One of the main benefits of understanding Elliott Wave analysis is that it places the market into a larger degree objective context from which you can make your major decisions about your investments.

While most analysis is either strongly bullish or strongly bearish for years on end (as I am sure many of you read perma-bears and perma-bulls alike), markets do not work like that. They are not always moving up or always moving down. While the last 5 years have certainly seen some tremendous market gains, there were clear periods of time which chopped traders up before the market continued higher.

In fact, one of my newer members thanked me for opening his eyes to the larger objective context provided by our Elliott Wave analysis. He noted that he always did well on the major rallies, but always gave back a lot of his profits while trading during the consolidation periods. His point was that he now has much better context for the market in the larger picture, and he has been able to avoid giving back his profits during this 4th wave pullback we identified earlier this year.

As I just mentioned, the specific structure within which we are navigating is a 4th wave structure, which is the most variable wave within the 5-wave Elliott Wave structure. And, in true 4th wave fashion, the market has not given us a clear micro-path as to how we will complete this 4th wave over the next month or two just yet. But, it does suggest that we will likely be heading lower before we see the set up to break us out towards 3000. And, that still applies even if the market begins a rally to 2740-2770SPX later this week.

I warned you well before this correction began that it would convince most market participants that the bull market which started in 2009 has concluded. And, amazingly, the more we move sideways, more and more market participants become convinced that this bull market is over. While the usual analysts who have been bearish for the last 5 years remain bearish, quite a few former bulls are moving into the bearish camp. But, we will likely need more of them moving into the bearish camp before we are ready to trek towards our next higher targets over 3000SPX. It is no different than how we set up to rally from 1800 to 2600+, as we predicted back in 2016.

As I have been reiterating, it is unusual to see a year-and-a-half rally corrected by only a several-week correction. So, while we did see an initial two-week drop off the 2018 highs to the top of the target we set for this wave (4) (2424-2539SPX), and it is “possible” that wave (4) may be over already, it seems that the greater probabilities suggest that this correction is going to push out a bit longer in time. But, I don’t think this bull market will complete until we are well over the 3000-mark.

And, as I have also been reiterating, I still think we have several more years to run before we complete this longer-term rally off the 2009 lows. Our bigger picture perspective is still expecting a rally to 3011-3223 as our next rally phase, as long as we hold the 2400SPX region. Alternatively, a break of 2370 would suggest that we are in a 4th wave of one larger degree (presented in yellow on the chart below), but I would still expect that we see a rally over 3000 into the early 2020’s before this bull market has been fully cooked.

See long-term chart illustrating the wave counts on the SPX.

Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net (www.elliottwavetrader.net), a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.

© 2018 Copyright Avi Gilburt - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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