If one follows the tenets of any of these theories, one finds there are times when all of these theories work extremely well. Unfortunately there are also times when these theories break down and seem not to work at all. Why should there be times when these theories work so well, and times when they work so poorly? Some people maintain it is because the movements of stock prices are random. Because they are random they cannot be predicted. Any correlation between the actual movement of prices and the movement predicted by any of these theories is strictly a chance occurrence. We take an opposing viewpoint and argue it is because they are only parts of a more complete theory. Or put another way, there is an all encompassing theory that manifests itself in ways that appear as patterns identified by Technical Analysis, or as Cycles, or as waves prescribed by the Elliot Wave Theory, or as highs and lows coming in as predicted by the Delta Phenomenon. We call this the Alpha Theory.

                What is the Alpha Theory? Very simply it states that over specific time intervals price movements can be broken down into exactly eight waves. Three of these waves form the up portion of the time interval; three form the down portion; and two are flex waves that can be part of the up portion, part of the down portion, or can be independent. The highs and lows within each time interval become the waves for the next higher time interval. If one can accurately identify the waves for each time interval, one can then determine with some confidence the likely turning points for subsequent time intervals. That is what we have set out to accomplish with this newsletter.