A tribute to the incredible predictive power of Elliott Waves.

I have been using EW for a long time.  The reason for this is that I have observed too many occasions where they they are incredibly accurate.  I mean, they can predict things that most people would not agree are even possible.  Of course, you have to do the count properly and of course even a valid count can be avoided by the herd in favor of one that will result in less winners (or the most losers).   Such was the recent case for NFLX.

While I have made a couple of early/incorrect topping calls on NFLX shares, those applying the calls properly would have gotten stopped out very quickly.  But my most recent call was also my most detailed call and that one I got very close to perfect.  Here is the high level picture.  NFLX gapped down because it had hit a 3rd wave.  The gap, of course, took out the lower rail as 3rd waves are meant to do.




On the left below is the chart model I provided before the big crap out of the shares and to its right is what actually happened.  At least part of what happened.  The rest of it fell off the bottom of the page.  So I nailed the bottom of black 1 but black 2 decided to get tricky and do an expanded flat correction shown on the right (red a-b-c resulted in black 2).  Then wave 3 began to unfold with pink 1 and then an flat correction into pink 2 and then off a cliff in pink 3 of black 3.

No other form of technical analysis will predict this kind of thing.  My left hand model clearly expected it: "WE should see a big gap in here.".

For the longest time I practiced Elliott waves while calling it the Elliott wave theory.  It always bothered me that EWI called it the Elliott wave principle.  But now I see that it was my inexperience that was bothering me.  The Elliott wave principle is real.

In any case, the kind of technical damage that was just done to NFLX is not easily undone. More than likely, it will continue to sell off even more in the coming days.