He points to overbought/oversold indicators and says the stock market was "overbought years ago" but prices kept going up. Some critics of Elliott analysis fault the theory's potential for subjectivity in counting the waves. Prechter counters by saying, "It is an objective discipline, but it only speaks to probabilities.... It says, ‘this is more likely than that.’

"Even so, sometimes the critics are right because a particular practitioner is not prioritizing his probabilities correctly. Every human, including me, is under influences we have to struggle to overcome."

Prechter admits that there are certain markets in which Elliott analysis tends to work better than others. He points to the stock and gold markets as two particularly suited to wave analysis.

"These markets reflect social mood in general, which tends to reflect the Wave Principle," he says. "The worst are the meats."

He says the livestock market's interdependence on some of the agricultural markets for feed could complicate those markets’ influences.

Also, "some of the small currencies don't seem to follow the Wave Principle very well," he says. "Because they are minor markets, mass psychology has less freedom to express itself with abandon."

Looking at the commodity markets, Prechter thinks that during inflationary times, one can see waves develop clearly, while during periods of "monetary calm," the markets tended to "meander."