Back in 2015, we continually pointed to targets for this market
between 2535 and 2611 on the S&P 500 (SPX), while most thought we
were crazy at that time even though we recently approached the 2500 SPX
region, We began to become much more cautious that we were finally going
to see a bigger pullback. While the pullback we did get from that
region (in mid-August) were the largest ones we saw since November of
2016, when the market moved back up through the 2460 level it opened the
door to a much more extended wave off the February 2016 lows, targeting
to strike the 2600 SPX region.
Moreover, when the market only provides small pullbacks within a
final move, especially as negative divergences are evident on the daily
and monthly charts we are tracking, to us that means that the
bullishness is running to an extreme, as we potentially head towards a
topping point. And, when bullishness runs to an extreme that s the time
to turn cautious.
Now, please don’t mistake what we are saying for an expectation for a 10% to 20% correction. The only way we can view this, as a real possibility is if we break the 2300 region on the next pullback that we are expecting. Rather, we think that the next pullback can take the market back down towards the 2329 to 2410 SPX region in a wave off the February 2016 low. But, based upon our target for the next wave, you can see that the potential downside has now become greater than the potential upside that is likely remaining.
Over the next month or two we are still expecting the market to move through the 2600 region. But, over the next few weeks, we also expect to see a 30 or more point drop (as evidenced on the in green wave) before we complete this long-term wave we are on since the February 2016 lows, as you can see from the daily and 5 minute charts. In other words, once we see a “real” pullback in the market in the coming weeks, This will be our first cue that the market is setting up to complete this wave which stated in off February 2016 with one more rally into the end of the year. Once the current wave is completed, we are expecting a new wave or pullback into 2018 down towards the 2329-2410 region.
The SPDR S&P Metals and Mining ETF (XME) is on the cusp of a surprising and very powerful upside breakout after completion of a 6-month corrective accumulation period. After President Trump was elected in November 2016, the XME (S&P Metals & Mining Select Industry Index) climbed from just under 25 to a high of 35.21 in February 2017 or a return of 41%, in anticipation of the enactment of the Trump administration agenda, concurrent with lower taxes, stronger economic growth, and upward pressure on inflation.
For those who are paying attention, this
means we were quite confident of the 700 points of the 780 points we
have seen to date from the low in February 2016. But, as we now move up
through this extreme extension, risks are running to a point where the
potential downside we see going into 2018 is much greater than the
potential upside we likely have remaining to this wave (3) off the
February 2016 lows. But, all I expect is a multi-month pullback, and not
the end to this bull market.
Now, please don’t mistake what we are saying for an expectation for a 10% to 20% correction. The only way we can view this, as a real possibility is if we break the 2300 region on the next pullback that we are expecting. Rather, we think that the next pullback can take the market back down towards the 2329 to 2410 SPX region in a wave off the February 2016 low. But, based upon our target for the next wave, you can see that the potential downside has now become greater than the potential upside that is likely remaining.
Over the next month or two we are still expecting the market to move through the 2600 region. But, over the next few weeks, we also expect to see a 30 or more point drop (as evidenced on the in green wave) before we complete this long-term wave we are on since the February 2016 lows, as you can see from the daily and 5 minute charts. In other words, once we see a “real” pullback in the market in the coming weeks, This will be our first cue that the market is setting up to complete this wave which stated in off February 2016 with one more rally into the end of the year. Once the current wave is completed, we are expecting a new wave or pullback into 2018 down towards the 2329-2410 region.
The SPDR S&P Metals and Mining ETF (XME) is on the cusp of a surprising and very powerful upside breakout after completion of a 6-month corrective accumulation period. After President Trump was elected in November 2016, the XME (S&P Metals & Mining Select Industry Index) climbed from just under 25 to a high of 35.21 in February 2017 or a return of 41%, in anticipation of the enactment of the Trump administration agenda, concurrent with lower taxes, stronger economic growth, and upward pressure on inflation.
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