The rally from April 6’s bombed-out lows seems to be weakening.
It was suspect to begin with because its ballistic stage, a steep upthrust on April 9, failed to surpass a small but technically important peak from a week earlier. I nevertheless adopted a theme that the big, bad bear market had run its course and that all would be right with the world by Christmas.
This was based intuitively on one piece of evidence: the April 6 low in SPX had occurred just a hair above a very promising correction target at 4820 that I’d drum-rolled earlier. When the S&Ps in fact bounced robustly from just above it, I adopted the ‘outrageously bullish’ conclusion that there would be no recession and that the tariff brouhaha would eventually blow over without wrecking the global economy.
But we are not out of the woods yet, mainly because, as noted above, the initial bounce should have exceeded the small, somewhat obscure peak near 5563 recorded on April 3. The fact that it did not implies that the pattern’s A-B leg is not actually impulsive. Elliott Wave theorists would tend to make more of this shortcoming than I have, and that’s why they are probably more bearish than I.
To give them their due, however, I do not regard a continuation to the pattern’s ‘D’ target at 5787.25 as a done deal. Although I think it is likely, I will nevertheless attempt a tightly stopped short from 5623.00. That is the pattern’s ‘secondary’ Hidden Pivot, and it is a logical place for the uptrend to fail, particularly if it is nothing more than a bear rally. If that proves to be the case, we are experiencing the first of many deceptive rallies likely to occur over the next 2-3 years.
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