Market Looks Poised to Reverse Hard to Downside Within Days
Reversals in the market often come when few expect them -- whether they come near bottoms or tops.
The patterns that I am seeing are based on crowd behavioral Elliott Wave analysis, and this analysis now favors a 70% probability of a bearish decline beginning very shortly to the 1150s area on the S&P 500 index. To wit, Investment Advisors in recent surveys have over 45% bulls and only 30% bears with typical tops forming around 47-48% bulls in surveys. In addition, the rally has been on light volume and recent action seems to be forming a rising “bearish wedge” pattern at the same time.
Reversals in the market often come when few expect them, whether they come near bottoms or tops. My most recent forecasts called a bullish turn after Thanksgiving Day when most were bearish in the 1160s on the S&P 500 index. We then rallied 109 points to a 1267 high, which we are re-testing now. As we recently pulled back into the low 1200s, I again said to watch for a major market turn on Dec 20. We then immediately rallied so far into the 1270 area from the 1203 lows.
Below is a chart I sent out on Dec. 24, having projected a continuing rally into the Dec. 27-29 window of trade.
Editor's Note: David Banister is the chief investment strategist and co-founder of ActiveTradingPartners.com, a small-cap portfolio and market advisory service.
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