Recent Market Rally - A Closer Look

Primary Wave 2 has been one heck of a rally. But that was expected... right? With this rally now in it's 5th month, and bullishness at an extreme, I think it should be safe to say that the end is near. How near? Well, let's take a look...

Here is a picture of the Bear Market so far:

Clearly 5 waves down, and what appears to be 3 waves up. Text book Elliot Wave.

But that doesn't tell you much. Zooming into Primary Wave 2(P2) only, it makes it easier.

3 Intermediate Waves. (A) completing at 956.23. (B) at 869.32. (C) currently underway. Intermediate (C) has met the minimum Fib relation to (A). P2 has met the minimum Fib retracement. Is it over?

Looking at (C) close up, we can see 5 waves up from the 869.32 low. Now are those 5 waves the end of (C)? Or is it just one wave up of a larger structure that is coming.

Do I personally believe the rally P2 is over? No. I still see one more squeeze coming, and it should take us to SPX 1040 to 1050 range. Why? That way, the bulls will think we have a clean break of the 38.2% Fib, and the next target is the 50% Fib at 1122, which is a possibility.

But let's rewind a bit to the end of Primary Wave 1. March 6, 2009. I remember the day we made the low of 666.79. Most people were claiming that to be only the end of minor wave 3 of (5) of [1], with minor 4 and 5 still to follow... but it never came, did it? A lot of people are expecting one more wave up, but that doesn't have to happen. Just something to think about...