Can The Market Melt Up From Here?
With the market not being able to break below its upper most support all week, after testing it seven times, we have to consider the real potential that we may simply break out from here on our way to the 2350 region next.
While I was clearly wrong in my expectations that we may finally see some movement over the past week, the market has simply consolidated over its upper most support at 2159SPX. When we consider all the potential catalysts we encountered this past week without seeing any real movement, it really gave us an amazing week. Yet, it still takes a break down below 2159SPX before we can see anything in the way of a pullback/correction in the equity market.
This still leaves us between our goalposts of 2159-2192. Moreover, during the week, I provided a few glances at the daily IWM chart, which provides us with another important goal post. As long as the market does not see a strong break out over 123.65 (the .618 extension of waves (1) and (2)), then I am still going to expect a pullback into August.
But, without any break of support or resistance, I am simply left with my prior expectations from last week:
You see, the market sentiment patterns we follow have been suggesting that the market is heading to the 2537-2610 region before we see a major correction take hold in 2018. And fleeting news events and perceived macroeconomic conditions do not affect the major trend, despite what so many desperately want to believe. So, as I have been saying all 2016, do not maintain a larger degree bearish bias if you want to remain on the correct side of the long term trend.
At this point in time, my preference is for a pullback to begin this coming week. But, I need to see a sustained break of the 2159SPX level to support my expectations. Alternatively, should we see a strong break out over 2192SPX instead, I, for one, will not be fighting the larger degree market sentiment, which is pointing to much higher levels in the coming year. The only question in my mind is a matter of short term action, and whether we will first see a sizeable pullback this summer before we rally through 2200SPX. I will let the market guide me in that decision this week as we remain between 2159-2192SPX.