The U.S. stock market keeps marching on, even amid trade-war and presidential-impeachment talk.
The only question in my mind is if there will be a pullback in the S&P 500 Index SPX, +0.54% before it tops — and is able to maintain — 2,900 points.
As of last week, I had the perspective that as long as the 2,806 level held as support (which I then moved up to the 2,820 region), the market was setting up to push to higher highs. And there is nothing in today’s update that changes my mind.
With the market holding upper support levels all last week, it certainly has a setup to immediately attack the 2,920 region this week. And as long as we do not see a sustained break below 2,860, that seems to be in the cards. This is represented in the light blue count on the chart, below.
However, since we know markets are not linear, we need to be prepared if the market breaks below 2,860 in the coming week. That would suggest the darker blue count is playing out, and the market would likely spend a good part of the coming week in a wave (2) retracement, which should still hold over the 2,820 region. All of this would mean a delay in breaching 2,900.
For now, my expectation remains that the S&P 500 will continue heading toward 2,920. We will use our Fibonacci Pinball method to move our support levels higher as well.
As the market moves closer to 3,000 points, investors are going to have to strongly consider — and continually reconsider — how much risk they are willing to take on what we believe will be the final rally before a 20%-30% correction takes hold going into 2019.
While our ideal target for this rally has been the 3,225 region for a number of years, we must recognize that markets don’t always do what we expect. We are getting closer and closer to the point where we can minimally consider all of the wave 3 off the 2009 lows are completed, and that the risks are rising every week as to when that big correction will begin.
See detailed charts illustrating the wave counts on the S&P 500.
Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net, a live Trading Room featuring intraday market analysis on U.S. indices, stocks, precious metals, energy, forex, and more, along with an interactive member-analyst forum and detailed library of Elliott Wave education.
