Though I think the U.S. stock market will hit new all-time highs, my only question is whether there will be a correction first.
In the analysis I provided well over a week ago, I noted that the 2,910/2,915-point region on the S&P 500
is of importance regarding whether the market can head to 3,010-3,040 before a bigger drop, or if stocks can top out within that resistance region and turn down hard.
Now that the market has struck the next resistance region, we are able to move our support up to the 2,865/2,885 level. And as long as all pullbacks now are corrective and hold over that level, which is noted on our five-minute chart, the market has opened the door to head to our old targets between 3,011-3,040. Moreover, I am still counting a move that high as within the b-wave structure of the larger-degree wave 4. In fact, the Bayesian probabilities that this is a b-wave are actually rising.
However, if the S&P 500 is able to turn down this week and break below 2,860, it suggests the 3,011-3,040 region will not likely be seen until after we see the c-wave down in the market.
At the bottoming near 2,250-2,335 many months ago, I warned that this rally will have to take us high enough that most of the market will be certain that the correction is over and that we are on our way to 3,500-plus. For this reason, I said we would likely have to exceed the 2,800 region, and may even reach our prior targets in the 3,011-3,040 region. And if you look around, you will now see how many scoff at the potential for any major selling to return. In fact, most are simply going to be happy with “some” pullback.
But I think the market has done exactly what it needed to do to shake out any further bearish expectations. And the market will soon tell us if that still needs to push us up toward the 3,011-3,040 region or not. But based on the larger-degree structures, as well as all the other reasons I have highlighted so many times before, I still think we will see a larger decline later this year, especially after most have given up on any bearish potential.
Yet, my longer-term expectations remain the same. I still don’t think the true bull-market move will begin in earnest until 2020, and it will likely point us up over 3,500 as we approach the year 2022.
View additional charts illustrating Avi’s wave counts on the S&P 500 across various time frames.
Avi Gilburt is a widely followed Elliott Wave technical analyst and founder of ElliottWaveTrader.net, a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.