The Elliott wave principle
A way of describing a share’s path as a repeating sequence of five waves with the trend and three against it — and the most subjective thing in this glossary, which is why stocks-llm publishes a candidate labelling with the price that would kill it rather than "the" count.
Ralph Nelson Elliott, an American accountant recovering from illness in the 1930s, spent several years reading decades of index data and concluded that crowd behaviour leaves a repeating shape on a price chart. In his description a market advances in five waves — three of them (1, 3 and 5) in the direction of the larger trend, separated by two pullbacks (2 and 4) — and then gives part of the advance back in three waves labelled A, B and C. The same shape is claimed at every scale, from decades down to minutes, which is where much of the method’s appeal and most of its trouble come from.
The trouble is worth stating before anything else, because it decides the whole shape of what stocks-llm can honestly publish. Two competent analysts routinely label the same chart differently and both labellings obey the rules, since the pattern is defined by relationships between turning points and WHICH turning points you count is a judgement, not a measurement. So there is no such thing as "the" count, and a site that printed one would be presenting a judgement as a reading. What is published here instead is built the other way round: every labelling that ends at the most recent turn is enumerated, the ones that break one of the three inviolable rules are thrown away, and the strongest survivor is reported as a CANDIDATE — carrying a confidence word, an alternate reading where a rival survives the same stretch of bars, and always the price at which the labelling is dead. Where nothing survives, the answer is that no clear structure fits, which is what a large share of the companies covered get on any given day and is a first-class answer rather than a gap.
What that candidate is and is not. It is a description of turns the price has already made, arranged into a shape; it is not a forecast, not a target and not a signal to buy or sell anything. It is computed nightly from up to two years of split-adjusted daily closes, at ONE wave degree only — the swings that survive the 5% reversal filter stocks-llm uses — so there is no labelling of smaller waves inside a wave, which is a large part of what practitioners do and is deliberately not modelled here. A company with fewer than 44 sessions of history, or too few turns to see four of them, gets no reading rather than a reading fitted to thin evidence. Nothing here is advice.
Stocks in a candidate Elliott wave 3 →
See more terms in the stocks-llm glossary.
Informational only — NOT financial advice. This is an educational definition, not a recommendation to buy or sell anything. Metrics on stocks-llm are delayed data and may be missing or stale. Always verify information independently and consult a qualified financial professional before making any investment decision.