Emotions speak: The next two weeks will be crucial for the stock market

Bull and bear stock market price concept.

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As exciting as it was to bottom in March 2020, I remember chuckling just as we bottomed out when economists announced that we might be entering a recession.In fact, it took those Prominent economists didn’t tell us we were no longer in a recession until the market fell 1500 points from its lows.

And, it seems, the market experts are at it again. Just as they declared that the S&P 500 had fallen into “bear market territory”, if you listen carefully you will hear the laughter of the market gods again as we have now rebounded 10% from the recent “bear market” statement low .

Back in late 2021, I warned that we could see a market pullback into early 2022. In fact, I told members of the Market Pinball Wizards that we “may see the biggest pullback of 2020 since the March bottom” and that my lowest pullback expectations are at 4400SPX, with more important support in the 4100SPX area. But, to be honest, I didn’t expect us to drop below the 4000/4100 SPX area.

Since we did break below the 4000/4100 SPX support level, this makes me wonder if the market has just one higher high in the next year or so, or if there are two higher highs in the next 2-3 years. But, for now, I consider this an academic exercise, as I see the next major rally as the final high of the bull market that started in 2009.

Yes, I know this might shock some of you, but I still think we’re in a bull market off the 2009 lows. And, yes, I know the S&P 500 is down 20% from its recent high, but I’ve explained why this is an absurdly arbitrary view of the market, as it outlines the structure to a really greater extent to a bull market Lack of understanding. I’ve written about it several times in the past, so you can always choose to go back and review these articles if you want to learn more about my views in more detail.

At the same time, it seems that many people truly believe that we are just beginning a bear market rally and that the current rally will end with lower lows in the coming months. And, of course, they could be right.

However, the next two weeks will be critical in determining whether they are right. You see, if the market continues to hold 4045-90SPX and completes the 5-wave structure that points us to the 4300SPX area, they are unlikely to be correct. Conversely, a completed 5-wave structure from the recent lows would strongly suggest that the market has begun the next major rally phase for the year ahead and points us towards 5150-5500.

Therefore, the bulls will fight the bears again in the next two weeks to control the market for the next 3-5 months and more.


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