In a recent update, I pointed towards the 2,335 SPX region as the next likely target in the market. This week, the market has finally obliged, and taken us to our next waypoint.
As I have been noting for several weeks, the market has been much more bearish than I had expected with only a slight drop off the all-time highs. Moreover, my ideal expectations had us dropping even lower towards the 2,335 SPX region before setting up another rally attempt.
But, the fact that the market has become so bearish of late, even though we have not dropped much off the highs, tells me that the market may only be setting up the bears for a whipsaw they may not soon forget.
When I look across the web and read what many are “feeling” right now, most seem to still believe the market has gone farther than it should. Many are now calling this the end to the “Trump Rally.” Many even believe that the market has hit its high for 2017. Week after week, we see one top caller after another coming out with reason after reason as to why the market is just “too high.” The market has supposedly so far surpassed its fundamental valuation that many are absolutely convinced we have seen a blow-off top.
At the same time, we have many believing the Fed is making a huge mistake in raising interest rates. They are quite certain that this will be the death knell for the markets, and clearly, lead the camp of those who believe the market is done for 2017.
But, I am sorry to tell you that I am declining my invitation to the “bear-party.” In fact, I am going to continue to suggest that you not to feed the bears.
You see, over the last month, I have been preparing those that read my analysis that we will likely see a pullback off the 2,400 SPX region, with an ideal target in the 2,335 SPX region. Today’s action has certainly taken us towards my initial target.
However, market sentiment, as I read it through our Elliott Wave analysis, enhanced by our Fibonacci Pinball method, suggests that this drop is only part of a corrective decline, which may even take us into April. However, once this pullback has completed, I foresee much higher highs to be made in the market, as sentiment has not risen to the point at which I see a major top having been struck.