Elliott Wave Stock Market Forecast - May 26, 2006

In our last update we said that "the next decline should break below the trendline that has supported the market after each short term decline this year" (it did!)...and "all of this year's gains should be rapidly retraced once the selloff gets underway." From the beginning of the year, the S&P 500 rallied for 86 days...from a low at 1245.74 to a high at 1326.70. In just 12 days, that entire gain was retraced. Other indices that have not yet fully retraced their gains this year year will follow suit in the weeks to come. Our wave count suggests that wave (c) of B is now underway (alternatively, wave d could be unfolding, if wave (b) is tracing out a horizontal triangle). The extent of the decline will depend on whether wave (b)'s pattern is complete or not, i.e., if wave (b) extends and develops into a triangle pattern the decline will be much less severe than a wave (c) decline...both in terms of price and time. Elliott Wave Charts and further analysis can be found here.

Elliott Wave Stock Market Forecast - May 7, 2006

Although the DJIA continued this past week to lead most indices to new highs for the year, our operative wave count remains the same, i.e, a top is forming and the next decline should break below the trendline that has supported the market after each short term decline this year. Our wave count suggests that wave c' of c of (b) of B is in its final topping phase. The next selloff will be either wave (c) of B, or alternatively, wave d, if wave (b) is not yet complete. The extent of the decline will depend on whether wave (b)'s pattern is complete, i.e., whether it extends and develops into a horizontal triangle pattern (a wave d decline would be much less severe then a wave (c) decline...both in terms of price and time). Elliott Wave Charts and further analysis can be found here.