I wouldn't spend much time with the Elliot Wave guys, I haven't found them to be a good source of information in general.
But studying deflation is a good idea - in fact we're 'enjoying' a large bout of it right now. When people think of deflation they usually only think of the Great Depression. But the US, prior to that, regularly experienced mild deflation of 1-2%, which as Gary Shilling points out also coincided with GDP growth. Read his books to see the historical evidence.
Shilling posits that during the post war period we haven't seen deflation, good (of excess supply - mild) or bad (of deficient demand - Great Depression) due to a few factors, but mainly war. We've been on a war footing - with attendant overspending, which caused an unusually long inflationary period (the govt overspends on tin, for bombs and tanks and such, which is not balanced in the consumer arena, since the material is blown up or otherwise thrown away in the war effort).
At any rate we are experiencing deflation right now. Deflation goes beyond generalized price deflation. Housing is in massive deflation (1T so far in paper losses?), credit is in massive deflation (early estimates of 500B, with leverage equalling a few trillions), and many other industries are experiencing it too (airlines, autos, furniture, etc.)
We're not at generalized price deflation, but with retiring baby boomers who generally haven't funded their retirements, and with a world of excess production, many think that there's a good chance we'll see it. The Fed will fight it tooth and nail, but it may be pushing on a string (why take out a loan for a new car, even at 0%, when you don't want a new car?)
Commodity prices can as well be due to speculation, as supply.
Otherwise my deflation hedges earned me 20% last year. If I was more aggressive I would have earned, as others I know did, 600%