Executive Mentoring Program

Executive Mentoring Elliott Wave Lesson 3

Wave Rules

Copyright 2005 Vision Investing Group LLC., All Rights Reserved Reproduction in any form without expressed written consent is prohibited.

Course 2, Lesson 3, Page 1

Executive Mentoring Program

Rules of Wave counts

1. Wave 2 should not break below the beginning of wave 1. 2. Wave 3 should not be the shortest wave among Wave 1,3,5. Wave 3 should extend beyond the high of wave 1. 3. Wave 4 should not overlap Wave 1. 4. Rule of alternation. Waves 2&4

Copyright 2005 Vision Investing Group LLC., All Rights Reserved Reproduction in any form without expressed written consent is prohibited.

Course 2, Lesson 3, Page 2

Executive Mentoring Program

This checklist will help you in walking through the labeling process.

Copyright 2005 Vision Investing Group LLC., All Rights Reserved Reproduction in any form without expressed written consent is prohibited.

Course 2, Lesson 3, Page 3

Executive Mentoring Program

Copyright 2005 Vision Investing Group LLC., All Rights Reserved Reproduction in any form without expressed written consent is prohibited.

Course 2, Lesson 3, Page 4

Executive Mentoring Program

Wave 2 should not break wave 1

If wave 2 does break the beginning of wave 1 there is a good chance that the previous downtrend will continue, and that the labeling is incorrect.

Copyright 2005 Vision Investing Group LLC., All Rights Reserved Reproduction in any form without expressed written consent is prohibited.

Course 2, Lesson 3, Page 5

Executive Mentoring Program

Extended Waves

By definition an extension occurs in an impulsive wave, where waves 1, 3 or 5 can be extended, being much longer than the other waves. It is quite common that one of these waves will extend, which is normally the 3rd wave. The two other waves then tend to equal each other.

Copyright 2005 Vision Investing Group LLC., All Rights Reserved Reproduction in any form without expressed written consent is prohibited.

Course 2, Lesson 3, Page 6

Executive Mentoring Program

Wave 3 should not be the shortest of 1,3,5

5 Proper Labeling 3 3 4 2 2
Improper Labeling

Most probable Wave count 5

(3)

(1)

(2)

Be aware of possible extended waves.

If wave 3 does turn out to be the shortest, there is a very good probability that an extension is underway.

Copyright 2005 Vision Investing Group LLC., All Rights Reserved Reproduction in any form without expressed written consent is prohibited.

Course 2, Lesson 3, Page 7

Executive Mentoring Program

KMB 3rd Wave Extension

Reprinted Permission Qcharts

KMB showing an extended wave 3.

Copyright 2005 Vision Investing Group LLC., All Rights Reserved Reproduction in any form without expressed written consent is prohibited.

Course 2, Lesson 3, Page 8

Executive Mentoring Program

5th Wave formations

Truncated (shortened) fifths
3 5

1 4 2

Diagonal triangle
5 3

The 2nd and 4th sub-waves overlap to form a diagonal triangle

Copyright 2005 Vision Investing Group LLC., All Rights Reserved Reproduction in any form without expressed written consent is prohibited.

Course 2, Lesson 3, Page 9

Executive Mentoring Program

Wave 4 should not overlap Wave 1.

If wave 4 does enter wave 1, consider a possible extension is underway and this is actually wave 2 of 3.

Copyright 2005 Vision Investing Group LLC., All Rights Reserved Reproduction in any form without expressed written consent is prohibited.

Course 2, Lesson 3, Page 10

Executive Mentoring Program

Rule of alternation. Waves 2&4

Wave 2 and 4 should unfold in two different wave forms.
Wave 2 could be a Zigzag and wave 4 could be a Flat Each correction should unfold in a different pattern.

Copyright 2005 Vision Investing Group LLC., All Rights Reserved Reproduction in any form without expressed written consent is prohibited.

Course 2, Lesson 3, Page 11

Executive Mentoring Program

PLL Alternation

IRREGULAR

ZIGZAG

Reprinted Permission QCharts

Wave 2 and wave 4 will often alternate from each other. This example being a zigzag and an irregular.

Reprinted Permission QCharts

Copyright 2005 Vision Investing Group LLC., All Rights Reserved Reproduction in any form without expressed written consent is prohibited.

Course 2, Lesson 3, Page 12

Executive Mentoring Program

BMY Irregular BAC Flat Correction

Reprinted Permission QCharts

Copyright 2005 Vision Investing Group LLC., All Rights Reserved Reproduction in any form without expressed written consent is prohibited.

Course 2, Lesson 3, Page 13

Executive Mentoring Program

APCC Alternation

Flat .30 Retracement .886 Projection 1.0 Extension

Zigzag .618 Retracement 1.272 Projection 1.272 Extension

Reprinted Permission QCharts

Copyright 2005 Vision Investing Group LLC., All Rights Reserved Reproduction in any form without expressed written consent is prohibited.

Course 2, Lesson 3, Page 14

Executive Mentoring Program

Summary
The purpose of this lesson is to understand the rules of the Elliott wave principle. Four main rules are stated. Wave 2 cannot go below the beginning of wave 1. Wave 3 cannot be the shortest wave. Wave 4 should not overlap wave 1. There should be an alternating corrective pattern between waves 2 and wave 4.

Assignments
Utilize the checklist to start looking for probable wave counts on each of these stocks.
SPY,DIA,QQQQ, IBM,EBAY,AMZN, BA,WMT,INTC, GOOG,JPM,KBH, XOM,TGT,GS, RIMM,FDX Paper trade any patterns that you see. Be prepared to answer these questions on any two of these stocks for the next class. 1. Is there a five wave sequence? Or an ABC correction?

2. Are any of the four rules being broken within that sequence?

3. If these rules are being broken what is the possible alternative?

Review the recording for clarification and repetition.

Read and have an understanding of lesson 4

Copyright 2005 Vision Investing Group LLC., All Rights Reserved Reproduction in any form without expressed written consent is prohibited.

Course 2, Lesson 3, Page 15