Elliott Wave Stock Market Forecast - July 26, 2006

In our mid June update, we suggested there was a 75 percent probability that the DJIA would rally to new all time highs in the months to come. That probability is even higher now. Last month we examined four viable wave counts for the market at the time. Three of the four supported the proposition that new highs were a "done deal." Given the market's progression over the past month, one of the four is now more likely than the others...and that count suggests that the DJIA is tracing out the final wave of a (b) wave triangle. Wave e of the triangle, a three wave a-b-c, appears to be tracing out an inverted flat (3-3-5). The DJIA should explode to the upside during the final phase of the pattern. Watch for a possible top around the Fibonacci Cycle week of August 25th (which coincidentally was the date the market peaked in 1987 before the crash).