WITH the stock market lurching again, plenty of investors are nervous, and some are downright bearish. Then there's Robert Prechter, the market forecaster and social theorist, who is in another league entirely.

Mr. Prechter is convinced that we have entered a market decline of staggering proportions - perhaps the biggest of the last 300 years.

In a series of phone conversations and e-mail exchanges last week, he said that no other forecaster was likely to accept his reasoning, which is based on his version of the Elliott Wave theory - a technical approach to market analysis that he embraces with evangelical fervor.

Originating in the writings of Ralph Nelson Elliott, an obscure accountant who found repetitive patterns, or "fractals," in the stock market of the 1930s and '40s, the theory suggests that an epic downswing is under way, Mr. Prechter said. But he argued that even skeptical investors should take his advice seriously.

"I'm saying: 'Winter is coming. Buy a coat,' " he said. "Other people are advising people to stay naked. If I'm wrong, you're not hurt. If they're wrong, you're dead. It's pretty benign advice to opt for safety for a while."

His advice: individual investors should move completely out of the market and hold cash and cash equivalents, like Treasury bills, for years to come. (For traders with a fair amount of skill and willingness to embrace risk, he suggests other alternatives, like shorting the market or making bets on volatility.) But ultimately, "the decline will lead to one of the best investment opportunities ever," he said.

Buy-and-hold stock investors will be devastated in a crash much worse than the declines of 2008 and early 2009 or the worst years of the Great Depression or the Panic of 1873, he predicted.

For a rough parallel, he said, go all the way back to England and the collapse of the South Sea Bubble in 1720, a crash that deterred people "from buying stocks for 100 years," he said. This time, he said, "If I'm right, it will be such a shock that people will be telling their grandkids many years from now, 'Don't touch stocks.' "

The Dow, which now stands at 9,686.48, is likely to fall well below 1,000 over perhaps five or six years as a grand market cycle comes to an end, he said. That unraveling, combined with a depression and deflation, will make anyone holding cash "extremely grateful for their prudence."

David Fuller's view Behaviourists among you may recall a plethora of bearish forecasts when markets become oversold just as bullish extrapolations often occur following strong rallies. Extremes of crowd sentiment reflect what people have already done. The investor who owns no stocks and may also be short will certainly be bearish, otherwise he would be schizophrenic.

Our Apocalyptic thoughts usually say more about our nightmares than any objective analysis. A forecast in the NYT article above which I do take seriously is Ralph Acampora's suggestion that the market could drop another 10 to 15 percent, probably until September or October, before resuming another "meaningful rally."

Taking developments one step at a time, I am not forecasting a decline of that magnitude because short-term indicators are deeply oversold at present, as I have mentioned in the Audios during the last few days. Therefore I think that today's upward dynamics, although not maintained by Wall Street, confirm the onset of at least a sharp technical rally.

Today's rebound in most of the previously weak OECD country stock markets may be due more to short covering than investment demand. If this remains the case the rally will struggle to last more than a week or two. However, if bargain hunters are returning to the stock market and if others holding cash are drawn in by upward momentum, then we could be seeing an important bottom.

I am not ruling out this best-case scenario because valuations are reasonably attractive once again, as I have been mentioning in the Audios recently. However, investor confidence has taken a knock and there is also plenty to worry about, which brings me back to Ralph Acampora's forecast mentioned above. The overhanging top formations evident on index charts for the USA and most European stock markets have the potential to push equities lower during this period of seasonal underperformance if today's oversold bounce does not gain traction.

Meanwhile, I am gratified that some Fullermoney themes have remained very firm recently despite Wall Street's significant correction. (See also Today's Interesting Charts below.)