Ralph Nelson Elliott

By Kenneth Robson on July 2, 2012 • ( 0 )

Try as I might, I have failed to master in my study of technical analysis, the labrynthine extensions of Elliott Wave Theory. I have however come to a deep respect for the accuracy and significance of his observations of market behaviour; observations which built on the foundations laid by Charles Dow.

Ralph Nelson Elliott died in1948 aged 77 years. He initially worked in various positions in the US railroads but at 25 he became an accountant, specialising in railroad and restaurant accounting. He travelled widely in this role, particularly in Central America and Mexico.

It was after he contracted a severe alimentary complaint in 1926 and became bedridden for many years that he took an interest in the stock market. He read Robert Rhea’s book on Dow Theory and subscribed to his stock market newsletter on Dow Theory Comment. He also took to constructing his own charts in differing time frames, and with his background knowledge of Dow Theory, made additional observations about market behaviour and the evolution of market trends. He thought that his observations and ideas, which he came to call the Wave Principle, were “a much needed complement to the Dow Theory”.

Running out of money in 1934 as a consequence of his illness, and the stock market crash, he successfully appealed to the publisher of a stock market newsletter, Charles Collins, to publish his views on the Wave Principle, and his forecasts on the behaviour of the Dow indices. It was not until 1946, 2 years before his death, that he wrote his definitive work, which he titled “Wave Principle, Nature’s Law-The Secret of the Universe”.

His theories have been perpetuated by the work of others. A Hamilton Bolton in 1953 published the Elliott Wave Supplement to the Bank Credit Analyst annually for 14 years until his death in 1967, when A.J. Frost took over the Elliott Supplements, and collaborated with Robert Prechter in writing a book in 1978 on the Elliott Wave Principle. In 1980, Robert Prechter published the original Elliott writings in a book entitled “The Major Works of R.N. Elliott”.

I hope to summarize another time his contributions to technical analysis.