The Wealth Factor
Stock Market Strategies, Segment 6
By Dr. Stephen Cooper

Can Charts Predict the Future?

We should get the answer to this question out of the way first. The answer is, “no”. You cannot predict the future by looking at stock charts. Oh yes, there are plenty of people who will disagree with me on this. I know that there are plenty of people who make their investment decisions based on astrology, card reading, visitations from the departed, or taking hot tips. From what I have seen so far, these techniques don’t work overly well.

On the other hand, I have observed that a rational study of stock charts can and will provide valuable insights to the probable course of price change in the near term. The reason that this is so is because the study of stock charts is essentially the study of history. There are patterns of price change that appear over and over again. This is what we look for in the charts.

I am going to show you a fascinating chart that clearly shows a certain pattern that shows up over and over again. It is called “Support.”

The points shown by the two blue arrows are when prices dropped down through support. When you see this, expect prices to then move down further in the following days and weeks. This is, in fact, one of the most important patterns/principles of chart analysis. It is one that I teach my students to always be aware of.

In this case we had two distinct warnings that prices were headed down and that it was not time to buy. If you had investments that depended on the prices shown on this chart going up, you should have sold on the first and certainly the second “Down-side breakout”.

You see, this pattern does not predict the future. It simply points out to us that when such a “look” comes up on a chart prices usually will continue downward. In the next chart we’ll add more time so you can see what actually happened after these signals were triggered.

On the third day of trading after that second ”watch out!” signal, the Dow Jones Industrial Average suffered its largest one day point drop in history! The chart absolutely warned us that something was coming. We had no idea how powerful the drop would be but we should have been on alert to watch out. Do you know what date the huge point drop arrived? It was September 17, 2001, the first day the markets opened after the now infamous 9/11 terrorist disasters. No, there is no magic here. All you would have needed to do in order to have avoided this amazing stock market loss was to have kept one eye on the chart. By doing this, you obviously have a distinct advantage over those who do not.

Therein is the great virtue of looking at the “charts”. They provide insights and hints that are just not available in other places. These insights can then be translated into real stock market profits.

Dr. Stephen Cooper is the Director of, a training and support web site for both beginning and advanced traders .Over the past four years, Dr. Stephen Cooper has been the primary stock market trainer for Mark Victor Hansen and Robert Allen’s Enlightened Millionaire Institute. He has now taught thousands of students his proven trading strategies. He is the author of The Online Option Trader, Windows to Wealth, and The Truth About Money. He has also authored 10interactive chart analysis tutorial CDs and contributed to several newsletters and publications.