Elliott Wave Stock Market Forecast - April 27, 2007

Four years ago, I forecast that PRIMARY wave (B) would rally to the 13040 area by 2007-8. We are now clearly within that time window. This week the DJIA rallied 80 points above the 13040 level, but it is not problematic...and here is why. 13040 was calculated based on a series of Fibonacci progressions that have developed since the current SUPERCYCLE began in 1932. From 1932 until 1937, the DJIA increased a Fibonacci 377 percent (actually 382 percent). From 1942 until 1966, the DJIA increased a Fibonacci 987 percent (actually 980 percent). In 1997, the DJIA paused after reaching the 8300 level (a 987 percent increase from the 1982 low of 769), but then 7 months later surpassed it. Since the next progression in the series was an increase of 1597 percent...it became evident (at least to me) that the DJIA was targeted towards 13067 (15.97 x 769.98 plus 769.98). Historically, however, there has been a .6 to 1.1 percent error factor in making these calculations. Since we are now above the 13040 area (the weighted midpoint based on the historical range), the high should be 13145 to 13211. We did, in fact, enter that area today.

The evidence is clear to me that a major wave pattern is ending. The DJIA has rallied nearly 6000 points (over 80 percent) since the 2002-2003 lows. Given where I believe we are in the long term SUPERCYCLE and CYCLE wave counts, the next major wave pattern will retrace most, if not all, of the gains made during the past 5 years. The only uncertainly I can see at this point is whether we are making a top right now or whether the topping process extends and becomes more complex (i.e, a diagonal triangle).