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For those who follow Elliott Wave analysis:

This bull market may still hold a few surprises

* November 23, 2015

While many are starting to view the divergences we are seeing on the longer-term charts and already declaring the end to this bull market, I think the market can shock many as to just how much further it can go before we complete this bull phase off the 2009 lows.

I beg your indulgence, as I want to digress a moment to briefly discuss my overall market perspective about what drives the markets. Last week, I tried to explain that those that are trying to follow news will likely find themselves on the wrong side of the market quite often. This past Monday provided us with yet another example of how the news caused people to be looking toward the wrong side of the market.

I noted we had several possibilities on the table. But, the one commonality between the wave counts we had on the chart last weekend was that they were all bottoming and expecting a rally for Monday. In fact, we accurately called that bottom in real time in our Trading Room at Elliottwavetrader.net on Sunday night not long after the futures market opened. Moreover, the target I had on the chart for the rally which we were expecting on Monday was between 2042-2050SPX, with the potential to head much higher later in the week if 2067SPX was broken as resistance.


Yet, many were so certain that the horrific events in Paris were going to cause the markets to crash. So, I would like to point you to a column I recently wrote about why surprise events really do not impact the market as most would believe.

In fact, some of the newer members of my trading room expressed similar thoughts to this one, which was posted in our room: "This has been a very educational experience for me. A terrorist attack in Paris really did not change the Fib Pinball pattern that was playing out in my futures chart. AMAZING!"

Last week, I provided the guidelines for the bull/bear battle I expected this past week:

“With the break down below 2075SPX, the most immediate bullish pattern has been invalidated, for which the market gave us early warning at the end of last week. And, it opened the door to the more bearish perspective to take us down to the 1800's once again, with the potential to still see a 17 handle. However, the market has much to prove over the early part of the coming week before we can aggressively trade that move. In fact, I expect this region to present us with a bull/bear battle to determine whether we really can head down to the 1800's again.

As far as any immediate bullish counts on the table, the market must maintain over 2020SPX in order to support any reasonably immediate bullish perspective. Assuming the market is able to hold that level early in the upcoming week, and begins to develop impulsively to the upside over 2067SPX, the next major test for the market will be the 2175SPX region.”

As we now know, the market held the 2020SPX level almost to the penny, and then began the rally we expected for early this past week. While it tested the 2067SPX level several times, once it opened that door, it took any immediate bearish counts off the table for last week. As long as we remain over 2075SPX in the coming week, it requires us now to follow the more bullish counts, with the potential to still see us move as high as 2500 in 2016, depending upon the action we see in December.

Again, we have a potential "bearish" count on the chart, but, as I said last week, one cannot even consider the bearish potential in the market until an appropriate set up is seen, and support breaks. So, stay on your toes in the upcoming week, as the bull/bear battle I expected last week is not yet over until the market provides us all 5 waves higher in the yellow count, which will then provide us with a "bullish" pullback in yellow wave (2).

With the break out over 2067SPX, the market has opened the door to 2140-2175SPX, as noted before, and outlined on the five-minute chart. But because of the manner in which we have rallied off the August lows, it does leave several options on the table. For now, I will continue looking toward that higher target region as long as the market does not break down below 2075SPX. From that point, I think we should see a pullback, which would likely be a wave (2) in the yellow count on the chart. This would set the market up to rally into much later in 2016, with 2500-2600 as a strong potential target region in that particular set up.

Should 2075SPX break early in the upcoming week, it, again, opens the door to re-testing the 1990-2020SPX region. And even that structure can maintain a strong, longer-term bullish setup, which can also propel us to the 2400-plus region. I will place this potential on my chart should the market break 2075 early in the upcoming week. Ultimately, under all the count potentials I am seeing, it will take a sustained break out over 2175SPX to open the door towards the 2400-plus region.

Lastly, I want to reiterate that while this bull market has weakened somewhat, it is hardly dead and still has much higher to take us. The big issue for us is exactly how the path to much higher highs takes shape, which is somewhat clouded at this point due to the market action seen in August and September, as it has hidden where the true bottom resides and where we need to begin our Fibonacci Pinball structure.

We should have this answer rather soon, and expect 2016 to provide us with a rally to the 2400-2500 region, which still represents a 10%-20% return for the S&P500 from the point at which we closed on Friday. When we couple this perspective with the potential bottoming we should be soon seeing in some of the emerging markets, as well as many of the U.S. individual stocks that our StockWaves team tracks, it really looks like 2016 should be a year in which investors can find many ways to profit.







http://www.marketwatch.com/story/this-bull-market-may-still-hold-a-few-surprises-2015-11-23

• George.

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