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Stocks , Investing , US Markets

Is the Stock Market Random or Patterned?

The latter – which is why the Elliott wave model allows for high-confidence market predictions

by Bob Stokes
Updated: September 18, 2018

You want to know what's next for the stock market, a question more than relevant after a nine-year bull run. You probably read articles and watch TV shows that help you answer this question.

Yet, many people, including some academics, believe stock market movements are simply haphazard meanderings.

In other words, market prediction is an utterly futile endeavor, they say.

Statastician Maurice Kendall proposed that the stock market's behavior was random back in 1953, an idea reiterated by economist Paul Samuelson in 1965. The proposal was further advanced in Burton Malkiel's 1973 book, A Random Walk Down Wall Street.

But professors Andrew Lo and A. Craig MacKinlay refuted the random theory in their 1999 book, A Non-Random Walk Down Wall Street. Here's an excerpt from the introduction:

If there is one central theme that organizes the papers contained in this volume, it is this: financial markets are predictable to some degree ...

In our experience of having observed and predicted the markets for almost 40 years, the random walk theory has been thoroughly discredited. Indeed, we have long seen evidence that market indexes are patterned according to the Elliott wave model. Here's the basic design:


For example, two years ago, our February 19, 2016 Elliott Wave Theorist told subscribers that a nine-month downtrend in the stock market beginning on May 19, 2015 had just ended on Feb. 11, 2016. The downside pattern was likely complete. The Dow climbed over 2000 points in the next two months.

The June 2016 Theorist gave an update:

We had been very bearish in the first half of 2015, and the market finally responded with a huge panic in August 2015, which erased over two years' worth of gains in the Dow and S&P. The decline initially seemed to be the kickoff to a bear market, but, as we showed back then, the Dow held within its trend channel, so an upside resolution was still possible. After a rally and another decline, the outlook became certain.

This is just one example of how Elliott wave analysis has served our subscribers.

Now, here in September 2018, the just-published Elliott Wave Theorist says:

What happened over the past month cleared the Elliott wave picture in two key indexes.

The price pattern of the stock market, once again, "became quite certain." Make no mistake: This analysis is time-critical.

You are encouraged to find out exactly what the Theorist is talking about so you can position yourself for what we anticipate to be the market's next big move.

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After almost 40 years in the business, we know the dangers well.

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No other analysts in the world, anywhere, undertake the depth of research that goes into the Financial Forecast Service. Throughout the month, Bob, Steve and Pete sift through mountains of data, often studying 100 years of data or more. Why? Because a chart of the big, long term waves is the only way to know precisely where in the pattern we are today – and therefore, precisely where we are most likely to go next.

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