# Science Based Market Forecasting

Let's say you're highly interested in the Wave Principle but haven't had time to study the academic writings about this vital subject. A 1996 quotation from France's Journal of Physics is offered with you in mind, says Elliot Wave.

"A lot of effort has been developed in finance both by academic and trading institutions and more recently by physicists. . . to analyze past data to get information on the future. The 'Elliott wave' technique is probably the most famous in this field. We speculate that the 'Elliott waves'. . .could be a signature of an underlying critical structure of the stock market." "Stock Market Crashes, Precursors and Replicas," quoted in the Elliott Wave Theorist, August 1999.

The stock market is not the only place the above-mentioned "signature" appears. Consider "branching fractals" such as blood vessels or trees: a small tree branch looks like an approximate replica of a big branch, and the big branch looks similar in form to the entire tree. Is the branching of trees, blood vessels, or river tributaries random?

Bob Prechter describes another study, which found that a particular branching fractal (DLA cluster) has the same mathematical sequence (Fibonacci) "in the same place that R.N. Elliott found the Fibonacci sequence in the Wave Principle: in the increasing numbers of subdivisions as the phenomenon progress." (The Wave Principle of Human Social Behavior,  p. 66.)

The Wave Principle reflects an order found in nature itself. When you look at a stock market price chart, you are looking at a fractal.   Natural structures are timeless: "Stock market analyst Robert Rhea undertook a statistical study of bull and bear markets between from 1896 to 1932. . .To generalize his findings, the stock market on average advances by 1s and retreats by .618s. . ." (Elliott Wave Theorist, August 1999).