WSJournal. Analysts Chart Stocks' Voyage to the Unknown

Sometimes the answer isn't in the charts.

The scope of U.S. stocks' record run has surprised almost everyone in the investing world, bull and bear alike. That includes technical analysts who track every twitch in the broad-market gauges, trying to transform historical price and volume data into a clear picture of future stock moves.

The 6,000-point rally in the Dow Jones Industrial Average over the past four-plus years has made many believers among technical analysts, who say such a steady increase suggests further gains are ahead.

But few are willing to project exactly how much higher stocks will go. That is because as stocks rise a key variable in the forecasting equation becomes more difficult to approximate: the behavior of always-unpredictable investors.

Case in point: Wednesday's wild run on the Dow, which was up as much as 155 points before ending 80 points lower following cautious comments on the economy from Federal Reserve Chairman Ben Bernanke.

"When you're in brand-new territory, it's difficult to say what will be resistance," said Jay Lefkowicz, technical strategist at New York brokerage firm Concept Capital Markets, referring to where the rally will stall. "There are people involved, so it's not always an efficient market."

Statue of Fibonacci, whose number system is used in technical analysis.

Whether technical analysis is really useful at answering such questions is a matter of some dispute on Wall Street.

Analyzing charts of past market behavior to try to predict future stock prices and trends, without the use of macro- or microeconomic research, often is referred to by skeptics as "voodoo" analysis.

More broadly, some investors believe it is impossible for any method to forecast the market's ups and downs. Academic studies have shown that when most people—professionals or amateurs—try to move money in and out of stocks to beat market fluctuations, they tend to wind up with losses .

Adding to that morass is the current setup, which involves tepid economic growth supported by unprecedented Federal Reserve bond purchases and near-zero interest rates. Those factors are making it more complicated to apply the traditional valuation metrics employed by analysts of business fundamentals and economic conditions.

That said, some investors lean on technically derived targets and trend analysis to help them make sense of the apparent chaos. While technicians often are wrong, some forms of chart analysis have been right often enough—including episodes in which they have called key market tops or bottoms—to have remained in use for over a century.

This year's gain has taken the Standard & Poor's 500-stock index, the measure most frequently followed by technicians, through the top of a 13-year trading range. Many technical analysts say that event suggests stocks are headed higher.

Some see the S&P 500 reaching 1750 over the "shorter-term," up from Wednesday's close of 1655.35, while others might target as high as 2500 over the next eight years.

"We may have confirmed that we're in a long-term secular bull market," said Craig Johnson, senior technical research analyst at Piper Jaffray, referring to a stock rally that takes place over years and isn't solely linked to an economic cycle. "But the question is, how far can we go from here?"

Technical analysts employ different tools to try to unfurl that and other mysteries.

Walter Zimmerman, chief technical analyst at New Jersey brokerage United-ICAP, leans on the Elliott Wave Theory, formulated by Ralph Nelson Elliott during the Great Depression. It is based on the belief that crowd behavior tends to follow quantifiable cycles and patterns.

The theory leans heavily on the Fibonacci sequence, which is a mathematical pattern of progression based on the ratio of 1.618 that has been used to describe natural phenomenon, such as the breeding pattern of rabbits and human body proportions.

Based on his interpretation of different Elliott Wave cycles and recurring technical patterns, Mr. Zimmerman sees multiple potential resistance levels for the S&P 500 between 1750 and 1790. That would mean gains of at least another 4% for stocks from Wednesday's midday levels.

He adds a caveat. "We're not trying to outsmart the market by picking the top." The price objectives are only intended to be levels where "we should be watching the market extra closely," Mr. Zimmerman said.

Piper Jaffray's Mr. Johnson said the S&P 500's jump should propel the index to 2000 by the end of 2014. The breakout also sets an important new floor for the market at previous resistance at 1550.

Concept Capital's Mr. Lefkowicz said a monthly close above 1620 would confirm a very long-term, secular bull market that can eventually carry the S&P 500 above 2500. But it could be a while, he added.

That said, all the forecasts are apt to be fallible for a familiar reason.

"The reason some patterns tend to repeat themselves, is the one thing that all markets at all times always share: human nature," Mr. Zimmerman said.