Bullish Run for SPY Most Probable Path in 2019

The SPDR S&P 500 ETF (SPY) has two potential paths according to our Bayesian Timing System.  In the first path, with a Bayesian probability (BP) percentage of 59%, the SPY has bottomed or has one more low into the 225-230 target range and then prices generally begin a bullish run higher into and throughout 2019 leading to all-time highs.  But more on that IF and when this path occurs.  

In the second path, with a BP of 41%, a bear market of sorts has begun dropping well below 250.  This path is expected to last months and have bearish attributes of a 20%-40% correction from the all-time highs.  On Jan 8, SPY and IWM joined QQQ in a short signal position.  The vibration windows still are 1/10-1/14, 1/17-1/18, and 1/22-1/24; and at the moment, a high is expected this week in the indices before a push lower.  

On the upside there is SPY 258-261 and then another BP cluster at 265-268; on the downside there is 250-252 and then 243-246, through which there is an air pocket into the mid-220s to low-230s.  

On the micro level, support in the 254s must fail to see lower targets.  

In terms of paths for the next 1-3 weeks: (1) [BP=28%] SPY drops to 250ish from a high found this week, (2) [BP=17%] SPY drops into the mid-240s and possibly much worse from a high found this week, (3) [26%] SPY drops to 254 this week and then up into next week, (4) [BP=21%] SPY continues its march higher into 258-261 and grinds around, and (5) [BP=8%] SPY continues its path above 261 targeting the upper 260s or more. 

In metals, the SPDR Gold Shares (GLD) has hit the 120-123 target range.  What now?  A grind higher to the upper end of that range at GLD 123 is still doable, but then it gets interesting.  

A corrective pullback to 117-119 would actually be the most bullish thing to see, as that would prep the launch pad for 125-127 over the next month or so.  If the corrective pullback turns into something more bearish, then bears could really growl with multi-month targets below 110.  

So let’s keep this simple for now: (1) [BP = 63%] GLD heads to 125-127 after a correction as deep as 117 and (2) [BP=37%] GLD loses its bullish path and heads south in a bad way.  

Luke Miller, who has developed a Bayesian timing system for trading the stock market, hosts two Bayesian timing premium services at ElliottWaveTrader.