SPX Conditional Path to 2500 Revisited Feb 2017
One big 3 Drive Pattern for Primary Wave 5 which extends to 2650
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Nothing says we could not have the 50% retrace here if the bullish pattern is to be completed since SPX is already >1.618 extension plus we going into 17 years from March 2000 Major Top. In 2000 actually, SPX had a weekly decline >10% in April, in a single week!
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Following this, we could tentatively have 3 year bear market from 2018-2021 which should min retest 1800 if not the Bernanke No Taper in the 1600s. So make money now because 3 lean years most likely coming
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Major 5 (1998-2000) was ending diagonal with extended Wave 1, so will not surprise if this one is similar with 2 peaks in 1Q and 3Q
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This BTW assumed USD devaluation into late 2017/early 2018 (see DXY chart). March in that respect should be telling as both FED (backing off) and Trump (FX discussions in G20) will have the opportunity to cause breakdown in USD which would respectively cause long spec unwinding for months.
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Always remember that Wave 5s are pure speculations/faith based (similar to now)
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The correction could just be a shallow pullback of c.3% next 1-2 weeks before resuming higher. Also may well be we just reach 2460s into July before the 50% retrace which goes to...2135! Too much coincidence in these numbers
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Next 2-3 weeks are decisive as we have many different scenarios: 1) Bearish-this one assumes that we are in Wave C=Wave A of extended Wave 1 of ED, then max rise into March is 2385 to be followed by 50% retrace for Wave 2. This suggests 2100 coming. This will be in sync with the 17 yr cycle and Tactical Top in March 2017; 2) Bullish - shallow pullback of 3/4% extending Wave C into later summer to >2450 followed by 50% retrace. This would be in sync with the typical yearly trend of Year 7 and also post election year. Catalysts for these: 1) Trump address to Congress; 2) FED speeches Yellen and FIsher; 3) NFP; 4) FED meeting, and 5) G20 on FX, all these next 3 weeks
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Industrial data continues to accelerate across the board and EPS will be accelerating for 1Q and 2Q due to lowest comps. Market supporting
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As to the maximum 2.24 extension of 5-0 pattern, there is another level to watch and this is 2479 which is 1.618x Wave 1 of ABC
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We should be currently in 5 of 3 of C meaning March is the month for 4 of C and then 5 of C into summer. I will be surprised if we blow off directly to 2470s in March.
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If i am to be correct that there will be >10% correction this year most likely summer to early Fall, then it means Trump is hot air because at that point SPX will be negative % YTD
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This assumed Wave 3 of C should be ending in 2411/2416 range.
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OK, we entered month of March where different LT cycles peak and rollover. This most likely will increasingly pressure equities and make any further gains from here labourious. Basically, I expect the first sign to come in March and further signs to appear summer. In any way a correction of >10% is very likely to happen this year which implicitly means at some point YTD SPX return <0%. Timing wise this is most likely to happen latter summer, and not now. Now, most likely is 3/5% decline before resuming into marginal new high in summer.
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Risk range next 9 months is 2479/2495 on the upside and 2145/2173 on the downside.
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Large build in net long spec position
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Finally huge spike in net spec longs to highest since Sep 2016..
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This week SPX should be making 17 years from the Major Top in March 2000 (23 March to be exact). Air is getting thin...
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There we go stronger downtown today. Watch HC bill Thursday as a positive vote could put the tactical low.
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Seems 2316/2280 could be the tactical low range before final upleg into summer
