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Question Of The Week - Library Of Past Questions |
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| 9/12/2007 |
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| Question: |
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Is NEoWave suitable for individual Stocks?
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| Answer:
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Both NEoWave and orthodox Elliott Wave depend on mass psychology to create identifiable price patterns that are then used to predict the future. The smaller a company, the less liquid its stock (i.e., the smaller its float) and therefore the less its price action reflects mass psychology.
In general, I don't recommend using wave theory to predict individual stocks. Wave theory works best when applied to stock indicies such as the S&P 500, Russell 1000, the Nasdaq, the Dow Jones Industrial average or any average that reflects a country's top companies.
If you are going to use wave theory to predict the action of an individual stock, I recommend you reserve it for companies with one billion in market capitalization or higher. Any mid-cap company should fall into that category.
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