American stocks are poised to resume a bear market that may last for decades, according to Steven Hochberg of Elliott Wave International, who studies patterns and cycles of stocks to predict price swings

The rally in share prices over the past two years is only a pause in the market decline that started in 2000, said Mr. Hochberg. Technology shares will lead the drop that won’t end until benchmark indexes fall below levels prior to the start of the bull market in the 1990s.

“I am as bearish as I have ever been,” said Mr. Hochberg, the firm’s chief market analyst, in a March 1 telephone interview from Gainesville, Ga. “The action of the indexes portends a coming down phase for the market.”

Elliot Wave Theory garnered attention when the founder of Mr. Hochberg’s firm, Robert Prechter, used it to predict the October 1987 stock market crash. Soon after, Mr. Prechter called for declines in the 1990s as stocks rallied.

The Nasdaq Composite Index would need to fall below 1000, or at least its October 2002 low of 1108, before a bull market can be sustained, he said.

Technology stocks will post the biggest losses because the group has rallied the least from its low, retracing 27% of its drop, compared with 57% for the Standard & Poor’s 500 Index, said Hochberg.

“That’s a hint that the next leader on the downside will be the Nasdaq,” he said.

For the year, the Nasdaq has declined 5% while the S&P 500 has fallen 0.2%. The Dow Jones Industrial Average has added 0.3%.

Hochberg predicts swings in stock prices by following the Elliott Wave, developed by accountant Ralph Nelson Elliott in the 1930s and 1940s.The theory measures investor psychology and suggests their behavior and the movement of the stock market occurs in repeating patterns.

According to the theory, stock prices move in five “waves” that consist of three moves in one direction and two in the other. In a rising market, there will be three moves up intertwined with two moves down. In a falling market, the pattern is three retreats and two advances.

The S&P 500 and the Nasdaq tumbled from their March 2000 peaks in a five-wave down move that ended in October 2002. The indexes are in the process of completing a three-wave “upward correction” from that point, Mr. Hochberg said.

Stocks still need to unwind from the “mania” of the 1980s and 1990s, Hochberg said. Over the past 500 years, every mania finished below its starting point, he said.

Prechter, who founded Elliott Wave International in 1979, writes the Elliott Wave Theorist monthly newsletter. Hochberg and his colleague Pete Kendall pen another monthly called the Elliott Wave Financial Forecast..

Mr. Hochberg started his career on Wall Street as a retail broker for Merrill Lynch in the early 1980s. Visiting prospective clients at their homes and asking them for money to invest, Hochberg said he learned that investment decisions are based on emotion. Even though Hochberg was, by his own admission, a “horrible” broker, he said it prepared him for a career as a technical analyst.

“When you find out what is driving that emotion, then you have a key to understanding the market,” he said. “What technicians do is look at human behavior.”

Like Mr. Prechter in the 1990s, Mr. Hochberg has had his misses too applying the theory.

Following the September 11 terrorist attacks in 2001, for instance, Mr. Hochberg forecast the Nasdaq would recover from its slump to rally as much as 68%. Instead, the Nasdaq extended its losses and didn’t bounce back until after it set a six-year low in October 2002.

Mr. Hochberg recommends investors keep most of their assets in cash until the bear market passes.

“Cash is king,” he said. “The smart thing to do is to have most of your money liquid in cash and wait for a better buying opportunity. We are in a bear market that is just not over.”