As equity bears remain stunned by the post-BREXIT rally, the new all time highs in SPX and soon in DJIA could be the final blow to their positions. So is it needed for all the bears to be obliterated for the market to turn lower? At least Gartman is changing his mind…..either way we cannot ignore the clear technical indications of a breakout….My view was bearish and I was wrong, but bulls should not chase this market and buy the breakout…the market will pull back and then it will be time to go long again.
1st and most probable scenario is the breakout towards 2200 first and longer-term towards 2500.
The rise from post-Brexit lows is and the correction reached 38% Fibonacci retracement in what could very well be wave 2 (2068). So are we now at wave 3 towards 2200? According to this wave count yes….but I prefer to look for long entries after a pull back and not chase the market…
What if the few points higher that produced the All time highs Hype (only in SPX for the time being while Europe is lagging far behind) is just a fake breakout? That is the second reason why we should not chase the market here. If we look at a zoomed out view we can see a lengthy topping formation and a reversal back towards 2100-2080 would be something normal BUT a break below that area will confirm a false breakout to me and bring the bigger bearish scenarios back in play.
As long as price is above 1950 I believe bulls have nothing to fear regarding the longer-term bullish trend, for the short-term however bulls will be in danger if we break below 2100-2080 as this will be a false breakout signal.
However the larger elliott wave count for the SPX shows there is ample upside potential but also lots of volatility…
Thank you for taking your time to catch up on my thoughts regarding the hype around the ATH in SPX.