With so much focus and energy on the passage of a tax bill it is natural to inventory winners and losers. Sure enough, the market will play that game, too. The march to new highs continues for bulls, but the time for inevitable pullback is nearly at hand for bears. Yes, something for everyone in the bill's passage as both bulls and bears contemplate what's next.
Patient bears will be rewarded from higher levels as most pullbacks generally fall to the area of wave 4. Continue to look for final wave 5 to correct to it's own wave 4 level, and then bounce before for all waves correct to the next higher degree wave 4. The expected pattern is a corrective a-b-c movement. Not necessary to identify the exact peak, but watch closely as 2700 approaches and monitor MACD/RSI.
Yes this is exactly what I have. Target area 2690/2710 around the first week of January. Might be better to travel than to arrive for the tax bill. The extra economic growth will result in higher interest rates and a stronger currency, both of which will be negative for markets. Once the markets realise this we will likely get the big correction. If consumers go mad with spending over Christmas expecting more cash from tax breaks, that ,might be the trigger.
iamthewolf
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@kunsan, wrt/timing, my projections are for 2 weeks out. However, you can't dismiss it starting sooner. There will likely be some sideways movement, re-testing of highs, to account for the timing. It is ok to be patient, as has been the case recently.
kunsan
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@iamthewolf, there are two Bradley timing dates coming up - the first one on January 4th, the second on January 29th. There is also a minor date on January 19th. I am watching for a possible spike upwards to the 2690/2710 area in the first few days of January. If that spike happens and coincides with January 4th (give or take a day or two) I'll assume the Bradley of Jan 4th is a high and Jan 29th expected to be a low.
If the market does go into correction mode (no guarantee that it will) I am looking for a sharp correction - sharp enough to create margin calls that in turn will exacerbate the selling.
There is a confluence of Fib, trend line and date timing in the 2367 area at the end of January. Can the market correct and go that low? Unlikely, but we'll see.
kunsan
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The market has shown a strong start to the New Year and has now entered the target area of 2690/2710. However as explained above, my 'perfect' target is 2714/17 to be achieved on or around the Bradley date of Jan 4th (give or take a couple days either side). I have Fib targets in that 2714/17 area, Elliot pattern targets and the possible coincidence with the Bradley date.
The question of course is whether SPX can hit that area on or around Jan 4th (that would basically be by the end of the current week where trading finishes on Friday 5th).
If all these things come to pass, then the likelihood of an important peak is high (but not of course guaranteed). The next target is 2367 to be achieved by Jan 19th (or preferably Jan 29th).
Can the market spike upwards into Jan 4th/5th and then enter a sharp correction phase? Time will tell. Cash levels are very low, margin and speculation is high, so the conditions for a sharp reversal exist.
iamthewolf
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@kunsan, See my last update prior to New Year for week of 12/26/17. I didn't publish one for week of 1/2/18 since the Holiday week was just a low volume, not significant, event.
kunsan
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@iamthewolf, as expected/hoped the market has shot upwards into the 'perfect 2714/17 target price, touching 2714 last night. Today, January 4th, is the Bradley date, with the next important date at Jan 29th. The question is whether the market will peak in the 2714/17 area and then decline sharply towards the end of january. target is 2367, down 350 points or so. Yes, I know that is a tall order, but stranger things have happened. What I would like to see is a final spike and sharp reversal in the 2714/17 area showing a strong reversal candle. And I'd like that to happen today or tomorrow to coincide with the Bradley date.
Whether anything will result from this analysis is difficult to tell. If *if* we get a spike and reversal from 2714/17 today or tomorrow then the omens are high that a top has been reached. No guarantees of course.