"The rally in the major stock market indexes has been the late stages of a bear market rally," said technical specialist Steven Hochberg earlier this week. He forecast that the Dow's push above 11,000 had created several multi-year extremes in investor pessimism.

Based on this outlook, the editor of The Elliott Wave Financial Forecasts stated, "Historically, such conditions accompany market highs. Don't believe the pundits who say the Greek debt crisis will not spread beyond its borders." Below, we offer his long-term assessment for a continued bear market.

"The collapse in real values for stocks as well as the credit implosion, economic contraction, terrorism and war of the past decade are consistent with our Elliott wave cycle case that in 1999-2000 the direction of fiscal mood changes from positive to negative at a Grand Supercycle degree," says technical cycle analyst Robert Prechter.

In his The Elliott Wave Theorist, he suggests, "But this is not the end of the story. The fact that investors are still giddy -- which is an apt word for the current sentiment indicators -- is consistent with our Elliott wave case that the bear market has barely begun."

Steve Hochberg, editor of The Elliott Wave Financial Forecast, has been warning investors that the bull market was poised for a dramatic downside reversal. Two weeks ago, I posted the commentary from his speech at the World Money Show in which he outlined his bearish long-term case.

Following yesterday's market decline, he issued an update, reaffirming his negative stance. He notes, "Yesterday was a confirmation day, with the DJIA, S&P and NASDAQ all breaking their respective 'trigger' levels, indicating that a top is in. The Dow industrials declined beneath the key 12,337 level, plunging to an intraday low of 12,086.10 before bouncing into the close.

"The S&P easily slid through its support trendline of 1435.85, which has contained the rally since last November, falling to an intraday low of 1389.42. And the NASDAQ negated the ending diagonal interpretation of its fifth wave, breaking 2440 and confirming that the five-wave rise from July is over."

"All the major stock indexes should now be at the forefront of an extended decline. There were many astounding statistics associated with the decline, such as the NYSE volume. A whopping 99% of total NYSE up and down volume was on the downside! A quick perusal data shows only two days with a greater percentage of daily downside volume: October 27, 1997 and the crash day of 1987.

"Yes, these two prior instances marked stock market lows. But these instances occurred after a period of a persistent and strong decline in the indexes. They represented capitulation.

"Yesterday's huge volume spike occurred only 5 days after the high, so the odds that it marks a capitulation are very low. Instead, it should be the kick-off to a more protracted period of selling pressure.

"That is why we focus so heavily on sentiment. When almost everyone is on one side of the door, if they all choose to go to the other side of the door at the same time, days like we have just seen can occur.

"What now? Looking ahead, there will likely be a very short-term low established soon. What will follow will be a short (in time) counter trend bounce, which should lead to more selling pressure and lower prices. These 'bounces' may be sharp in price due to possibly short covering, so be prepared.

"The Dow's next possible support area is 11,965 - 11,989, the S&P's next support is 1360 - 1377, and NASDAQ's support is 2316-2333. Should these levels be broken on the downside, we will then see another wave of selling."

Steven Halpern's TheStockAdvisors.com provides a free, daily overview of the latest stock ideas from the nation's leading financial newsletters.