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January 7th, 2014: SP-500 Long-Term View Update

Posted by pugsma on January 7, 2014

3:15 pm EST:  I’ve been asked privately a few times recently about the long-term view of the SP-500 for 2014 and beyond.  I think 2014 is likely be a tough year for the SP-500 and could be very frustrating for investors and traders.   As we all know my forecast is that Primary Wave 3 (P3) of Cycle 1 (C1) of Super Cycle V (SC-V) has ended at 1849 (alternate blue) or will end soon (2 to 3 months) in the 1941 area (primary count).

Recall that P2-C1 was a sharp (5 months) major [A]-[B]-[C] Zig-Zag correction, as is often the case with a wave 2.  P2-C1 was also was a 42% retrace of P1-C1, which is a little short of the more typical 50%/62% wave 2 retrace.   The E-wave guideline of “alternation” would suggest that P4-C1 should be a more shallow (maybe 23% Fibonacci retrace of P3-C1) and a more drawn-out in time (maybe 9-12 months) correction.   It’s likely that P4-C1 will take the form of either a flat or triangle, which will alternate with the P2-C1 Zig-Zag.   With the QE taper underway for 2014, this would fit with a shallow, drawn-out P4-C1 correct that will take most of 2014 and maybe into early 2014 to complete.  The SP-500 price should move slightly down to mostly sideways to full the white bull channel shown on the weekly and daily SP-500 charts (see below).  There should be a P4-C1 low in the range of 1670 to 1740 something during 2014 that will be an excellent buying opportunity for the P5-C1 wave up yet to come.   The timing of the P4-C1 correction is going to be the difficult thing to primary.  As long as the SP-500 remains above the 1814 pivot, it’s more likely that primary counts is correct and P3-C1 is going to extend higher into early 2014 before the P4-C1 correction begins.

SP-500 daily chart (1-7-13):

PUG SP-500 daily chart EOD 1-7-14

SP-500 weekly chart (1-7-13):

PUG SP-500 weekly chart EOD 1-7-14

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