There are some criterion need to be fulfilled before the Phase II of the ongoing secular bear market will execute. First of all the market have to make an advance into a secondary high below prior high 1220, secondly, we need to break the secondary low which I believe it's the 1010 we saw last week.
If I am right with the above analysis, then we are entering a short term bull market provided the market hold 1010, that mean the market is heading toward the fibonacci retractment level from the high of 1220 to the recent low 1010. The 38.2%, 50%, 61.8% and 78.6% fibonacci number are 1090, 1115, 1140 and 1175. And I believe the market will go up to 1140 or 1175 with five Elliott wave and that three peak of the wave are at 1090, 1115 and 1140/1175. The market will only reach 61.8% fib level 1175 if the momentum is on extreme mode. In the mean time, I doubt the market can go that far, well, I will keep my eyes open and see how the market climb.
I also predict the duration of this counter rally will be 20 to 30 days. By mid to end of August, if you see the market at the extreme overbought level, feel free to lighten your long position, aggressive trader may start shorting this market if all the technical indicators show unanimous direction.
Friday S&P500 closed at 1077.96, I would like to wait for at least 1082- 1085 before start shorting this market again. If you are patient enough, you should wait for the 38.2 fib 1090 or critical resistance 1100.
All in All, today I just want to share my analysis of this market. I may not accurate with this prediction, actually we shouldn't predict the market, but if I am right, at least some long term investors can escape the second phase of this bear market.
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