------+-J--l---j 90 1-------+-------1 60L-------- 800 700 600 500 400 8 u II (" ) 10/22/57-11/15/61 1485 doys 8 Prlmory Sw jngs 75.68" ifJ Jj 'J e ",. ,\1\ , II. "~ I' ,r V 1/1 II W' \~ I', ;.l l-.---. Fig. AIOF
(App. AIO-p. 8) Bull Markets: Bull (12) 3/31/3B-1I110/3B 11113/29-4117130 9/24/00-6/17101 3 Primary legs 371 Days 29.08 % 2 Pri. legs Bull (15) 9/25/11- 9/30/12 80 .f' 90 100 Bull (14) 60 1-+-----1 701---1Yt+.LJ-l 266 Days 47.77'" 5. Prl. 'ells 80 Bull (13) 155 Days 4B.00% 2. Pri. 'egs 300 224 Days GO.42% \ l\ .' I I I \ ...A 01 I :. I g 140 120 100 160 90 50'----------l 70 Fig. AIOG
(App. AIO-p. 9) Bull Markets: The Currenl Markel-- Begins: 6/25/62, 2. PM DJI=52669 ~.!~ I!:c.... .. " .. 1-1.- .. " I-- z z I .. : z I -J , , , , 700 900 1100 500 600 800 1200 1000 Fig. AIOH 6-5
(App. AIO-p. 10) Bear Markets: (3) ... '" .. :> 1119/06- 11/15/07 665. Doys 94.34% 7. Prlmorv Lege .. 0 1, S ~::i k' J", .I , ., , :\.~ i l,~ 90 80 60 70 10 50 Fig. AIOI (2) 3/6/37 - 3/31/38 390. Dovs 9G.93'r. S. Prlmory Legs \ ., ... 0 .. ! '" \ . .. lI i I 'J : '.!. :\. I : k \I I ., I ; 90 150 200 100 \ (I) 4/17/1930 -7/811932 813. Doys r II I 616.7Z % " , '" II. Primory Legs \ ' , I , I I : a I A. .-,1 " ", , e ! l i I r . I I : y I I I I , I I I I I 1 I .1 : " I ", til Y I , , I 40 70 6-0 50 80 90 150 100 200 250 3-00