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1540 Target Reached, Can the Bulls Keep Pushing?


The next key levels to watch.

In Monday's update, both the preferred outlook and the first alternate count projected that the S&P 500 (INDEXSP:.INX) would rally to 1540 +/-, which happened with blinding speed on Tuesday. The main bull and bear outlooks from Monday remain materially unchanged, though of course with the added information provided by the price movement since then, I have been able to refine some of the key levels.

Before we get into the near-term outlook, let's center ourselves with the long-term. As I've mentioned several times before (and as most every other technician on the planet has no doubt noticed), the market is in a very long-term resistance zone.

Of note, the Dow Jones Industrial Average (INDEXDJX:.DJI) (not shown) did make a new all-time high yesterday (and in the process finally reached my 14,200+ target zone from January 24).

Click to enlarge

I always find it interesting when wave counts target potentially important confluence zones (almost as if the market knew exactly where it was headed from the beginning of the move), and in this case, the more bullish interpretation of the wave structure (below) seems to be pointing right at the blue confluence highlighted on the monthly chart above.

The wave count below suggests a fifth wave rally is now pushing into this long-term resistance zone, to be followed by a sizeable correction (typically about 50% of the preceding rally).

Click to enlarge
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