For those that have followed my work for some time, you would know that I have maintained a long-term bullish bias for many years. In fact, while many were looking for a market crash back in early 2016, we were pounding the table looking for a “global melt-up.” Moreover, as we went into the election in 2016, we continued to pound the table with targets north of 2600SPX, when at the time we were in the 2100SPX region.
As for how I currently view the bullish long-term perspective, I don’t think this market tops out until around the 2022/23 time frame, with the potential to rally as high as the 3800-4100SPX region within that time frame.
But, that is not the same as saying that I think the market is going directly to that region right now.
For those that understand how markets work, nothing moves in a linear fashion. Rather, I believe that the market is fractal in nature, and view it as taking five steps forward and three steps back.
Within that perspective, I see the market as now completing five steps forward off the December lows, which means I am looking for at least three steps back. For this reason, I think the 2600 region is a minimum target with the strong potential to still drop towards the 2200 region before we begin that final rally into 2022/23.
Now, clearly, I can always be wrong in my assessments. My work is based upon probabilities. And, based upon the structures I am seeing, it would suggest that once we complete the current bout of strength and the 5-wave structure I am tracking that can point us towards the 3000 region, then 70% of the time the market would take us back down to at least the 2600SPX region.
Yet, that means that 30% of the time, the market can surprise us and continue directly towards our 3800-4100SPX target. And, if we see continued strength through the 3020-45SPX region, then I would likely have to side with what I now view as the lower probability path.
The next 3-4 weeks of market action should provide us further clarity regarding from where the market begins its next major rally to the 3800-4100SPX region.