Question of the Week: 1/16/2006
How is wave structure impacted by dividends and interest payments or stock splits?
This question, asked by Ahmad Pesnani, is important for those trading (and applying wave theory to) equities. No matter which of the above three events occurs, it is known well in advance, giving investors plenty of time to contemplate, calculate and plan for their impact. Lacking the unexpected impact and surprise of an event such as hurricane Katrina, dividends and interest payments simply become part of the psychological fabric of a stock and should have no impact on wave structure.
Regarding stock splits, because exchanges retroactively adjust and connect historical prices for a stock to the new price level, stock splits also have no impact on wave structure. Therefore, when applying wave theory to equities, I would ignore news regarding dividends, interest payments and stock splits and simply apply all NEoWave rules as you would to any other market.
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