The S&P’s correction may last until early Spring according to Ron Meisels at Phases & Cycles, though he is confident that the underlying major uptrend will resume thereafter.
Meisels thinks the current correction is the fourth part of a 5-wave move upwards (1-up, 2-down, 3-up, 4-down, 5-up) and that the fourth wave correction will in itself be divided into an A-B-C pattern (down-up-down). He says the “A” leg began with the recent sharp decline and ended on Friday 9 February as the S&P 500 found support at its rising 200-day moving average. Meisels thinks we are now in the “B” rally part, which will likely last several weeks and approach recent highs.
However, Meisels warns there is one more wave down (“C”) which could go lower than wave “A”, at which point he thinks, “we should hear the bears in full voice and see some major positive divergences, setting the stage for the… start of the final fifth leg up.”
In terms of short- to medum-term levels, Meisels says the low 2500s are important and that the recent low at 2533 could well be re-tested. Above, he says the 50-day moving average currently at around 2720 presents significant resistance, though he thinks the current rally could continue a little higher into the high 2700s.
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