Sentiment Speaks: Next 2 Weeks Are Critical To The Stock Market

Despite how emotional the bottom was in March of 2020, I remember getting a chuckle at when the economists declared us likely to be heading into recession just as we were striking that bottom. In fact, it took those brilliant economists until the market was 1500 points off its low to tell us that we were no longer in a recession.

And, it seems as though the market mavens have struck again. Just as they were proclaiming that the S&P 500 has dropped into "bear market territory," if you listened closely, you would have heard the market gods laughing again as we have now rallied 10% off the recent "bear market" declaration low.

Back at the end of 2021, I was warning that we will likely see a pullback in the market into early 2022. In fact, I told the members of ElliottWaveTrader that we will "likely see the largest pullback since we bottomed in March of 2020," with my minimum pullback expectation being 4400SPX, and more important support down in the 4100SPX region. But, in all honesty, I did not expect that we would break down below the 4000/4100SPX region.

Since we did break below the 4000/4100SPX support, it leaves me questioning whether the market has only one more higher high in coming year or so, or if there are still two more higher highs to be seen over the coming 2-3 years. But, for now, I view that as an academic exercise, as I will be treating the next major rally as the final high to the bull market which began in 2009.

Yes, I know that may shock some of you, but I still think we are in a bull market off the 2009 lows. And, yes, I know the S&P 500 dropped 20% off the recent highs, but I have explained why that is a ridiculously arbitrary perspective about markets, as it outlines a lack of understanding of the true larger degree structure of bull markets. I have written about this several times in the past, so you can always choose to go back and review those articles if you would like a bit more detail about my perspective.

In the meantime, it seems that many are truly convinced that we have only begun a bear market rally, and the current rally is going to resolve with lower lows in the coming months. And, it is certainly possible they could be right.

However, the next two weeks are going to be critical in knowing whether they are going to be right or not. You see, if the market continues to hold over the 4045-90SPX, and completes a 5-wave structure pointing us towards the 4300SPX region, then they will not likely be right. Rather, a 5-wave structure that completes off the recent lows will strongly suggest that the market has begun its next major rally phase over the coming year, and pointing us to 5150-5500.

So, the bulls will again battle the bears over the next two weeks for control of the market through the next 3-5 months, and potentially beyond.