How Deep Will This Pullback Be?

Well, the answer to that question is really based upon the wave degree that the pullback represents.  As I outlined yesterday, as long as the market holds the 5965-80SPX support region, this pullback could still be a wave [iv] of wave v of [3].  That means that the market may still be stretching to the 6020-26SPX region to complete wave [3].  

However, a sustained break of 5965 makes it likely we are in the higher degree wave [4] pullback with an ideal target/support presented by the pivot box.   The top of the box represents the .236 retracement of wave [3], which is generally the minimum expectation for a standard wave [4], with the lower end of the box representing the .382 retracement of wave [3], which also aligns with the 1.00 extension of waves [1][2], and typical targets for wave [4].

Thus far, the market has spiked the 5965SPX support but has not provided us with a sustained break as it spiked right back over it.  Therefore, the alternative count remains alive for the moment.   

The main point I want you to walk away with after reading this update is that as long as the market is over the 5888SPX level (the lower end of the support box), then we are going to be targeting the 6153SPX region next.  So, as long as we remain over support, please continue looking higher.  

Now, this is where your risk tolerance is going to come into play.  I am still very much of the opinion that we are approaching a major market top.  But, as I have tried to reiterate time and again over the years, until a support breaks, a bull market deserves our respect and requires us to continue to look higher.  But, that does not mean you have to necessarily trade it.

While I outlined my plans several times to take half of the cash that I raised and put it back in the market for this rally, I will be stopping out should we see a break-down below 5888SPX.  And, until such time, I will continue looking higher with that limited position, and will continue to raise our support as we move higher.