As the trade wars seem to be heating up and the calls for Trump’s impeachment seem to be getting louder, the market just does not care and keeps marching on. And, the only question on my mind is if there is another pullback in the cards before we start exceeding the 2900 region in earnest.
As we came into this past week, we maintained a perspective that as long as the 2806SPX level held as support, (which I then moved up to the 2820SPX region), the market was setting up to push to higher highs. And, there is nothing in this update that changes that perspective.
With the market holding upper support levels all week, it certainly has a set up to immediately attack the 2920SPX region next week. And, as long as we do not see a sustained break down below 2860SPX, that seems to be in the cards. This is represented in the light blue count on our attached charts.
However, since we know markets are not linear, we need to also be prepared if the market decides to break down below 2860SPX in the coming week. A break down below 2860SPX would suggest the darker blue count is playing out, and we will likely spend a good part of the coming week in a wave (2) retracement, which should still hold over the 2820SPX region. All this would mean is a delay in when we attack those levels over 2900SPX.
For now, my expectation remains that we will continue marching higher towards the 2920SPX region next. And, as we continue to march higher, we will use our Fibonacci Pinball method to move our support levels higher as well.
But, as we move closer and closer to the 3000+ region, 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 into 2019. While our ideal target for this rally has been the 3225SPX 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 30% correction will begin.
