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Sentiment is speaking: the market is approaching a potentially significant bottom

bull vs bear

Florent Molinier

As we wrapped up 2021, I was explaining to those following my work that I expected a significant pullback heading into 2022. In fact, I even noted that “we’ll probably see the biggest pullback since we’ve hit rock bottom.” March 2020.”

However, I did not expect the market to fall below the 4000 region at the time. And, despite my expectations at the end of 2021, I was still able to outline a number of points on which I suggested our members raise funds as the market had the potential to fall lower than I expected. had originally planned. The first major point was at the end of March 2022 as we hit the 4630SPX region. And, I described several more as the market provided fresh bounces as we pulled back throughout the year.

Several weeks ago, on 9/11, I posted an article while I was on a trip that described the potential for an imminent 500+ point move. Interestingly, the two paths I was following were both pointing down first. And, if this decline was impulsive in nature, I would expect the 500 point move to continue lower. In fact, the market even gave us a low probability opportunity to sell before the market opened as we approached the 4175ES target we had for the previous rally. And, as we now know, the market broke through exactly that level of 4175ES to the penny, and began the decline that we have been involved in since that point.

And many of our members were very satisfied with this analysis:

“Thank you Avi. I took your advice today and bought protection. Instead of the S&P, I used the DAX. The options doubled in minutes.

“Your call for protection was sure to be perfect!”

As it stands, the market is down over 580 points since hitting the resistance target 4175ES that we set for our members of The Market Pinball Wizard, and we have met our minimum expectations for the movement of more than 500 points that we were looking for. Yet the microstructure did not suggest that this decline had run its course.

Currently, resistance lies in the 3681SPX region. Initial support is in the 3550SPX region, with lower support than the 3430SPX region. There is a pattern in place that may hold 3550 support in the week ahead. But, if we are not able to get back above the 3681SPX resistance, we can certainly continue to the secondary support region in the 3400/3430SPX region.

While I clearly cannot tell you exactly how the market will react over the coming week, I have provided you with the turning points I am watching to determine where the next major rally could begin from.

But the most important factor I will be watching over the next few weeks is whether this next rally is impulsive or not. If the next rally through 3681SPX takes the form of a 5 wave pattern, I will hold my expectations for a rally at 5150+ to end the bull market from the 2009 low, after which we will usher in a 7 to 20 years.

However, if the next rally is clearly corrective in nature, then I would have to firmly consider that the bull market from the 2009 low has peaked earlier and lower than originally expected. This would mean that we have potentially started a bear market of at least 7/8 years, but which could more likely last up to 20 years. I have written about my expectations for this potential bear market and how I came to this determination in many previous articles if you are interested.

The Feeling Speaks: It’s The Roaring Twenties Again – Start Preparing For The Same Ending

Finally, I want to remind you that we provide our perspective by classifying probabilistic market movements based on the structure of market price action. And, if we maintain some primal perspective as to how the market will move next, and the market breaks that pattern, it clearly tells us that we were wrong in our initial assessment. But here is the most important part of the analysis: we also provide you with an alternative perspective at the same time as we provide you with our main expectation, and let you know when to adopt this alternative perspective before it happens.

As I have said many times before, it is no different than if an army general were to lay out his main battle plans and, at the same time, also lay out a contingency plan in case his initial battle would not work. in his favour. It’s simply how the general prepares for battle. We prepare for the market battle in the same way.

So while I will never be able to tell you for sure how the market will move in the weeks, months and years to come, I am presenting you with enough information to know where my main perspective is wrong so that you can adjust to hold on. account of the alternative situation.

By now, I hope you recognize the difference in our analysis approach, other than the precision of it. We strive to see the market and use our math-based methodology, as objectively as possible, no matter how crazy that sounds. Additionally, it provides us with objective levels for targets and invalidation. So when we get it wrong in a minority of circumstances, we are able to adjust our course fairly quickly, rather than fight the market.

And, to that end, the next market rally will likely tell us if a major long-term bear market has actually started sooner than expected, or if we still have a rally to see to new all-time highs ahead of that big bear market at long term begins. Either way, I still expect this long-term bear market one way or another. The only question is whether the next rally points us to higher highs, or whether it only points us to a lower high, which would confirm that a long-term bear market has indeed started earlier than I think. originally planned it.

Housekeeping questions

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As for upcoming presentations, I will present in person at the MoneyShow in Orlando on October 31, then host a panel discussion on November 10 with Elliottwavetrader analysts Lyn Alden Schwartzer, Garrett Patten, and Ryan Wilday regarding our perspective on the stock, gold, bond and cryptocurrency markets for 2023.

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