Market Direction and Stock Trends

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For those who follow Elliott Wave analysis:

It’s tough to be a bear in the stock market these days

* February 6, 2017

Whenever equities have pulled back, they’ve rebounded soon afterward

While so many were so bearish throughout 2016, many were caught on the wrong side of the stock market in one of the largest rallies we have seen in years.

Yet, we at Elliottwavetrader.net maintained a bullish bias throughout the year, and even caught the pullbacks along the way. And I see no reason to change that bias now.

Since the start of 2017, the S&P 500 Index SPX, -0.32% has been choppy, trading within a 40-point range, as it sets up a run to higher targets. To us, those targets reside in the 2,400-2,440 range. (The S&P 500 was trading at around 2,295 Monday.)

The only question I’ve been struggling with is whether the market has consolidated enough to set up the next stage higher. And due to the overlapping nature of recent action, the market has not made the answer to that query at all clear. To that end, I am uncertain if our upper support region will be tested again before the next larger rally begins, but it would be my preference that we do so, as the greater probabilities suggest so at this point in time, but only marginally.


With the break of the 2,280 level on the S&P 500 this past week, I had a very short-term bearish bias about the market. But, clearly, it is tough to be a bear for any period of time recently, since the market went back up to the highs not long thereafter. But any bearish bias that I entertain at this time will be short-lived.

If the market is unable to directly break out through the 2,320-2,330 region, we still can be set up for that pullback in February, which will test our upper support region. And, again, that really would be my preference. However, if we take out that resistance region, then it certainly opens the door to a more direct route to 2,400-2,440.

Keep in mind that this market has not been kind, and quite stingy, to the short side for quite some time, and the bigger patterns are pointing much higher in 2017. Moreover, I still remember back in 2013, when we had a similar degree fourth wave setting up for a pullback, and it only provided us with a high-level consolidation in a running triangle. And, to be honest, there is no reason we could not see the same in this region as well.

Ultimately, our larger parameters remain the same. As long as we remain over our upper support box of 2,205-2,245 on the S&P 500, one should maintain a strong bullish bias, with our next larger degree target now standing between 2,400 and 2,440, on our way toward our longer-term target in the 2,537-2,611 region.

http://www.marketwatch.com/story/its-tough-to-be-a-bear-in-the-stock-market-these-days-2017-02-06

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