Market Direction and Stock Trends

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For those who follow Elliott Wave analysis:

Stocks have confounded expectations, so I’m predicting more gains for 2017

* January 30, 2017

The S&P 500 looks like it will top 2,500 this year

As stocks have hit new peaks almost eight years into this bull market, investors and traders are fearing a major top. Yet, stocks continue to push higher, and they’re not likely done yet, as the so-called wall of worry still seems formidable.

The stock market has proven to be more bullish than most expected last year. In fact, when we were down around 1,900 on the S&P 500 Index SPX, -0.95% in February 2016, I was preparing investors for the rally I expected to 2,300, on its way to over 2,500 in 2017. And, at this time, there is nothing I have seen to change our expectation that the market will be heading much higher in 2017. The S&P 500 today stands at about 2,272.

When you read investing commentary, the main conclusion seems to be that this market has rallied way too far after the election. First, many were certain that Donald Trump’s win would crash the markets, yet we rallied strongly. Then they assumed that the Trump inauguration was going to be the nail in the coffin for the stock market, only to see us rally again. Then they assumed January 2017 as a whole would see a strong decline, just as we had in the past two Januarys, only to see us rally once more. In fact, those who were not following our Fibonacci Pinball analysis last year were not prepared for this rally and have been constantly looking down as the market has been heading higher.

Currently, micro support in the S&P 500 resides between 2,284 and 2,291. As long as that region holds as support, we are setting up to target the 2,320-2,330 level first, and, after a pullback, the 2,350 zone. It would take a break down below 2,280 to force me into an alternative perspective, which would require another test of the 2,230-2,245 region before we head much higher.

But, as long as the upper micro support holds over 2,280, the 2,350 (up to as high as 2,375) region is next in our sights. Once we complete the structure up into 2,350-2,375, I am going to expect a several-week, if not month-long, pullback/consolidation before we attack the 2,400 level.

In conclusion, the market has given me no reason to suggest that we will not continue higher in 2017. So I am going to continue to expect that our targets over 2,500 are going to be struck, unless the market breaks some support. I will turn bearish on this market only when the market strikes our long-term 2,537-2,611 target on the S&P 500 with a completed Elliott Wave structure, or if the market breaks a long-term support telling me we will not achieve those levels. But, for now, I will be staying the course on the bullish side of the market.

Wave charts







http://www.marketwatch.com/story/avi-gilburt-stocks-have-confounded-expectations-so-im-predicting-more-gains-for-2017-2017-01-30

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