Best Financial Markets Analysis Article The August 2009 issue listed the range for typical retracement as being from 9368 to 11,620. This is a wide range, but there is nothing we can do about it; second waves have a lot of leeway. The illustration shown in that issue is reproduced below alongside an update of market prices. The Dow has so far stayed within the normal range."

Read Part One of Robert Prechter's Latest Two-Part, April-May Theorists FREE The April-May Theorist series entitled "Deadly Bearish Big Picture" reveals a lucid picture for 2010-2016. It's the flip side of Robert Prechter's February 2009 Forecast for a 'Sharp and Scary' Rally. Click here to download the 10-page part one for FREE now.

Even so, I expected the rally to peak in the lower half of the target range then reverse. In August 2009, after 5 months, and in November, after 8 months, I was quite sure that the rally was ending. But instead of stopping near 10,000 at a 50% retracement, it has reached a 60% retracement. Whenever a market surprises me, I try to figure out why.

The Outlook From Time Cycles

For newer readers, I should reiterate that my view of time cycles is that they are very transient epiphenomena of the Wave Principle. This means that cycles are not the fundamental regulator for stock prices. They merely show up for a time, like the appearance of the occasional perfect oval in a fractal video. Cycles can be quite useful for a time. When they disappear, you look for the next oval.

For some time, I had tracked a 3.3 year cycle, which was distinct from 1978 to 1997 and then disappeared. The venerable 4 year cycle was distinct from 1962 to 2001. There was a minor pullback into late 2006, and if the 4-year cycle were still operating, its next low would be due in late 2010. This is one reason why I expected a sharp rally off the 2009 low and then a crash. This rally has been sharp, but it has gone on too long to......... Download the rest of this 10-page issue of Robert Prechter's Elliott Wave Theorist FREE from Elliott Wave International.

Robert Prechter, Chartered Market Technician, is the world's foremost expert on and proponent of the deflationary scenario. Prechter is the founder and CEO of Elliott Wave International, author of Wall Street best-sellers Conquer the Crash and Elliott Wave Principle and editor of The Elliott Wave Theorist monthly market letter since 1979.

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