Market observations

In a prior post, Markets and psychology, I mentioned a market theory known as Elliot wave principle. Elliot wave principle states the markets move in five wave fractal shapes dependent upon investor sentiment. It is a tool based upon probabilities estimating future outcomes. The theory gives investors windows of buying and selling opportunities.

I have encountered difficulty using this theory within the last week. If one examines stock charts over long periods of time, the wave can be easily identified in the data. Sometimes, the waves are not clear as they are being formed. For example, on February 9 I predicted we were on this step in the current Cycle:

Primary = 3 of 5
Intermediate = 1 of 5
Minor = 2 of 3
Minute (not sure)

After about a week of market action, this stage in the Cycle has yet to be fulfilled. My current guess as of today's close (2/17) is:
Primary = 3 of 5
Intermediate = 1 of 5
Minor = end of 2
Minute (still not sure)
I was assuming the Minor 2 of 3 was unfolding as we had entered into the 3rd Minor wave. Further market action completed a nice rebound 2nd Minor wave demonstrating we were not that far into the overall wave structure yet. The 3rd Minor is coming at a later date.

What went wrong? Two things come to mind.
1. I had my investments ready for a 3 of 3 Minor movement. My bias.
2. Other more experienced bloggers I follow came to the same conclusion. The waves were unclear as they were being traced.

It is now obvious what the wave patterns are, not so in real time. Stock market investing in general follows this unknown path. Mr. Market will move as Mr. Market chooses. As Yogi Berra said, "It's tough to make predictions, especially about the future."