For the last three months, the S&P 500 SPX, -0.58% has basically remained within the same region. On Friday, we came within 20 points again of the all-time highs. Is the market finally ready to break out over 2200, and take us to our next higher target of 2350? I am not convinced just yet.
Our larger expectation remains for the market to target the 2537-2610 in the next major rally phase which we are now setting up. However, I am still looking for a c-wave down to complete wave (ii) of wave (3) of wave v of 3. Our minimal target should be in the 2111SPX region.
Currently, we have a 1-2 downside structure for the c-wave of wave (ii) in place. If this pattern takes hold, then we should be presented with at least a 60-point decline this coming week. However, if the market moves through the 2180SPX level first, then this b-wave of wave (ii) is extending out in time, and the true decline may still be a week or two away.
I know that I have had a bullish bias in the market for quite some time. Yet, I have still been looking for the c-wave down to develop over the last few weeks. But if the market is able to move through the 2180SPX level in the coming week, it opens the door to the potential that wave (ii) actually completed at the September lows and we have developed a leading diagonal for wave 1 of wave (iii) of 3.
However, I place little reliance on leading diagonals, especially when a prior corrective phase looks incomplete, so I view this potential as a low probability at this point in time. Yet I do have to recognize the potential, if the market is able to prove it over the coming two weeks. So, I will maintain this perspective in the back of my mind, as I do not want to be caught looking the wrong way if the heart of a 3rd wave begins to take us to the 2350SPX region sooner than expected.
I am still going to be looking down for one more drop in the market before the next major rally phase takes hold. As long as we remain below 2180SPX, there is a setup to begin that decline in the coming week. However, if we move over the 2180SPX level, then it potentially pushes that decline out for another week or two, and causes us to even maintain a little more immediate bullish potential in the back of our minds.
News 
Market Data 
Discover 
