Elliott Wave Stock Market Forecast - January 30, 2007

Since the Fibonacci Cycle week of November 24, 2006, the DJIA has crept slowly higher. Just how slow you ask? Well, the DJIA has only gained an average of 3.7 points per day over the 44 days since the November 22nd high. (On the other hand, the NASDAQ 100 is 2.5 percent below its November 24th peak). Market sentiment has been excessively bullish during this entire period (click to see put/call ratio), but the market has not yet exhibited overly bullish volatility.

Since the market has not had a significant correction in six months, Elliott wave analysis has not been very helpful in terms of charting the market's future direction. As the chart above suggests (by the numerous alternate counts), the DJIA's Elliott wave count is not clear. The wave count will become clear ONLY after the next downward correction. At this point, the various alternate wave counts suggest that the next correction should take the DJIA back toward 12100, at least...and possibly below 10683, at most. Given the fact that several market indices have finally broken below trendchannel support (click to see OEX and XMI charts), a serious decline would appear to be imminent.