April will decide the market's fate

 

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When we turned bullish in mid February, many were looking for the market to crash. While many of the bears are now capitulating and turning bullish, the potential for the market to drop to the 1700s on the S&P has not completely dissipated, and the next several weeks will tell us if we are heading to 2500 from here, or if we have to drop down to the 1700s before we rally to the 2500 region.
While the market did not follow through early this past week in the most bullish expectation I had, at no time have we broken support, and we ended the week striking the 2050-2060 target I wanted to hit.
Without any break of support, I still see the potential to head up to the 2080SPX region as early as this week. As usual, the question is the path. As long as the market remains over 2035SPX, the path can be a more direct one, which can see us strike 2080 by the middle of the week. However, if we break 2035SPX early this coming week, then we will likely drop to retest the 1995-2005SPX support region, and as long as it holds, we will then likely rally up to the 2080SPX region to complete wave iii off the February lows.

Should we actually rally up toward the 2080SPX region, I would expect to see us drop back to at least the 2027SPX region in a wave iv, as outlined in the green count on the 60-minute chart linked below. As long as the market remains over 1995-2005 support on all pullbacks into April, that will set us up to challenge the prior all-time highs in the SPX. But I do not believe we will breach the 2015 market high by much, if at all, which will then lead to a wave (2) pullback in a few months from now, which if it holds support, sets us up to rally to 2500-2600 in the SPX going into 2017.
Alternatively, if the market breaks below the 1995-2005SPX support at any point in time over the next month, it will be a strong signal that the market has not moved back into a long-term bullish posture, and I would expect that we will be testing the 1700 region later this year, as we continue within primary wave 4.
I warned in January and February of this year that we have a potential setup for a global melt up in emerging markets, commodities and U.S. equities, and much has followed through as expected so far. While we still have much to do on the upside over the next two months to confirm this case, by the summer, we will know if the market is setting up for a major bullish move into the second half of the year, or if we will be mired in a primary wave 4 into the fall, with the 1700's still being seen before the global melt up begins.
See charts illustrating the wave counts on the S&P 500 and Russell 2000.