Despite a strongly bearish long-term outlook, technicians Stephen Hochberg and Robert Prechter continue to see near-term upside for the market.

In The Elliott Wave Financial Forecast, a specialty service focused on a form of technical analyst known as Elliott wave theory, they explain, "Optimism is definitely on the increase, but it is not yet as the exteme that typically accompanies the end of a Primary degree rally.

"So notwithstanding near-term gyrations, the Dow should rise to the initial target, which remains in the 9,000 to 10,000 range.

Steve Hochberg believes the market is now in the process of forming a major long-term top. Here is his bearish outlook from the Elliott Wave Financial Forecast.

"Last January, we forecast that 2007 would be the year of the 'financial flameout'. And while the financial sector is down sharply, we believe this is still just the downpayment on the sector's full decline, which will last at least the next few years.

"From 1980 to 1999, we saw a simulataneous rise in the Dow in terms of dollars (nominal), gold (real) and commodities (purchasing power). This advance signified real gains for investors. The market's topping process started in late 1999 when the Dow peaked in terms of real money and purchasing power.

The Dow's rise since 2002, however, occurred only in dollar terms. The Dow's new nominal high does not represent an increase in purchasing power nor a rise in real money. In fact, it is just the opposite, as the Dow denominated in denominated in each of these assets classes has been crashing.

Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.

For both of their top picks for 2007, Steve Hochberg and Pete Kendall look to ETFs -- the iShares Lehman 1-3 year Treasury Bond Fund (ASE: SHY) for conservative investors and a short position in the iShares S&P SmallCap 600 Index Fund (NYSE: IJR) as a speculation.

The co-editors of The Elliott Wave Financial Forecast explain, "Stock prices have been crashing since 1999 in terms of real money, a fact of which nine out of ten people are unaware. From 1980 to 1999, stocks rose in terms of paper dollars, gold, and commodities. Since 1999, a historic shift out of stocks and into hard cash or 'things' has been underway.

"Relative to gold, the Dow is down 56% and the NASDAQ is off 78%, with new lows made this year. Similar stock market behavior occurred from 1966 to 1980, a time period that included a decline of 50% in the S&P 500 index.

"The Dow is at a new high in nominal terms due to credit inflation, which has allowed the index to stay up because the measuring unit (the dollar) is falling. Historically, whenever a discrepancy between the performance of the Dow in real terms and the Dow in nominal terms develops, the Dow in nominal terms always plays catch up to the Dow in real terms.