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A complete re-shaping? Certainly not, but given the Dow Jones Industrial Average’s lofty perch above 12,000, 2006’s “winds of change” mark a powerful start toward the reshaped political landscape that The Elliott Wave Financial Forecast anticipated more than a year ago. The consensus remark with respect to the markets is that the Democratic shift is bullish because it will gridlock the lawmaking apparatus. This sentiment is supported by the Dow’s 13% rally from July to early November. But the market action can be deceiving around elections. In the seven weeks leading up to 1994’s Republican Revolution, for instance, the DJIA fell about 4%. Once the election was over, it fell another 4% through November 23. From that low of 3638.97, however, the Dow Jones Industrial Average gained 220% over the next five years.

Several aspect of the 2006 race, suggest that it will be also be a marker of a historic reversal – this time into a long decline.  In addition to it’s movement against the ruling party and President and the record success of female candidates (see today's other entry); there is 2006’s “mirror image” to the politics of 1994. The term is taken from the pre-election analysis of Dr. G. Terry Madonna, a professor of public affairs at Franklin and Marshall College and Dr. Michael Young, managing partner of Michael Young Strategic Research who also state:
But now exactly 12 years later, the gains made possible by the conservative 1994 revolution are in jeopardy in another mid-term election. Nationally, Republicans in 2006 are in the throes of an electoral meltdown just as Democrats were in 1994.

As in 1994, the US House and possibly the Senate seem increasingly likely to switch parties. As in 1994, an unpopular president and his unpopular policies are feeding the fire engulfing his party. And as in 1994, it is desertion of the ruling coalition by moderate and independent voters that provides the crucial catalyst that may sweep the ruling party from power.

Candidates like conservative Rick Santorum, who led the Republican’s into office in 1994 are leading the way out in 2006. Pennsylvania Senator Santorum was soundly beaten by Democratic candidate Bob Casey, Jr. The simmering hostility of Pennsylvania voters is something EWFF touched on back in October 2005 (see Additional References below). Another political pressure point that EWFF covered in September 2005 was Arnold Schwarzenegger’s bid for re-election in California. As we noted here on October 16, Schwarzenegger turned his fortunes around by completely changing his stripes from Republican to Democrat. Last but not least, there’s Eliot Spitzer’s successful bid for the governorship of New York, which was anticipated here on September 13. Spitzer won in a landslide with 70% of the vote. New York’s election of the great Wall Street crime fighter to the office of governor is another 180-degree flip from the 1994 experience when George Pataki defeated Democrat Mario Cuomo. Spitzer now replaces Pataki. His campaign slogan, “Day 1: Everything Changes,” should be more accurate than he or anyone else imagines.