U.S. Stocks On a Collision Course with Market History

The past offers answers about the future; market patterns do repeat themselves

By Elliott Wave International

Next time you look at a clear night sky, keep in mind that what you see is the distant past.

Most stars are so distant that it takes millions of years before the light is visible to us.

Even so, astronomers can learn much about the future of the universe by studying the past.

NASA astronomers announced they can now predict with certainty the next major cosmic event to affect our galaxy, Sun, and solar system: the titanic collision of our Milky Way galaxy with the neighboring Andromeda galaxy.

NASA, May 31, 2012

That collision is expected in some 4 billion years.

The Hubble Space Telescope also recently revealed the farthest-ever view of deep space. NASA noted, "The images allow us to follow the development of the universe."

And back here on earth, Elliott wave practitioners study the market's past price patterns to determine the probable development of the present trend.

You see, price patterns repeat themselves at all degrees of trend.

Indeed, Robert Prechter recently discussed how past wave patterns are similar to what's unfolding now:

The ... rallies of 1929-1930 and 1938-1939 are good examples.

The Elliott Wave Theorist, September 2012

Both of those rallies came after steep market declines. Likewise, the present rally of three and a half years commenced after the 2007-2009 market plunge.

Be aware: Both of those past rallies in turn fell back into severe market declines.

The Dow Industrials lost 86% on just the second leg of the 1929-32 bear market, and surrendered 41% during the 1939-42 downtrend.

U.S. markets are likely on a similar collision course with history. The present price pattern is unfolding at a larger degree of trend than those previous two periods.

Position your portfolio for what Prechter calls "History in the Making."

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This article was syndicated by Elliott Wave International and was originally published under the headline U.S. Stocks On a Collision Course with Market History. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

2 thoughts on “U.S. Stocks On a Collision Course with Market History

  1. I have the Elliot Wave Financial forcast from October 2007 and February 2009. they were right on the money for both the bear market from 2007 and the bear market ralley that started in March of 2009 to May 2012. They had to eat crow twice over the past three years because of the complicated wave counts but at every major turning point they were on the money. I saved hundreds of thousands of dollars in 2007 and did ok on the bear market ralley. Every time the market pulled back it was the end of the world for them but it turned out to be a buy and hold from March 2009 to current. Well, this time they are right on the money. Longer term I have never seen the market to go up and pull back more then two time then continue up. It always pulls back two times goes up and then tanks. We shall see if they are right about the bear market contuation. It will be very interesting and this time my money is on them.

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