A ‘corrective’ interpretation of recent S&P market action is a better fit than an interpretation which thinks the bull market is over, according to Ron Meisels, President of independent research house Phases & Cycles.
Meisels says it is important to remember that: “The history of this bull market is one of ‘long Legs’. It took over six years for the bull to complete three Legs (up-down-up). Many bears contend that a corrective Leg 4 and a final Leg 5 occurred within a matter of a few months in late-2015/early-2016, but that does not fit the ‘long Legs’ pattern!”
Meisels thinks that as long as the S&P 500 holds the 1800 to 1850 zone (which it has done five times) and does not conclusively break below, the recent action is part of a Leg 4 correction. For now, however, he expects a continued battle between bulls and bears in the 1800 to 1975 area, resulting in choppy sideways action. Whilst a move below 1800 would signify a victory for the bears, a move above 2025 would suggest the bulls are gaining the upper hand.
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