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Sentiment Speaks: I Am Still Bullish, Unless…

Sentiment Speaks: I Am Still Bullish, Unless…

Hey there, fellow investors and traders! So, let’s talk about the current state of the market and where things might be heading. Honestly, I still see some potential for the bulls to make a comeback, but their window of opportunity is getting narrower. Let’s dive into it.

First things first: the market has been struggling to break through the important resistance level we’ve been keeping an eye on at 4401SPX. Despite several attempts, it just hasn’t happened yet. In fact, the overnight futures even came close to that line and turned down. On top of that, we’ve also broken below the upper support region at 4280SPX that I highlighted last weekend. So why am I still optimistic about the bulls?

Here’s the thing: my bullish perspective is based on a bigger picture analysis that goes beyond short-term factors like interest rates or inflation numbers. Over time, I’ve gathered a lot of evidence and real-world examples to support my view that these factors don’t always have the major impact that many people think they do. In fact, they are often just noise in the grand scheme of things. So, instead of rehashing all of that in this article, I want to focus on explaining how I’m currently viewing the market from an Elliott Wave perspective.

Understanding the Waves

Okay, let’s talk about two potential scenarios: the bullish one and the bearish one. In Elliott Wave analysis, a corrective pullback usually consists of a three-wave structure, with the ‘a’ wave typically being a three-wave structure and the ‘c’ wave often being a five-wave structure. Based on the initial decline off the 4607SPX high a few months ago, which counts best as a three-wave structure, I believe this is a corrective pullback that will eventually set us up for another rally towards the 4800SPX region.

However, I also need to consider the possibility of a diagonal structure, which starts as a three-wave structure but then completes a full five-wave structure with three-wave substructures. Diagonals are less common, but they deserve our attention. If a sustained break below the 4165SPX region occurs, then we might be dealing with a diagonal and the bearish scenario becomes more likely.

To differentiate between the two scenarios, let’s look at the objective parameters. If we hold above the 4165SPX support region (which could even extend down to 4145SPX) and start a rally above 4340SPX, then my primary view of a rally to 4800SPX remains intact. On the other hand, if we see a sustained breakdown below 4165SPX leading us into the 4000-4100SPX region, then I have to shift my perspective and view this decline as part of the 5-wave ‘c’ wave, pointing us down to the 2900-3300SPX region in the future.

Planning for Battle

I want to take a moment to explain why I always maintain an alternative perspective in market analysis. We all know that predicting what the market will do right now is simply impossible. It’s a non-linear environment, and that’s how we approach it. We rank probabilistic market movements based on price action structure and provide you with our primary expectation. However, we also offer an alternative perspective and let you know when to adopt it before it happens. Think of it as a contingency plan in case our initial battle plans don’t work in our favor.

By providing you with objective price points at which we know we have to move to our contingency plan, we stay objective and avoid significant losses. That’s what sets our methodology apart. Now, I understand that this type of analysis might be confusing if you’re new to Elliott Wave and Fibonacci Pinball. It may take a few readings to sink in, but trust me, it’s worth it.

Why Should You Listen to Me?

Before we wrap up, I want to address any doubts you might have about the effectiveness of this type of analysis. Over the past 12 years, our analysis has been spot-on, capturing almost all the major turns in the markets we cover. Our members often mention some of the remarkable calls we’ve made, like foreseeing the rally in the DXY even when everyone expected a dollar crash, or calling a top in gold before it plummeted. These are just a few examples, but they demonstrate the power of our methodology.

So, as we move forward into the coming weeks, keep an eye on the parameters I outlined above. They will guide our assessments of the next 500+ point move in the market. And if you want to receive notifications when I publish new articles, hit the “Follow” button at the bottom of the page. Oh, and if you’re wondering why all comments go through moderation, check out my article on dealing with haters.

That’s all for now, folks. Happy investing, and may the bulls be with us!