Elliott Wave Stock Market Forecast - June 15, 2006

Yesterday, the DJIA completed a three wave decline of 972 points...nearly matching the three wave 984 point decline of March/April 2005. With the DJIA holding at important trendchannel support and sentiment moving to extremely pessimistic levels, the odds have increased dramatically that the DJIA will rally in the coming months to new all time highs. As I see it, there are essentially four viable wave counts for the market at this time. Three of the four support the proposition that new highs are a "done deal." Only a weak three wave rally that falls short of 11670 (the May 10th high) would cause me to conclude that a wave (c) (diagonal triangle type) decline was indeed underway. Two of the four most likely wave counts suggest that the next rally will be the final wave of a triangle (in one case, a (b) wave horizontal triangle...in the other, a C wave diagonal triangle). The other remaining wave count is the most bullish...and is based on the possibility that the DJIA has completed a "B" wave horizontal triangle.